Global Procurement Spotlight: Mexico Faces Tariff Hikes Amid USMCA Renegotiations. May 06, 2025. Read More.

Global Category Intelligence

Q2 2025

Uyghur Forced Labor Prevention Act

The US Customs and Border Protection (CBP) has implemented a new requirement, effective from January 18, 2023, that mandates importers to provide the postal code of the manufacturer or supplier of goods imported from China. This measure is aimed at combating forced labor practices in the Xinjiang Uyghur Autonomous Region (XUAR). CBP has introduced automated processes to streamline the identification and detention of goods suspected of being produced using forced labor. Following the lead of the US, Canada has also implemented a similar requirement and is considering expanding the list of goods at risk. Mexico is exploring the adoption of measures to address forced labor concerns within its own trade practices under the United States-Mexico-Canada Agreement (USMCA). The US Congress has demonstrated a commitment to addressing forced labor through public hearings involving experts from various sectors. These actions highlight the international efforts to combat forced labor and promote ethical trade practices.

Trans-shipment Vigilance: CBP is actively monitoring the trans-shipment of goods through intermediary countries to evade import restrictions and prevent the entry of goods produced using forced labor.
Section 321 Detention: CBP effectively utilizes Section 321 of the Tariff Act of 1930 to detain goods suspected of violating US law by being produced using forced labor.
Uyghur Labor Exploitation: CBP expresses deep concern about the exploitation of Uyghur labor outside of Xinjiang, recognizing the need for comprehensive scrutiny across supply chains to address potential forced labor risks.
Entity List: CBP maintains a list of companies involved in activities contrary to US national security or foreign policy interests, including those suspected of engaging in forced labor practices.
Stay Compliant and Informed: Businesses must remain updated on evolving forced labor regulations to ensure compliance, protect their reputation, and uphold ethical business practices.

Chinese Goods Repaired/Altered in Canada/Mexico

Goods imported to the United States and undergoing repairs, alterations, or processing abroad are subject to duty under provision 9802.00.50. However, the USMCA introduces an exception, exempting goods repaired, altered, or processed in Canada or Mexico from duty assessment, promoting smoother trade between these countries. Nevertheless, if the goods are subject to Section 301 duties due to their Chinese origin, these duties still apply to the value of repairs conducted in Canada or Mexico. Regular duties and merchandise processing fees (MPFs) are not imposed on the value of repairs or processing in these countries. This ruling clarifies the dutiable status of Chinese-origin goods returning to the US after undergoing repairs, alterations, or processing in a USMCA country.

Applicability: The ruling pertains to goods previously imported to the US from China, which have undergone repair, alteration, or processing and are subsequently returned after such activities are carried out in Canada or Mexico.
Value of Repairs or Processing: The ruling applies to the value of the repairs or processing, irrespective of whether it occurred in a USMCA country.
Exemption from Regular Duties and MPFs: Regular duties or MPFs will not be levied on the value of repairs or processing when conducted in Canada or Mexico, as per the USMCA agreement.
Consultation with Customs Brokers: Highly recommended that businesses importing goods from China engage in thorough discussions with their customs brokers to understand the implications of this ruling on their specific operations.

21st Century Customs Framework (21CCF)

The US Customs and Border Protection (CBP) is undertaking a significant modernization effort to enhance the customs process. The initiative includes implementing a new customs automation system called ACE 2.0, streamlining and automating import, and export processing. CBP aims to mandate importers to provide additional information earlier in the customs process, enabling pre-screening of shipments for enhanced security. Additionally, CBP is considering transitioning from a 2-step to a 1-step customs process, requiring all necessary information in a single submission. These changes aim to improve efficiency and security but may impact import and export business activities. Businesses should prepare by updating customs software and complying with new information requirements. The modernization of customs procedures aligns with the goal of increased efficiency and security.

Here are further details concerning the modernization of the customs process:

ACE 2.0 Implementation: The phased rollout will begin in 2023 to ensure a smooth transition and minimal disruptions to trade activities.
Additional Information Requirements: Importers should anticipate CBP's request for additional details on origin, value, and intended use of goods, and ensure accurate and prompt provision of the necessary data.
Transition to a 1-Step Process: CBP is evaluating the potential transition to a 1-step customs process, with the timeline and implementation details currently under deliberation.

As per the Uyghur Forced Labor Prevention Act Statistics, the data analysis for the period between October and May indicates significant fluctuations in the total shipment numbers. In October, total shipments peaked at $125M, dropping to a low of $53.9M in December. However, they rose again to a new high of $179.9M in May.

The electronics industry exhibited strong performance during the analyzed period, with 454 shipments released. The industry also had a higher number of pending shipments compared to released and declined shipments combined.

The industrial and manufacturing industry has encountered notable impacts, resulting in 621 shipments being detained. Among these shipments, 91 have been released, 159 denied, and 371 remain pending. The total value of shipments amounts to $69.5M, with China accounting for $24.01M and Vietnam following with $25.48M. The number of shipments peaked in February (140), while May (35) was the lowest.

The apparel, footwear, and textiles industry experienced significant fluctuations in shipment volumes, reaching a peak of over $14.8M in October and dropping to 0.9M in May. China and Vietnam were the major contributors, with shipments over $14M and $13M, respectively. Denied and pending shipments account for over 75% of the shipments.

In the agriculture and prepared products industry, shipments fluctuated between $0.9-3.5M. China contributing over $15M. Three-fourths of the shipments were released, while the remaining quarter was pending, with only 19 denials.

In December, the consumer products and mass merchandising industry experienced a sharp spike with shipments exceeding $5M. China accounting for a shipment value of over $14.8M.

The machinery industry had an equal distribution of pending and released shipments. The shipment values varied significantly, ranging from hundreds of thousands to $2.9M in January. Since then, values have consistently hovered between $2-2.8M.

Both the base metals industry and the pharmaceuticals, health, and chemicals industries exhibited similar patterns. The base metals industry saw shipment values ranging from $1-2M until a significant spike to $18M in April. The pharmaceutical industry experienced a sudden surge in May, reaching $10.3M.