[Video] Navigating The Post-IEEPA Regulatory Landscape

Hello, everyone. Welcome to Talking Logistics, where we have conversations with thought leaders and newsmakers in the supply chain logistics industry. It's my great pleasure to welcome to today's program, Glenn Palanaki, who is VP of Product Management at Descartes. And today, we're going to talk about navigating the post-IEPA regulatory landscape.

So as many of you probably already know, on February 20th, the Supreme Court invalidated the tariffs imposed under the International Emergency Economics Powers Act, or IEPA. And not surprisingly, this introduced a lot of uncertainty yet again for global trade. And as we all know, tariffs directly influence sourcing decisions, pricing, and broader supply chain strategy. So any shift in tariff authority or refund eligibility carries significant implications for importers, customs brokers, and logistics service providers.

Again, not surprisingly, a lot of questions at the moment about refunds, audit and enforcement risks, duty planning, and what trade measures might be down the road. So to help us unpack these issues and what companies should be thinking about moving forward, I'm excited to welcome Glenn back to the program to share his insights and advice. So Glenn, great to see you again. Great to see you too.

Happy to be here. So Glenn, I think every time that you come in the program, I always say the same thing, which is there's never a dull day in global trade management, is there? No, not at all. So of course, you know, we began the year, everyone was waiting for the Supreme Court decision.

It came. I think a lot of people were kind of expecting it based on some, you know, buzz that was going on and commentary going on. But now we're kind of in this post-IEPA phase. And one of the big things is about refunds of the tariffs that were previously paid under IEPA.

And it's been estimated that refunds could reach upwards of $160 billion or more. So I guess my first question is, how realistic is it that companies will receive refunds and what factors will determine eligibility? Yeah, the refunds are, that's a very real thing. But what we're seeing is it's really an uneven recovery curve.

And there's a few things that we can unpack, I think, as to the reasons why. But what we're seeing is the process is working well for companies realistically that already had, I'd call it the infrastructure around their process, whether that was they were a self filer in doing their own global trade management or they relied on somebody like a customs worker, a freight forwarder to help them through that process. They already had things like ACE accounts. So already the connector digitally within customs.

and we're seeing, I call it that infrastructure being tested. And this was a great example of those that were ready, were able to have velocity, I would say it, within this process. So who would be eligible, I think is a good thing to have in mind. It's of course somebody who paid, but somebody who not only paid, but then has, call it the backup information, You know, to be able to say, well, I'm asking for a refund, but I have my processes and I have my documentation already set in the case where they want to take a deeper look.

So we're in that area where, you know, for a while, as you mentioned, it was like, is this going to happen? Meaning the legality of the situation? this is more about who was prepared and who's able to have velocity in submitting refund requests and then all the processes that that will happen after that yeah you know that's a great point because i mean i think anytime we talk about um you know any potential risks or development in supply chain management um you know we always talk about hey you know you got to prepare now for if for any any of these situations right and and to your point i mean those companies that have really prepared from day one right from the moment they started paying these tariffs to have all the data available to have that audit trail if you will to have that link to you know how much they paid for what shipments what was in those shipments etc etc etc you know like anything else like you know i always i the way i think about it is like when you file your taxes, right?

If you've been like throughout the year, you know, putting away, you know, the receipts that you need, the documentation you need and everything else, come tax filing time, it becomes a relatively painless process because you've got all the information there, all the documentation there to then just fill in the blanks and submit it. Versus like if you've done nothing, then you have to go through, you know, piles of receipts and piles of emails and letters that you, you know, statements that you've ever opened from your bank or your, you know, and then it just becomes a very complicated thing.

I think this is what I'm seeing as well, you know, and to your point, those companies that have been kind of planning for this eventuality all along are, you know, facing a much smoother path than those that are now saying, oh, okay, now what do we need to do? And right now, we're trying to figure it out, which kind of brings me to my next question. I mean, what processes or mechanisms are emerging for companies pursuing IEPA tariff refunds and how complex or resources intensive is the process likely to be?

Yeah great question So there was a bit of a question mark between the SCOTUS ruling and then well how does this actually happen A lot of chatter in the industry whether that was LinkedIn or webinars from folks like ourselves folks like yourself you know theorizing So we are way past that now where CBP did announce and then implement a new portal called the CAPE portal to facilitate that submission. So that's really dealing with, I'd call it the front end submission of that. So those that were prepared as we've been discussing, something as, I don't want to say simple, but I do want to lean towards, they don't want an unbelievably arduous process either to put in roadblocks, but it is going into the portal, submitting via a data file.

So really quickly, you'd almost immediately be able to get back, okay, an initial ruling is too strong, an initial validation of the data that you've been submitting. But really, that's when the complexity starts in terms of like, this isn't a, I have my file, I upload and I ignore. Really, it's in that process of if there is any validation errors, you being able to go back to hopefully some really clean books and records, as you described, to be able to manage that reconciliation, or whether it's coordinating with a service provider, a logistic service provider like a broker to make sure that the data you are submitting is valid and correct.

So yeah, we're seeing, if I can say, we're seeing different segments of the market, I would say struggle more. Definitely those that are, you know, in your analogy, I thought of the shoebox with the receipts versus the folks with the Excel files, maybe with everything categorized or using their favorite accounting software that loads in bank statements. So pulling on the thread of your analogy, we're seeing those that have the shoebox of receipts versus those that have the mechanisms digitally to pull this information.

So wouldn't want to say that it's a submit the CSV file and then just watch your bank account. there's preparation before that and probably preparation after a CBP gives some of that immediate feedback on the data that you've submitted. And I would think that particularly for, you know, a lot of companies, you know, rely on customs brokers, free forwarders, you know, for their day-to-day operations. And they probably more than likely have, you know, the data, the documentation that you need for that.

So I would assume that for many of these companies, it really requires some, you know, strong collaboration, communication, partnership with these companies, these service providers, these partners you work with to really not only put that information together up front, but then as these, as the process rolls along and exceptions may come or requests for additional information might, might come to, you know, have them involved in that process as well. You know, one of the questions that I hear a lot, and I think you hear a lot as well, when we had our previous conversation is preparing for this episode, is are importers taking on additional audit enforcement or regulatory risk by filing IEPA refund claims?

Again, it comes to a personal level too. Sometimes you see something in your personal return, you say, hey, I forgot to include this, so maybe I should refile to get a refund. But then there's always a concern. It's like, well, if I have them kind of relook at this year's return, are they going to start looking at previous year's returns and open up in the orders box?

So I think that's kind of the equivalent for me in that respect. Yeah, I'll answer that by saying the sentiment isn't necessarily from CBP themselves, but I would say the customers we work with, but that is absolutely a real concern, saying that they recognize that doing this submission really increases the visibility, uh, to, uh, to, even though that's historical customs work, uh, but, uh, maybe some classifications that, uh, that somebody took some liberty on, whatever it might be, um, being able to back up not only that original submission, you know, you still have the due diligence to be able to do that for, uh, for the refund claim as well.

So whenever we're talking about it, uh, your sentiment around, you know, how we consider these things on a personal level applies in business as well. So we are hearing that from customers. Maybe if I can say on the flip side of that, if some are saying, wow, I really don't want to open said Pandora's box, I'm going to sit this one out. We're also hearing that because you started off this with that, this is a large number we're talking about money-wise.

Are we not claiming back something that's rightfully ours? you know, if you're sitting as an importer. So these are things you need to balance. So being on either side of that spectrum, you know, positively or negatively in terms of getting back a refund should cause you to question and ask yourself these real realities of if there's some money being left on the table, do I really want to do it?

And the answer is probably not. but really being prepared and relying on a service provider. If you're using them, this is why they're in business. We often say that, you know, they're in to service you.

So asking the question to them is something that I would go on a limb and say all service providers are ready to field that question for you. They're experts in the industry and really do want to help. Yeah, absolutely. That's a great point.

I mean that really at the end of the day that what you paying them for and you relying on them for for their knowledge and expertise and guidance in this area Yeah and I think your point about leaving money on the table I think that in this environment that we in right now you know obviously because of the situation in the Middle East with rising fuel prices with you know inflation still you know problematic I think a few CEOs or CFOs are going to be willing to leave money on the table if that number is of any significance.

But again, to your point, I mean, I think if you've been diligent, you know, all along in your global trade management processes overall, you know, you should feel confident in, you know, moving forward. You know, related question, I mean, what are some of the legal and financial trade-offs for companies that decide not to pursue IEPA tariff-free funds? Yeah, we're hearing, you know, a spectrum of answers. Some are saying, I do want to avoid the scrutiny we just discussed.

Others are saying, well, this is an administrative burden that I'm just not ready to take on. So whatever it might be, that relationship with your service provider or the way that you've orchestrated your logistics team internally, this is really that stress that we try to always prepare for, all of those question marks. So whatever you end up on that spectrum, I think this is a good time if you're a logistics leader or if you're in your finance group partnering with logistics as a business unit.

I think this is an area for you to look at, well, how were we prepared? Maybe even a postmortem to help, you know, the adage. Somebody just told me that and it just wasn't unlocked for me, Adrian. They said, you know, when's the best time to plant the tree 20 years ago?

And the second best is today. You know, so taking a look even organizationally how you're structured. But we are hearing this happen. You know, we mentioned the CEO level.

This is board level visibility too. You know, these are the things that we're hearing. So even though there might not be a desire for the short term or near term scrutiny, or whether it's, hey, this is going to be tough administratively, you know, we need to assign people to it. So knowing that this is at a board level consideration, I think should give the guidance to, I think, the logistics and the finance teams of how they need to be looking at it.

So it's more about the strategic balancing of resources, maybe knowing that this, at least this scenario is going to be short term, even though there's probably some longer term impacts of what we're reading as tea leaves, as it were. So partner with the right teams, with the right service provider. Don't leave money on the table. I feel like it's all of the above.

And that just ends up being logistics. Yeah, yeah, for sure. So let's broaden the conversation a little bit. I mean, ultimately, how will this ruling affect duty planning, pricing assumptions, and broader supply chain decision-making going forward?

Yeah, we're seeing that back to the tree analogy that those that had strong roots in this area are excelling. There's a definite correlation. So we're seeing shippers that had tariff policy tools, whether that might be digging into data of what they're doing, what their competitors are doing, things like alternate sourcing and so on. Those that invested in tools previously were seeing really shine in this period.

So, you know, not just saying, hey, this is logistics is an operational, you know, like we ship stuff, we, you know, track it, we see where the trucks are on the map and, you know, we're fine. really that expanding into alternate supply chain sourcing, those types of areas, overlaid with, well, what are, as we see today, customs policies, whether for that country of origin, whatever it might be for those goods, we're seeing those that are able to model alternates. Well, what happens if that goes from a duty situation of some percentage to, what if it was 2x, 3x, 4x?

How would that change the way we do business? We're seeing those with, I'll call it, probably the best word is kind of this digital trade infrastructure to be able to do different modeling. We're seeing them really, really excel in this type of environment. Not taking away that they still have operational challenges like anybody else, but they're able to at least theorize into the future and give some resiliency in some decisions to that.

Yeah, you know, if there's one positive, I would say, of this whole very dynamic, you know, you can say frustrating global trade environment over the past, you know, year plus, year and a half now, you know, is that it certainly elevated the role of global trade management within the organization, right? It has become much more strategic. You are talking about it in the boardroom, like we said, you know, before. And I think the ability to ask these what-if questions from a pricing standpoint, from a sourcing standpoint, all sorts of different supply chain logistics considerations is becoming critically important.

And obviously, this is where technology comes into play. This is where having the right data and the right context comes into play to be able to do that analysis. You know the funny thing is is that you know the environment is changing so quickly that you know you have to do this analysis on an ongoing basis And maybe what you came out with last week is no longer valid because something has completely changed. I heard a statistic, there's no way of me validating it, but it was from a trusted source at a conference that in 2025, the number was 4.

7. He said, you know what 4.7 is? And he said 4.

7 was the average number of days in between tariff changes in 2025. So every 4.7 days, there was a change related to tariffs in 2025, beginning with, you know, that, I guess by this point, infamous Liberation Day in April of 2025 through the end of the year. which I think for people, freight forwarders, brokers, folks like you that have to, you know, configure the technology to be able to support them and so forth.

That's not surprising because you lived, you know, through that. But I think that puts it into perspective in terms of how ongoing all of this change has been and kind of helps explain why so much, you know, uncertainty and how challenging it is to really take a longer term, bigger picture approach, because it's, nothing stable. Yeah, we had to look at ourselves and say, we need to be, we need to have more velocity in this area. You know, long gone were the days where you'd have a couple months, you know, a CSMS comes out, you have time to prepare.

This was quite literally, so the 4.7, I would agree with in the sense of we would get it the end of a work week and it's by 12.01, let's call it Monday morning. This has to be in effect.

So for us as technology people, we had to refactor some systems that couldn't adapt as quickly to that. And where we stand today, we're quite proud of that turnaround as a service provider. Why? Because a lot of logistics service providers are looking at folks like technology providers and saying, you need to be ready on 1201 of the day that this is ready.

And I think it's, I'm quite proud of how technology has responded in this area. Yeah, no, absolutely. I mean, and I think obviously, you know, we talk about things like AI and some of the more modern technology platforms and capabilities. Thank God, right?

Thank God that these are there because that has helped in kind of ramping up that velocity and that responsiveness. Well, Glenn, maybe as a way to wrap up, kind of looking ahead a little bit, I mean, what if anything might replace IEPA tariffs in the short to medium term? And what action should companies, importers, brokers, supply chain leaders be taking now? As we talked about that, it's time to prepare now, right?

Plant that tree now, right? Don't wait for the future. What should they do now to prepare for continued trade and regulatory uncertainty? Yeah, I think our position is, if anybody says they know, they probably don't.

know. So I will not say that. But, you know, we have definitely seen some signaling like, okay, AIPA is gone. I think some of the early indications are Section 232 for some new tariff.

So I think if I step back and just digest the question, probably the most appropriate way of answering is that whatever the administration feels is at their disposal, they will do. So this is really becoming a, it's clear that this is also a political lever, and this isn't a political podcast. So I'll leave it at that. But we're seeing whatever is at their disposal, they will want to use as the levers, as it were.

So I think if we look at it through that lens, again, not a political commentary, but we look at it through that lens, volatility is shown that it's quite permanent, right? This isn't just a short-term thing. So whoever is ready with a repeatable solution, and that doesn't, I'm not just talking about the shipper, I'm not just talking about the ocean carrier or the airline, I'm talking about all of us in supply chain because we all have our part. So, you know, we just, we talked two minutes ago about how we as technology provider had to change.

We needed to get better and faster at implementing other new solutions or new tariffs. So we needed to be operationally ready for whatever mechanism was coming. It wasn't just thinking, okay, you know, IEPA is the last thing. It's probably far from it if we're honest with ourselves.

So whatever is available, realistically will be reused. It's how we can respond is the way that we've internalized our, I'll call it singular spoke within a much complex wheel, we want to make sure that we're serving our subscribers well by being operationally ready. Yeah, great. I mean, I think you're right.

I mean, I think, you know, we've all learned that sometimes you got to expect the unexpected, not only in supply chain as a whole, but certainly in this whole area of global trade management, certainly over the past, you know, 18 months. Well, Glenn, as always, very insightful. You provided some great insights and words of advice. I think it was about a year since we last spoke.

Hopefully it won't be another year until we catch up again. But certainly there's some major development that happens between now and the end of 2026. Be happy to have you back in the program to help us and our audience navigate through it. So again, thank you for joining us.

Always a pleasure. I want to thank those of you that joined us today. If you're watching this episode on demand, either at the Descartes website or on Talking Logistics, and you've got a question or comment for Glenn, you can post it there, and I'm sure he'll be more than happy to respond via that medium. Again, thank you for joining us and look forward to seeing you in a future episode of Talking Logistics.

Have a great day. Bye-bye.