Customs Brokers Star in the Trade Wars

Importers need their niche knowledge for clarity as tariffs upend supply chains

BY KEJAL VYAS

LAREDO, Texas—Most workers in this city reliant on cross-border trade are anxious about the effect of President Trump’s mercurial tariff plans. But the Byzantine knowledge of customs brokers has never been in higher demand.

They help importers accurately classify and report goods to U.S. Customs and Border Protection and pay duties for their clients. This was dull, rote work in the heyday of free trade.

But in recent months brokers have been bombarded with pleas from clients working to rejigger supply chains to mitigate the effect of Trump’s tariffs. Brokers are acting as accountant, lawyer, consultant and, at times, fortuneteller for clients desperate for clarity on U.S. policy.

“Even though we hate tariffs, from a business standpoint, I think we’re doing better than any other year,” said Eduardo Lozano, founder and head of customs brokerage Eelco. He estimated business is up 20% in the past month.

Eelco auditor Diana Sanchez said she has been working 13hour shifts in recent weeks, combing through customs filings for a Fortune 500 company to ensure each of its 400 weekly shipments from Mexico are properly classified using the CBP database of 18,000 codes that determine the duty on a product.

Filings that used to require a single code now need three or five to factor in tariffs and customs guidelines. Much of the work to complete and up--date electronic forms is manual because programs haven’t been developed to account for the new and frequently changing guidelines.

“Uff, I’m exhausted, my fingers hurt,” Sanchez said as she stretched her hands before returning them to the keyboard and skimming the CBP website for updated guidelines.

Automotive clients are especially worried, said Miguel Perez, senior director for cross-border operations at TA Services, another brokerage. Metals and other raw materials move across the border here repeatedly as they become parts and flat-screen TVs for U.S. consumers.

One client, Perez said, recently asked to move materials for a factory in Mexico from Asia instead of the U.S. to avoid tariff risks.

Laredo, the U.S.’s largest inland port, handles more than $800 million in goods each day. Traffic downtown comes to a standstill several times a day as miles-long freight trains cut through. The city is home to the sprawling warehouses of more than 200 brokerage firms, many started as mom-and-pop shops by Mexican-American families who experienced a surge in business after the North American Free Trade Agreement took effect in the 1990s.

“If you want to be an actor, you go to Hollywood. If you want to be a customs broker, you go to Laredo,” said J.D. Gonzalez, who leads the national customs broker’s association and runs a

Clockwise from top left, workers process raw materials at the Sunset Transportation warehouse in Laredo, Texas, the U.S.’s largest inland port, which handles more than $800 million in goods each day. Eduardo Lozano, founder of customs brokerage Eelco, estimated business is up 20% in the past month. Auditors review export and import paperwork at Eelco. KAYLEE GREENLEE FOR WSJ ( 3)

small brokerage in Laredo.

Gonzalez is looking for more workers to help process a flood of paperwork tariffs have generated. More work, he said, also means more risks and challenges for brokers. Gonzalez recently asked a beer-importing client for documentation showing the origins of aluminum it uses in its cans, to determine whether it was subject to new Trump administration tariffs.

“It’s gotten a lot more complicated,” he said. “Was it smelted in Mexico or India? Whoever smelt it, dealt it?”

Rules change on the fly. Gonzalez and his staff were processing customs paperwork late on a recent Friday night to comply with China tariffs, when new CBP guidelines arrived, effective at 11:01 p.m. They had to start over.

CBP systems and broker databases haven’t kept up with policy changes and often lack guidance on what formulas to use while calculating tariffs, exposing brokers and their customers to fines or overpaying. Clients call them to wax philosophical about what Trump’s social-media posts might mean for their duty payments.

“It’s like we all had to go back to school, but guess what? The teacher’s not there,” said Jose Minarro, a trade specialist at Sunset Transportation in Laredo.

Some brokerages are planning to add millions of square feet of warehouse space. But brokers are also worried tariffs will stoke inflation and slow U.S. demand generally, said Rahul Oltikar, president of Jamco, one of Laredo’s largest brokerages and warehouse operators.

Jamco’s warehouses were packed recently with tens of thousands of all-terrain vehicles a manufacturer had rushed over the border ahead of possible tariffs. A lack of demand for products such as those would make any bump in business from the tariff confusion a moot point, he said: “It’s bad for us across everything we do.”

President's Monthly Message