The United States must treat all World Trade Organization (WTO) members consistently and follow the tariff guidelines set by the WTO when conducting business with a another member country, but are not regulated to do so for non-WTO members. Looking at different countries you can import your product from could possibly lead you to choose one manufacturer over another, since non-WTO members tend to be taxed at a higher rate. There are also other regulations or agreements that may be a factor in tariff pricing. For example, the US is involved in the North American Free Trade Agreement (NAFTA) with Mexico and Canada. This significantly reduces the price of tariffs between the three countries. The United States currently has 17 of these free trade agreements in place.

The US also issues Harmonized Tariff Schedules. These schedules contain a list of goods made overseas that are imported to the United States. They also describe the tariff and classification for each product that is imported. The Harmonized Tariff Schedule is a simple tool that can produce valuable information quickly and should be utilized to compare tax percentages and make your company more informed and more cost efficient.

It is crucial for any company doing business with a foreign supplier to be aware of the regulations and tariffs that exist as a component of pricing. As described above, there are different tariffs. Knowing how your product is being taxed, from production to sale, can have an impact on your external pricing strategies. Each good manufactured is taxed differently based on its qualities and characteristics. This includes, but is not limited to, the type of product, weight, size, price and packaging. For example, a company that imports lead crystal stemware glasses from most WTO countries pays a 7.3% tariff if the glasses are in category 7013.22.30 (valued over $3 but not over $5 each), whereas lead crystal stemware glasses in category 7013.22.50 (valued over $5 each) are charged a 3% tariff. Assuming the company imports 100,000 glasses annually, it will pay a $32,850 tariff on glasses valued at $4.50 each, but only $15,000 on glasses valued at $5.00. So, the company pockets a $17,850 reduction in tariff payments to the government and a 10% increase in gross profit from the price increase.

Altering your product sourcing slightly may be very beneficial and could impact your corporation's bottom line.

By Alan Lund 

What are disruptive technologies, you ask? The term was first used by Harvard Business School professor Clayton M. Christensen to describe a new technology that unexpectedly displaces an established technology. In his book, The Innovator's Dilemma , Christensen separates new technology into two categories: sustaining and disruptive. Sustaining technologies are based on incremental improvements to an established technology, whereas, disruptive technologies can be defined as "simple, convenient-to-use innovations that initially are used by only unsophisticated customers at the low end of markets". Christensen has stated that large companies tend not to pay attention to these disruptive technologies because they don't satisfy the demands of high-end users - at least, not at first.

•  Mobile Internet: In the last four years, 1.3 billion people have purchased a smartphone. It is estimated that there are 4.3 billion people remaining to be connected to the internet. A high percentage will use mobile internet technologies.
• Automation of Knowledge Work: A Knowledge Worker is someone who works at any of the tasks of planning, acquiring, searching, analyzing, organizing, storing, programming, distributing, marketing, or otherwise contributing to the transformation and commerce of information. There are 230+ million Knowledge Workers. Automation of their work is rapidly gaining.  
• The Internet of things: There has been a 300% increase in connecting machine-to-machine devices over the past five years.It's been estimated that 1 trillion "Things" could potentially be connected to the internet across all industries.
• Cloud technology: MGI's report referenced that the cost of owning a server is 3x the cost of renting in the cloud and that there are 2 billion global users of cloud-based services. 
• Advanced robotics: There has been a 170% growth in sales of industrial robotics from 2009 through 2011. 
• Autonomous and near-autonomous vehicles: An Autonomous Vehicle is a driverless or self-driving car capable of fulfilling the human transportation capabilities of a traditional car. At the 2014 Consumer Electronics Show, BMW and Audi unveiled their latest driverless car technology and conducted demonstration drives. Ford has partnered with MIT and Stanford to research automated driving. 
• 3D printing: Three-dimensional printing or the current buzz term "additive manufacturing" is the process of making three-dimensional solid objects of virtually any shape from a digital model. While 3D Printing has been around since the early 1980's, it has recently been commercialized to the point where economically priced 3D printers are readily available from a wide-variety of sources. Don't think just small parts - the Navy just issued a contract to research 3D printing of concrete buildings!

Where do we go from here? It appears that disruptive technologies have the potential to be economically disruptive. Every business faces the challenges associated with competitiveness and maintaining market share. Every business needs to innovative and to explore how their products and/or services will need to change over time. Businesses need to think through how to utilize disruptive technologies to their advantage.

Andy  Molokac is a new Senior Manager in the Resources Solutions Group. Prior to joining the firm, he was the National Practice Director for Tax Consulting Services at a consulting firm. Andy comes to us with over 15 years of public accounting experience. He has worked primarily with manufacturing clients ranging from middle market companies to large multinational corporations. 

The Resource Solutions Group provides clients with loan staff solutions and direct hire services. Our team has extensive experience with a wide range of clients from middle market, close held organizations to large fortune 500 companies. We focus on resource needs within tax, accounting/finance and internal audit fields. To learn more please visit our website.

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2/20 Seventh Annual D.M.G.C. Texas Hold Em' Tournament

Thursday, February 20, 2014

Registration at 6:00 PM. Game starts promptly at 7:00 PM.

Star Lanes at Emagine Royal Oak

200 North Main Street

Royal Oak, MI 48067

$100 buy-in and $50 re-buy. VIP prizes for finalists. Chips have no cash value. Must be 18 to play and 21 to consume alcohol.

Contact Shannon Gnesda at sgnesda@uhy-us.com or 586 843 2637 to save your spot! Cash, check or credit card contributions accepted in advance or at the door. Sponsorship opportunities available.

UHY Cares in cooperation with the D.M.G.C. and the McCarty family hope to see you there!

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Experienced Recruiting Update

UHY wishes to connect with top talent in our Michigan market. We are always on the lookout for professionals with experience in tax, audit, attest, finance, fraud and forensics, litigation support and business advisory. Be sure to visit our careers page for the most up-to-date career listings or contact Amanda Sheets at asheets@uhy-us.com to learn how we can help you take charge of your career path now. Current Michigan openings include:

Sterling Heights

Seasonal tax consultant (five years public accounting experience)

Tax manager

Senior audit accountant

Sterling Heights or Farmington Hills

Forensic accountant

Director of litigation

Senior tax and audit accountants (must have CPA license)

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