Permanent link for Trump's Newest Tariffs on Canada, Mexico, and China: What It Means for U.S. Trade and Consumers on February 3, 2025

On February 1, 2025, President Donald J. Trump announced the imposition of new tariffs on imports from Canada, Mexico, and China, citing national security concerns related to illegal immigration and drug trafficking. The measures include a 25% tariff on imports from Canada and Mexico, with a reduced 10% tariff specifically on Canadian energy resources, and a 10% tariff on imports from China. - whitehouse.gov

As of February 3, the 25% additional tariffs on Mexico imports have been put on hold for 30 days due to current talks. – Reuters.com

Trade Volume with Canada and Mexico

According to data from the U.S. Census Bureau, in the first ten months of 2024, the United States engaged in substantial trade with both Canada and Mexico. Total trade with Canada amounted to approximately $699.6 billion, with U.S. exports to Canada totaling $322.4 billion and imports from Canada at $377.2 billion. - census.gov

In the first three quarters of 2024, goods and services worth approximately US$600 billion crossed the U.S.-Canada border. When including trade in services, this figure rises to US$683 billion., with nearly US$350 billion in goods and services exported to Canada during this period. This data underscores Canada's position as a key trading partner for the U.S.   - economics.td.com

In the first ten months of 2024, according to data from the U.S. Census Bureau, trade with Mexico was even more significant than with Canada, totaling around $776.0 billion. U.S. exports to Mexico were valued at $309.4 billion, while imports from Mexico reached $466.6 billion. - census.gov

Regarding Mexico, in 2023, the U.S. imported goods and services valued at $530 billion and exported $367 billion to Mexico. The machinery and equipment manufacturing sector, which includes automotive and parts, accounted for $193 billion of U.S. imports from Mexico, while electronics manufacturing contributed $119 billion. These two sectors also represented significant portions of U.S. exports to Mexico, totaling $67 billion and $65 billion, respectively. - scotiabank.com

These statistics illustrate the critical importance of Canada and Mexico in U.S. trade dynamics, reflecting the extensive economic ties that have been fostered over the years.

China's Response

In response to the U.S. tariffs, China's Ministry of Commerce condemned the action, announced plans to file a legal case against the U.S. at the World Trade Organization, and stated that China "will take corresponding countermeasures to firmly safeguard its rights and interests."  - fmprc.gov.cn

Global Economic Implications

The announcement of these tariffs has led to significant reactions in global markets. Major stock indices have experienced declines, and there is heightened concern about potential disruptions to international trade and economic growth.  - theguardian.com

Economists and industry leaders have expressed concerns that the newly imposed tariffs could lead to increased costs for consumers and businesses, potentially contributing to higher inflation and affecting employment in industries reliant on international trade. A model gauging the economic impact of President Trump's tariff plan from EY Chief Economist Greg Daco suggests it would reduce U.S. economic growth by 1.5 percentage points this year, potentially ushering in "stagflation"—high inflation, stagnant economic growth, and elevated unemployment. - reuters.com

Additionally, North American companies are preparing for the effects of these tariffs, which threaten to disrupt numerous industries, including automotive, consumer goods, and energy, leading to increased costs and potential production delays. Industry leaders express concerns over increased costs for consumers and possible supply chain disruptions. The tariffs could harm industries on both sides of the border, affecting auto manufacturing, fuel, and consumer goods sectors. - reuters.com

The tariff situation is consistently evolving. Discussions are ongoing among the involved nations and within the global economic community regarding the potential impacts and future developments related to these trade measures. GVSU’s Van Andel Global Trade Center will continue to post updates as they occur.

Categories: Automotive China Export Import Tariffs
Posted on Permanent link for Trump's Newest Tariffs on Canada, Mexico, and China: What It Means for U.S. Trade and Consumers on February 3, 2025.

Permanent link for Where are the Customs Entries? A Guide for Import Compliance on January 16, 2025

As trade advisors and consultants, one of the most common questions we hear from small and mid-sized businesses is: “Do we need to worry about Customs compliance?” The short answer? Yes—absolutely.

Often, the realization of the importance of compliance is triggered by a new hire, an internal audit, or as international trade becomes more integrated into day-to-day operations. No matter how the awareness begins, businesses need to understand that compliance risk is a hidden but significant challenge when working with partners outside the U.S.

Uncovering Compliance Risks: The Role of Customs Entries

When we first walk into a business, we don’t know much about its import activity or the processes they have in place. Some companies have oversight mechanisms; others assume everything is running smoothly simply because shipments arrive on time. The truth is, within the first five minutes, we can usually gauge their level of compliance oversight. How? By asking one simple question: “Where are the customs entries?”

Customs Entries Hold the Key

Customs entries are the foundation of any import operation. They reveal critical details such as:

• The number of entries filed over a given period.
• Where the entries are being filed.
• Who is responsible for filing them?

If a company cannot provide these answers, tracking down customs entry data often uncovers previously unknown trade lanes and hidden risks.

The second question we ask is equally telling: “Where are the records?” Responses often include:

• “I’ve never seen the customs entries.”
• “That’s the customs broker’s job.”
• “I assume someone else handles that.”

In many cases, customs entries are sent to Accounts Payable with the broker’s invoice and then filed away—never to be seen again. This lack of oversight can expose the company to significant compliance risks.

The Importance of Oversight and Recordkeeping

Customs entries are official government filings, akin to transactional tax returns. They rely on accurate import documentation—particularly the commercial invoice. Errors in value, classification, or country of origin can lead to costly penalties. While customs brokers file these entries on your behalf, they act as service agents and are not held liable for errors. The responsibility for compliance rests squarely on the importer, as mandated by Customs under the principle of “Reasonable Care.”

To safeguard against these risks, companies must establish robust internal controls, including:

• Reviewing customs entries against commercial invoices and an audited Harmonized Tariff Schedule (HTS) classification list.
• Promptly addressing errors with customs brokers.
• Maintaining a secure record retention system indexed by entry number, date, supplier name, and related documentation.

By implementing these measures, you’ll be well-prepared to answer the pivotal question: “Where are the customs entries?”

Take the First Step Toward Compliance

Ready to build confidence in your importing practices? Join us for Van Andel Global Trade Center’s “Basics of Importing” training. This workshop will provide the foundational knowledge you need to navigate U.S. Customs regulations, manage compliance risks, and import goods effectively and efficiently.

Visit our Upcoming Events page to register and take the next step toward a more informed and compliant import process.

Categories: Import
Posted on Permanent link for Where are the Customs Entries? A Guide for Import Compliance on January 16, 2025.

Permanent link for USMCA Year Four: Analyzing Its Impact on Michigan's Labor Market and Future Trade Prospects on October 11, 2024

by Luke Notorangelo

The United States-Mexico-Canada Agreement (USMCA), which replaced NAFTA on July 1, 2020, aimed to modernize trade between the U.S., Canada, and Mexico, incorporating more flexibility and advanced technological strategies. The article Driving Capital underscores how the USMCA and the Inflation Reduction Act (IRA) have catalyzed job creation and investment in Michigan, especially in the automotive sector’s shift toward sustainability. The Wilson Center's analysis further highlights the USMCA's role in strengthening supply chains and addressing geopolitical challenges. Meanwhile, the Atlantic Council notes that upcoming elections in Mexico and the U.S. could significantly influence the Agreement's future. Collectively, these perspectives reveal the USMCA’s pivotal role in shaping economic resilience and sustainability across North America.

Impact on Michigan’s Labor Market

The USMCA has significantly impacted Michigan's labor market, particularly in the automotive industry, driving job creation and investment in electric vehicle manufacturing. The Agreement's requirement that a substantial portion of automotive content be produced by workers earning at least $16 per hour is a key step in raising wage standards and supporting labor rights. Mechanisms like the Rapid Response Labor Mechanism (RRLM) empower workers to report labor violations, enhancing protections.

However, there are challenges. Some Michigan companies have closed operations in Mexico due to compliance issues, raising concerns about job stability and competition. This underscores the delicate balance Michigan workers face as the automotive sector evolves.

With the IRA encouraging growth in Mexico’s automotive sector, Michigan’s labor market stands at a crossroads—facing both opportunities and uncertainties. The upcoming USMCA review in 2026 will likely shape the future for workers and businesses alike, offering a chance to critique and adjust the Agreement to ensure long-term benefits for North American trade.

Four Years of USMCA: Looking Ahead

Despite global supply chain challenges such as the COVID-19 pandemic, Russia’s invasion of Ukraine, and tensions with China, trade between the USMCA nations has surged by 50%. This growth underscores the strength of the Agreement in managing trade disputes and overcoming supply chain disruptions. Beyond economics, the USMCA reflects a broader shift in globalization, emphasizing sustainability, transparency, and resilience.

As the USMCA reaches its fourth anniversary, it’s clear that while much has been accomplished, unresolved disputes and future challenges remain. Elections in Mexico, the U.S., and Canada could introduce new policies that reshape the trade landscape. Monitoring these developments is essential to maximizing the Agreement’s potential and ensuring a successful 2026 review.

The 2026 USMCA Review: Why It Matters for Michigan Trade

The USMCA includes a unique review process, with a critical evaluation scheduled for July 1, 2026. This review will determine whether the Agreement will be extended for another 16 years or if periodic evaluations will occur. The review will focus on compliance in key areas like telecommunications and labor rights. As political debates intensify, particularly around migration and drug trafficking, Mexico must solidify its position as a reliable partner in North American trade to ensure a successful review.

USMCA in 2024: Notable Considerations

As we mark the fourth anniversary of the USMCA, it's evident that the Agreement is more than just a trade deal—it’s a vital support for Michigan's labor market and a symbol of resilience for North America’s economic future. Growth in the automotive sector and broader trade has positioned the region toward a more sustainable and equitable economy. Yet, upcoming reviews and elections could significantly reshape this framework, making it crucial for businesses, workers, and policymakers to stay engaged. Decisions made now will impact job stability and competition in Michigan, laying the foundation for a stronger North American economy.

Expand Your Knowledge of International Trade

Looking to deepen your understanding of The United States-Mexico-Canada Agreement (USMCA)? Join us at an October, Basics of USMCA training event! Learn valuable insights, expand your network, and discover how the Van Andel Global Trade Center can support your international growth. Register today to secure your spot!

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About the Contributor

Luke Notorangelo is currently a Marketing and Sales Student Assistant at the Van Andel Global Trade Center. Luke is a senior studying Business Administration with a concentration in Marketing at Grand Valley State University. He enjoys going to the gym, watching a good sports game, spending time with friends, and exploring new noteworthy restaurants in the area.

Categories: FTAs Mexico USMCA
Posted on Permanent link for USMCA Year Four: Analyzing Its Impact on Michigan's Labor Market and Future Trade Prospects on October 11, 2024.

Permanent link for East and Gulf coast ports strike, with ILA longshoremen walking off job from New England to Texas, stranding billions in trade on October 2, 2024

By CNBC's Lori Ann LaRocco

Billions in trade came to a screeching halt at U.S. East Coast and Gulf Coast ports after members of the International Longshoremen’s Association, or ILA, began walking off the job after 12:01 a.m. ET on Tuesday.

The ILA is North America’s largest longshoremen’s union, with roughly 50,000 of its 85,000 members making good on the threat to strike at 14 major ports subject to a just-expired master contract with the United States Maritime Alliance, or USMX, and picketing workers beginning to appear at ports. The union and port ownership group failed to reach agreement by midnight on a new contract in a protracted battle over wage increases and use of automation.

In a last-ditch effort on Monday to avert a strike that will cause significant harm to the U.S. economy if it is lengthy — at least hundreds of millions of dollars a day at the largest ports like New York/New Jersey — the USMX offered a nearly 50% wage hike over six years, but that was rejected by the ILA, according to a source close to the negotiations, who was granted anonymity to speak about the private negotiations. The port ownership group said it hoped the offer would lead to a resumption of collective bargaining.

Read the full article here.

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CNBC  This piece of content has been aggregated from an outside website.

Categories: New Articles
Posted on Permanent link for East and Gulf coast ports strike, with ILA longshoremen walking off job from New England to Texas, stranding billions in trade on October 2, 2024.

Permanent link for Gov. Gretchen Whitmer Announces $1.2 Million in Export Assistance Funds Available for Michigan's Small Businesses on October 1, 2024

LANSING, Mich. – Governor Gretchen Whitmer joined the Michigan Economic Development Corporation (MEDC) today to announce Michigan has received the top award of $900,000 from the U.S. Small Business Administration (SBA) State Trade Expansion Program (STEP) for the upcoming fiscal year. The Michigan Strategic Fund is providing an additional $300,000 as the state match to support the Michigan STEP initiative (MI-STEP) and help small businesses grow through increased access to global markets. MEDC’s International Trade program has now facilitated nearly $6 billion in small business export sales development by deploying critical export resources and fostering a statewide network of export support.

This year marks the 13th year of STEP funding from SBA, which has awarded nearly $15 million to the state of Michigan since its inception. With 95% of the world's consumers and two-thirds of all purchasing power located outside of the United States, Michigan’s administration of STEP dollars to small businesses is critical in promoting Michigan’s goods and services worldwide.

Michigan has historically led the nationwide STEP grant program in results of facilitated export sales. While the national return on investment (ROI) remains 40:1 for facilitated sales realized from SBA STEP dollars, Michigan retains #1 status with a reported ROI of 328:1 during STEP program history.

“This year, Michigan has secured a top STEP award from the Biden-Harris administration’s SBA to help small local businesses access the international market and export their high-quality goods,” said Governor Whitmer. “We are focused on connecting our businesses with the international network they need to expand and create jobs in Michigan. We will get it done by bolstering our federal partnerships and shoring up our state-level initiatives including the MEDC’s International Trade program. Together, we will grow our economy and help small businesses thrive right here in Michigan.”

This year’s SBA award will continue to support export development for small- and medium-sized businesses through grants for international sales trips, trade missions, and trade shows. However, no additional activities will be eligible for the FY25 administration of MI-STEP. MI-STEP is designed to spur job creation by empowering small- and medium-sized businesses to export their products, providing reimbursement grants up to $15,000 annually for eligible export-related expenses.

“Increasing the sale of Michigan goods and services to global markets is an important part of taking the state’s ‘Make It in Michigan’ economic development strategy globally. Growing export sales not only fosters increased company revenue and stability but also supports higher incomes for Michiganders by helping Michigan exporters revitalize communities and create greater employment and entrepreneurial options,” said Quentin L. Messer, Jr., CEO of MEDC and President and Chair of the MSF Board. “In fiscal year 2023, federal and state funding for MI-STEP allocated more than $2 million to 254 companies. Michigan small businesses utilizing MEDC’s International Trade resources, including MI-STEP, reported $510 million in new export sales to 127 countries.”

MI-STEP applications are accepted Nov. 1, 2024 through Sept. 15, 2025 for small- and medium-sized businesses pursuing export development. MI-STEP grants are competitive awards and funding is not guaranteed. Companies that may not qualify for MI-STEP or do not receive MI-STEP funding are encouraged to engage with Michigan’s network of international trade resources and service providers offering support for businesses at any point along their international growth journey. These services include B2B matchmaking, qualified and unqualified partner lists, worldwide credit reports, export compliance support, customized market research, and more –available at no cost to Michigan small businesses.

Click below to get details on how to apply for assistance, including MI-STEP eligibility requirements and the application process, or complete the online intake form to start a conversation with an International Trade Manager.

Get Details on How to Apply

Categories: MEDC New Articles
Posted on Permanent link for Gov. Gretchen Whitmer Announces $1.2 Million in Export Assistance Funds Available for Michigan's Small Businesses on October 1, 2024.

Permanent link for Things to Consider When Doing Business in Mexico on August 12, 2024

by Natalie Bremmer 

When people think of exporting, they often picture sending their products halfway across the globe. Though this mentality is not necessarily wrong, it can oftentimes lead businesses astray from their greatest opportunity– their next-door neighbor, Mexico!

U.S. businesses would be doing themselves a grave disservice by overlooking the exporting opportunities Mexico has to offer. In 2019, the U.S. exported roughly 350,000 units of product to Mexico while simultaneously receiving 200,000 units of product in the same year– a huge opportunity while also being able to decrease shipping costs because of a much shorter travel distance.

However, as with any country, there are social and cultural norms that businesspersons should be aware of before attempting to strike a deal.

Here are the top cultural norms people should be aware of when doing business in Mexico:

Timing

Business hours typically don’t start until 9-10 a.m. at the earliest and sometimes end at 8 p.m. and have a much longer lunch break. With this, you can expect later meeting times as well as more small talk before diving right into the designated topic of the meeting.

Though it’s polite for the guests to arrive on time, it is culturally common for the hosting company to oftentimes be a bit late for meetings.

If you do have meetings over lunch or dinner at a restaurant, expect it to take even longer. Restaurant service in Mexico is usually at a much slower pace than it is in the US. Sit, enjoy the conversation, and do not rush the check.

Formalities

Always dress formally and professionally for the first meeting to make the best impression. In areas with a hotter climate, it is sometimes acceptable to dress more ‘business casual’ as it is usually too hot to wear a full suit.

Business cards are always welcome and are readily exchanged. It is best to have a business card in both English and Spanish (if applicable) for maximum outreach results.

Small gifts with your company’s logo on it are acceptable, but anything larger or of higher value may be considered as a sort of unwanted persuasion.

In addition to this, doing anything that could remotely be considered bribing or promising ‘favors’ is extremely disrespectful and is not tolerated. All final business decisions are made by those in positions of power; negotiating with anyone not in this position will achieve suboptimal results.

Also, it is not polite to perform the first initial business meeting over a meal. Meals are shared among people who are familiar and enjoy each other's company; they are typically not acceptable for people unfamiliar with each other.

Communication

When addressing someone, it is best to use their official title of Mr., Mrs., Ms., Dr. This conveys the upmost respect, tends to have the best social reaction, and is a much quicker way to build relationships.

With the presence of the Covid-19 pandemic, Americans have started to shift toward a preference of online and video call communication, but in Mexico, the preference is still face to face communication as it tends to have a more personal touch.

While communicating in person, body language is also very important to consider. Trying to seem as open and engaged as possible by not closing off your arms and nodding along to the conversation is a great starting point to have the most productive conversations.

Do not feel the need to rush into business right away, though. Business professionals in Mexico prefer to get to know their partners first by engaging in small talk to get a good assessment of their character.

Having some baseline understanding and conversational skills in Spanish is a must-have in this scenario. Your Mexican business partners might find this impressive and realize how serious your offer is, resulting in a better negotiation.

Learn More!

To expand your cultural awareness of the best business practices in Mexico, sign up to attend the Business Travelers Series: Navigating Mexico – Virtual event on August 14, 2024, at 9 am EST, this virtual event is sponsored by the Gerald R. Ford International Airport and the Michigan Economic Development Corporation.

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Natalie Bremmer was a Student Assistant at GVSU’s Van Andel Global Trade Center . She pursued an undergraduate degree in Finance, Human Resource Management, and General Management at Grand Valley State University. She enjoys lifting weights, getting lost in a good video game, spending time with friends, and going on long hikes.

Categories: Culture Mexico The Business Travelers Series
Posted on Permanent link for Things to Consider When Doing Business in Mexico on August 12, 2024.

Permanent link for What is the Harmonized Classification System and Why is it Important? on April 9, 2024

What is the Harmonized Classification System (HS)?

The Harmonized Classification System is a globally recognized way to identify goods being imported and exported by assigning a standardized classification. The HS classification is used for declaring goods at the time of export in export declarations and for the purpose of filing customs entries at the time of import in the country of destination. The HS classification is used to determine duty rates and collect duties, taxes, and fees for imported products.

The Harmonized System (HS) is something every importing and export company will need to understand so proper HS classifications can be assigned to their products. Companies need to take great care in assigning HS classification and understand the compliance risks associated with their HS classification decisions.  Exporters and importers alike have a legal responsibility to properly claim and classify goods/products.

The Harmonized Classification System Breakdown

The Harmonized System (HS) is a very structured classification system made up of sections, chapters, notes, headings, and subheadings.

The United States has two published versions of the Harmonized System (HS).  For imports, the U.S. publishes the Harmonized Tariff Schedule (HTS) of the U.S. for the HS classification of imported products and the assignment of duty rates.  For exports, the U.S. publishes Schedule B for export HS classifications and the collection of statistical data.

The Harmonized System (HS) is broken down into 22 sections which act as groupings of similar chapters.

There are 97 chapters of products that are organized from least manufactured to more manufactured and logically group classifications by make or by use. The first two digits of each HS classification are the chapter number. Within each chapter, the Harmonized System (HS) provides a four-digit heading with the primary legal definition of what is to be included in that heading.  Those headings are further broken down into six-digit subheadings. The heading and subheading legal definitions are universal and all countries agree to use the same legal definitions.

While the globally recognized headings and subheadings remain constant, each country can further break down the subheadings with country-specific suffixes. In the U.S. two digits (digit 7 and 8) are added as the duty rate suffix and two digits (digits 9 and 10) are added as a statistical suffix – making the U.S. classification a 10-digit number.
See the photo above for an example using Coffee.

Why is HS Classification Important for Your Business?

First of all, for importers, the HTS classification determines the duty rates and the duties paid at the time of import so it has immediate revenue implications. Non-compliance can result in fines, penalties, and the back payment of additional duties owed.

Paying duties is a non-negotiable, so proper classification can reduce your compliance risk in the short and long run. The result will never be good when using the wrong classification. If your misclassification caused you to overpay in duties, you won’t receive a refund. If you are underpaid in duties, you are required to pay the difference, and customs will decide if you will need to pay interest, and whether or not fines and penalties will be imposed.

For exporting, HS classification is used in:

• Export documentation (ex. Commercial Invoice)
• Export Declaration
• Import customs entry in a country of destination

For importing, HS classification is used in:

• Customs and Border Protection (CBP) for customs clearance and entry

All in all, use the HS classification to your advantage. Generate proper classifications and importing and exporting will be smooth sailing.

Are You Interested in Learning More? 

GVSU's Van Andel Global Trade Center offers a yearly Fundamentals of Harmonized System (HS) Classification Training. Check out our Events page to register for this upcoming event!

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About the Contributor

Jenna Hoover worked as a student assistant for GVSU’s Van Andel Global Trade Center. At GVSU she studied Finance and Supply Chain Management within the Seidman College of Business. You can find her visiting local coffee shops or checking in on her Roth IRA. In her free time, she enjoys walking her dog, Gertrude, and hanging out with friends along the beautiful beaches of West Michigan.

Originally published 4/8/2022 - Updated 4/9/2024

Categories: Export Harmonized Tariff Classification Import
Posted on Permanent link for What is the Harmonized Classification System and Why is it Important? on April 9, 2024.

Permanent link for GVSU to host 25th symposium for area automotive suppliers on February 26, 2024

FOR IMMEDIATE RELEASE

February 26, 2024

Contact: GVSU University Communications
[email protected]
(616) 331-2221

GRAND RAPIDS, Mich. — Navigating industry difficulties and challenges will be the main topic of the 25th Michigan Automotive Suppliers Symposium, hosted by Grand Valley State University’s Van Andel Global Trade Center.

The symposium, with the theme of “Momentum Matters,” will be held at the DeVos Center, Loosemore Auditorium, on the Pew Grand Rapids Campus on Thursday, March 7, from 8:00 a.m.-noon.

"The annual symposium offers the chance to hear crucial insights as businesses realign with the constantly changing fast-paced automotive sector,” said Sonja Johnson, executive director, of the Van Andel Global Trade Center. “Listen to industry experts and how they are maintaining momentum as they navigate challenges in the requirements to meet government standards, and customer needs while juggling a complex supply chain and how recent issues such as labor strikes have impacted the auto industry.”

Speakers include two GVSU alumni. Alejandra Lorenzo, who works for Stellantis North America as a supplier diversity program manager, graduated in 2014. Lorenzo is an expert in supplier diversity, risk management, project management, pre-production and international launches. Lorenzo will give the keynote presentation, “Supplier Diversity: Direct and Tangible Benefits to Create a Stronger, More Resilient Supply Chain.”

GVSU graduate Mike Wall will present “The Road Ahead: Navigating the Winding Roads of the Auto Industry,” as an industry outlook. Wall earned a bachelor’s degree in finance and now has over 20 years of expertise. As executive director of automotive analysis at S&P Global Mobility, Wall will provide an in-depth analysis of vehicle markets and technology trends.

Other sessions include a fireside chat with Munro & Associates; and a Tier 1 Supplier Panel with representatives from Pridgeon and Clay, Inc.; ADAC Automotive; Lacks Enterprises; and Warner Norcross + Judd LLP.

Each year since 1999 the Van Andel Global Trade Center has hosted more than 25 international business events in Michigan and worked with a broad variety of community partners & corporate sponsors to provide the international business community with the business training and international resources it needs to succeed on the global stage.

For more information on this event, visit the Van Andel Global Trade Center website.

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Categories: Automotive
Posted on Permanent link for GVSU to host 25th symposium for area automotive suppliers on February 26, 2024.

Permanent link for Three Key Considerations for Successful International Expansion on February 8, 2024

It seems like all over the internet there are guides giving advice on specific locations or countries. Some of their advice can range from very specific to extremely broad, making it all the more confusing as to what advice might carry over into a different country. But what advice do all these guides have in common?

Here are some general rules to apply when expanding your business to any country:

1. Understand the Market

Market research is absolutely vital when trying to reach a certain segment. When expanding internationally, this step is crucial. Markets vary widely by country and region, market research for a specific area/region is highly recommended.

Some things to consider while putting together market research:

• Local currencies
• Potential client base in your market segment
• Number of local competitors currently in your target segment
• Foreign competitors in the desired market segment

If performing business from your home country and shipping to a foreign country, ask yourself: Do they take my currency? Could I take their local currency? What kind of people am I trying to sell my product to? What type of people need my product? Which companies in that market are already selling a product similar to what I am trying to sell? Is that market oversaturated?

Asking and answering these types of questions can help verify that your business can become successful in your next venture.

2. Know the Regional Politics

On the outside, a venture might seem extremely viable, but if the political climate is not advantageous then everything can stop in its tracks. If governmental entities are unwelcoming to foreigners or certain types of businesses, then adjustments should be made accordingly.

 Things to look out for regarding regional politics include:

• Recently passed legislation regarding the business sector your company is attempting to enter
• Any tariffs or exceptional high duties
• Past and present tensions between the country of origin and the country your business is attempting to expand to

Has the country you’re operating from been at odds with the country you are trying to perform business with recently? Have the respective governments responded by putting tariffs and other restrictions on each other? Such actions would make trying to get your product within that country extremely expensive and could potentially ruin the competitive advantage you once held over your foreign competitors.

Additionally, if the country residents are highly involved in these politics, they might boycott your product anyway. It is important to consider this a highly relevant factor when attempting to expand internationally.

3. Study the Culture

The culture difference can be a make-or-break point when introducing a new business within a foreign culture. Certain topics might be considered more taboo, other countries may hold more conservative values, and different countries might have almost no boundaries at all.

Here are some techniques to get an accurate grasp of a country’s culture:

• Analyze Their Media - If a country’s media broadcasts highly controversial or offensive content, business in this country may not be good for business. Media analysis can also often give you an idea of what’s popular with your demographic and help you advertise abroad.
• Look at Their Laws - Some countries might ban certain demographics from certain activities by the letter of their law. In that case, it would not be wise to release a product that would make those demographics legally vulnerable or unsafe.
• Know Their History - Countries historically go through phases, yet many aspects of their culture remain constant over time. It’s important to understand major historical movements that have happened within your target country, how they affected or changed the culture, and whether are not some of those impacts are still lasting today. Additionally, it is vital to identify ongoing movements and build that into your brand identity for marketing within that country.

Also, understand that cultures within countries can also vary by region as well, so the more specific an analysis is to the target area the better. It is vital to know if your product or service would transition well within a country’s culture to gauge how successful it has the potential to be. For example, avoid selling products that go against a religious belief held by the majority or confront a cultural taboo in the country you are looking to do business in. It is vital to identify whether your product has a “fit” within the culture you are trying to sell to.

With all three of these major factors in mind, you are now ready to successfully expand your business abroad and find yourself a market with the perfect fit for your product or service and the Van Andel Global Trade Center (VAGTC) can help! Whether you are a company just starting to consider global expansion or have been at it for a few years, VAGTC can help you go global or expand into new markets. With funding opportunities available for small and medium-sized businesses from the Michigan Economic Development Corporation (MEDC) through the Michigan State Trade Expansion Program (STEP), there is no better time than now to start or expand your export operations!

For more specialized information on expanding your business internationally and getting connected to the MEDC and STEP, schedule a consultation with the Van Andel Global Trade Center to answer any questions and get connected.

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ABOUT THE CONTRIBUTOR

Natalie Bremmer is a Student Assistant at   GVSU’s Van Andel Global Trade Center . She is a Senior currently pursuing an undergraduate degree in Finance, Human Resource Management, and General Management at Grand Valley State University. She enjoys lifting weights, getting lost in a good video game, spending time with friends, and going on long hikes.

Edited by Parker Mackey, a student assistant at the Van Andel Global Trade Center. 

Original publish date 5/18/2023 - Updated 2/8/2024

Categories: Export
Posted on Permanent link for Three Key Considerations for Successful International Expansion on February 8, 2024.

Permanent link for Reaching Global Markets: A Small Business Guide to Funding Exports on February 8, 2024

How can small businesses grow their customer base and increase profitability? Export!

When local markets are facing tough times or simply not bringing in enough revenue, the next step in expanding a small business and increasing revenue is to start exporting goods to access new global markets.

Common Concerns about Exporting

Exporting, however, may seem quite daunting and expensive to the inexperienced individual. Fortunately, there are several financial resources, mentors, and consultants available for small businesses to utilize to create an export strategy and set up export operations unique to their business needs.

Setting up and maintaining export operations does require an investment of both time and money, but with 95% of the world’s consumers outside of the U.S., it has the potential to turn into a profitable investment. If traditional bank financing doesn’t fit your business needs, there are different types of loan programs that help in setting up and/or maintaining export plans and provide alternatives to traditional loan options to fund export endeavors.

Export Programs

Programs funded through the U.S. Small Business Association (SBA) that small businesses should be aware of include: 

• SBA State Trade Expansion Program (STEP)
• SBA International Trade Loan Program
• SBA Export Working Capital Program
• SBA Export Express Loan Program

SBA loans are provided through banks, but SBA guarantees a substantial portion of the loan – up to 90% – making it more likely to get accepted than a traditional, non-SBA-backed loan.

State Trade Expansion Program (STEP)

One of the most easily accessible financial assistance options available for exporting is the STEP program.

The State Trade Expansion Program (STEP) is a completely different category than the other loan program since technically it’s not a loan at all. Though the money given to the state government is awarded by SBA, it is ultimately the individual state’s economic development department that distributes these funds– no repayment is required.

State-level STEP assistance helps small businesses:

• Learn how to export
• Participate in foreign trade missions and trade shows
• Obtain services to support foreign market entry
• Develop websites to attract foreign buyers
• Design international marketing products or campaigns

Roughly 46 of the 50 states were awarded STEP funds, including Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Georgie, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.

Michigan’s STEP program, MI-STEP, administered by the Michigan Economic Development Corporation, offers export assistance that covers up to 50% of export-eligible expenses. For more information on MI-STEP, check out our blog article Michigan Small Businesses Are Missing Out on Free Money: Why You Should Take Advantage of MI-STEP .

Coverage rates and total assistance varies by state, check your state’s STEP policy for exact export assistance information.

International Trade Loan Program

The most expansive of these would be the International Trade Loan Program. Companies can be approved to borrow a maximum of $5 million through this program with a processing time of roughly 5 - 10 business days.

These loans are available to help small businesses enter international markets and compete with businesses already present in the market. It works by combining fixed assets, working capital financing, and debt refinancing for the maximum amount of assistance.

Export Working Capital Program

The Export Working Capital Program is similar to the International Trade Loan Program in that there is a $5 million maximum borrowing limit and 5 - 10 day processing time, but the purpose is slightly different.

People applying for this loan already have a finalized sale or export contract in hand and just need the extra funds to seal the deal. This venture is ultimately a bit less risky than going into a market blind – like the prior program – which makes the approval process easier.

Export Express Loan Program

The Export Express Loan Program allows small businesses to get loans accepted within 36 hours with the trade-off of only being able to borrow $500,000 or less.

The reason turnaround time is so quick is that Export Express lenders can directly underwrite a loan without SBA prior approval.

Meet Your Export Mentors

For businesses interested in learning how to export their goods and explore funding opportunities and resources available for this endeavor, GVSU’s Van Andel Global Trade Center along with state and federal partners from the Michigan Economic Development Corporation (MEDC), Michigan West Coast Chamber of Commerce, U.S. Department of Commerce - Grand Rapids, Michigan Small Business Development Center, Export-Import Bank of the United States, Networks Northwest, U.S. Small Business Association (SBA), and more, are offering four opportunities to join us for our New to Export Workshops throughout the state of Michigan in 2024, visit our event page for dates and details!

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Natalie Bremmer is a Student Assistant at GVSU’s Van Andel Global Trade Center . She is a Junior currently pursuing a Bachelor in Business Administration degree in Finance, Human Resource Management, and General Management at Grand Valley State University. She enjoys lifting weights, getting lost in a good video game, spending time with friends, and going on long hikes.

Originally published 12/14/2022 - Updated 2/8/2024

Categories: Export MEDC
Posted on Permanent link for Reaching Global Markets: A Small Business Guide to Funding Exports on February 8, 2024.