Tariffs & The Cashflow Conundrum

Unraveling some of the more important details in the chaos

I woke up this morning expecting every produce publication to have in-depth analysis on the chaos that unfolded at the border yesterday. The real, nitty-gritty details.  Hoping to hear more than just the usual “things will be more expensive” chatter.  I think all of us in the business are craving and searching for more details and clarity. For anyone dealing with imports, the reality of the chaos is sinking in fast.

On the surface, a 25% tariff might seem like a straightforward financial hit, but the real problem runs much deeper. It’s not just the tariff—it’s the fuzzy, confusing math behind it. As the details emerged, importers quickly realized that beyond the tariff itself, the sheer cash flow strain and mounting expenses make everything riskier immediately. The uncertainty is so severe that many mango producers—and others—have already paused or are limiting shipments as they try to maneuver through the rising challenges. I am doing my best to keep trying to learn more but struggling to find answers.

We are now in uncharted territory, and clarity seems very far away.

I had hoped to find some real insight or at least clarification in our industry periodicals this morning, but instead, I found little about what I hear as the biggest threat to continued functionality-cash flow changes. l. So, the best I can do is offer what I feel I’ve had to become good at—sharing what I know, trying to learn more, and connecting the dots in a way that might help others navigate this mess. I enter into a laymen reminder of the import process as to educate myself and be more aware for my own team and my customers.

Keep in mind I pretend not to be an expert on any of this, what I am laying out here is fluid, probably incorrect, confusing, partially correct and maybe even misinformed, but its something and a great deal of it is beginning to make more sense to me, again beyond the 25% number. My feeling is something is better than nothing. I intend to keep unraveling and sharing.

Import Process & Bonds 101

Importing fresh produce into the U.S. is a highly regulated process requiring multiple steps, agencies, and financial obligations—even before tariffs. Importers work with Customs Brokers to handle paperwork and ensure compliance with Customs and Border Protection, USDA, and FDA regulations. Before any shipment crosses, importers must secure a Customs Bond, a financial guarantee that duties, taxes, and fees will be paid. It’s essentially a form of insurance that customs and border protection require to cover any potential financial risk associated with the shipment. This bond also ensures regulatory compliance and covers potential financial risks.

There are two types: Single-Entry Bonds for one-time shipments and Continuous Bonds covering all shipments for a year. Most commercial produce importers use continuous bonds due to frequent shipments. The bond cost is based on a percentage of the importer’s total duties and fees over 12 months. Even though produce is often duty-free or has low duties under trade agreements, securing the bond still requires upfront cash flow.

Shipments undergo inspections, including phytosanitary checks and food safety protocols, sometimes facing additional scrutiny based on risk factors. Once cleared, customs brokers (on behalf of importers) pay all necessary costs, and the produce is released into the supply chain. Even before tariffs, this process demands significant capital, planning, and risk management. With the new tariffs, it has proven impossible to maneuver through and quickly is not even an option.

Typical Customs Brokerage Terms

Typically, in produce importing without tariffs, Customs Brokers are paid under net terms, usually Net 7, Net 15, or Net 30, meaning payment is due within that timeframe after invoicing. New or high-risk importers often pay upfront, while established importers may secure longer terms or monthly billing. Brokers may charge per shipment or offer flat-rate agreements for frequent importers. Since Brokers must ensure Duties and Fees are paid on time, most require immediate or short-term payment arrangements, 7-10 average is normal. Yesterday the 25% tariffs changed the terms in a sense and made every importer – high-risk. Let that sink in.

Confusing Customs Valuation

One of the most confusing and risky parts of the new tariff system is how Customs Valuation is calculated, which directly impacts the 25% tariff on Mexican imports. Customs Value, also known as the Declared Value, is the amount on which Tariffs, Duties, and Taxes are based. For produce imports, this is typically determined using the Transaction Value Method, which relies on the actual price paid or payable for the goods when sold for export to the U.S. This includes the Invoice Price and, depending on the terms, may also factor in Cost, Insurance, and Freight (CIF) or only the product cost at the point of export (FOB). Additional costs such as Commissions, Packaging Assists, and Royalties may also be included, while some non-dutiable charges, like Inland Transportation in the exporting country, may be deducted. If the Transaction Value is unclear or challenged, Customs may use alternative methods like the Computed Value Method, based on Production Costs, or the Deductive Value Method, which considers Resale Prices in the U.S. Ultimately, Customs and Border Protection has the authority to adjust values based on industry benchmarks to prevent undervaluation, creating added uncertainty for Importers already struggling with increased costs.

This sentence above has created significant fear, rightly so. Improper valuation of produce imports can lead to shipment delays, fines, and increased scrutiny from Customs and Border Protection. If undervaluation is detected, importers may face duty reassessments, financial penalties, or even seizure of goods. Repeated violations can result in higher bond requirements, loss of Import privileges, or legal action. Customs actively audits and reviews Import data, making even unintentional errors costly and disruptive. There are so many unknowns in this realm that fear is incredibly high, again so high that most growers, at least in mangoes have paused or stopped shipping more goods until it can be unraveled into greater clarity.

 High Risk & Cash Flow & Clarity

Importers are now facing an unprecedented level of financial risk and cash flow strain, with uncertainty at every turn. The 25% tariff is not just an added cost—it has fundamentally shifted the financial structure of produce importing, turning even the most stable importers into high-risk operators overnight. With the complexities of valuation, the potential for miscalculations, and the fear of penalties or shipment delays, many are left in limbo, hesitant to move product across the border. Adding to the urgency, part of the law states that even if the tariff is removed in the future, it is non-retroactive—an uncommon provision that makes each passing day critical. Regardless of what we think may happen, every shipment imported under these tariffs is locked into this financial burden permanently, making the risk and cash flow challenges very real in the present. Without clear guidance or predictable outcomes, the risks may simply be too great for many to continue business as usual.

I could dive into other financial burdens—invoice accounting, collections, and customer payment terms and even quality credits, returns, rejections etc—but all of these issues only compound what I see, hear, and feel is the greatest threat to us all: cash flow risk. The reality is that without the proper cash flow to sustain the massive financial burden of this 25% tariff, nothing moves. No shipments, no supply chain, no business. Every aspect of this tariff—valuation, upfront costs, penalties, and uncertainty—funnels back to one critical issue: who has the cash to keep going? And for many, the answer is increasingly causing great pause.