It seems like everyone’s preparing for the worst.
Since the Trump administration proposed changes to the North American Free Trade Agreement, businesses large and small have wondered how it will affect trade and, more importantly, their bottom line.
Well, things haven’t gotten much better. We’re going into the sixth-round of negotiations, and issues between the three countries keep piling up. Trump is all about protectionism, and Canada has filed a complaint to the World Trade Organization about high US tariffs.
Long story short: things don’t look great for the future of NAFTA.
In an article released this week, the Canada West Foundation is advising small businesses to act now, and prepare for big changes in intercontinental trade.
The foundation’s director of the center for trade stated that if Trump decides to withdraw from NAFTA, “the worst time to figure out what to do would be in the midst of the media coverage and frenzy.” Small businesses should act now.
But, where to start? How can US small businesses proactively prepare for the end of a national trade agreement? The Canada West Foundation has tips for businesses in the north, but what about the US?
Don’t worry, we’ve got you covered.
Communication is Key
First and foremost, you’ll want to communicate clearly with your North American supplier or suppliers. Make them aware of your concerns, and what you think your business relationship will look like post-NAFTA.
Though it may cause tension or be a bit uncomfortable, better to talk now than later. Wait too long, and your business relationship could crumble under new regulations. There’s no harm in starting the conversation early.
You’ll need to discuss every way that you and your supplier will be affected by the renegotiation, or the US’ non-participation in NAFTA. Especially in terms of pricing, having to pay tariffs and duties that you didn’t have to before can be a real strain on a business relationship, and on the bottom line of both parties.
Though it seems pretty obvious, a clear line of communication is always a good plan. Don’t assume that everything will be fine, or that your partner will take the post-NAFTA news well.
The government doesn’t seem to have a plan B, but you should.
Hiring a Broker
Your next step should be to hire a customs broker. Even if you and your supplier are on the same page, you’ll need to hedge your bets.
Customs brokers can be private individuals, corporations, or partnerships that are regulated and empowered by US Customs and Border Protection. Their job is to help businesses navigate Federal requirements for imports and exports.
These requirements can include duties, tariffs, restricted goods, required forms, and any other specifics on the country you’re working with.
Because North American countries had such a strong free trade agreement, there was largely no need for customs brokers for continental trade.
But due to recent events, US small businesses may want to reconsider figuring out the specifics themselves. Missing fees or forms can be costly, and having to fill it all out yourself can be time-consuming.
Luckily, the Customs and Border Protection office helps small businesses find brokers. For more information and to use their “Find a Broker” tool, check out this link.
Now that you have an experienced broker, you may want to consider going global.
Under NAFTA, trading within North America seems almost domestic. We’ve said it over and over, but slashed tariffs and duties, and paper-thin trade borders really makes a difference for small businesses. It incentivizes you to stay where you are. Which, undeniably, makes a ton of sense.
But this may not be an option anymore, and small businesses in all three North American countries should consider other options. Namely, looking beyond the continent.
Depending on what trade looks like post-NAFTA, US businesses may find that they actually save money by finding suppliers or supplying other countries outside of North America. The EU-US bilateral trade agreement is famously good for US businesses. Another example is Australia, where the US enjoys a free trade agreement.
Though shipping costs are a cause for concern, you may still end up saving time and money by working with another nation
Though shipping costs are a cause for concern, you may still end up saving time and money by working with another nation. Your business will also benefit by expanding into larger European, Asian, and other global markets.
So maybe the loss of NAFTA isn’t such a bad thing.
As with anything, there are logistical concerns with going global. The most annoying is sending payments.
Paying suppliers and getting paid internationally is a hassle, and hidden fees from banks can greatly affect your bottom line.
With Veem, your international payments are taken care of.
Veem is a global payments solution that helps small businesses send payments internationally. Thanks to our experienced team and innovative technologies, we can easily find the most secure, and cost-effective path for your money.
It’s fast too, and without the middle-men of big banks, you don’t have to worry about unexpected delays or fees. Your payments are between you and your business partner.
What’s not to love?
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