How to navigate trade war volatility: tax incentives, tax treaties, transfer pricing and more

Alejandra Fuentes-Pieruccini
Consortium Legal, Guatemala City
afuentespieruccini@consortiumlegal.com

Report on a session at the 17th IBA/ABA US and Latin America Tax Practice Trends Conference in Miami

Thursday 19 June 2025

Session Co-Chairs
Gisele Belotto KPMG US, Miami
Ana Luiza Martins Tauil & Chequer, São Paulo

Speakers
Fabian Alonso Kroll, Miami
Daniel Dominguez Rosso Alba & Rougès, Buenos Aires
Luis Miguel Jiménez Von Wobeser & Sierra, Mexico City
Vera Kanas VK Law, São Paulo
Lionel Nobre Latin America Tax, Dell Technologies, Miami
Clara Inés Ramírez Duarte Godoy Hoyos, Bogotá

Introduction

From the basement to the C-Suite, the ongoing volatility of global trade wars has opened up significant opportunities for trade professionals to provide strategic guidance amid regulatory uncertainty. The panel offered a comprehensive overview of the trade measures currently in place across several key jurisdictions, including Brazil, Mexico, Argentina, the United States and Colombia.

The discussion focused on three critical factors that businesses must consider when making import-related decisions:

1. the harmonised tariff schedule;
2. country of origin; and
3. customs valuation.

Additionally, the panel emphasised key considerations for navigating trade regulations, highlighting the importance of a deep understanding of a company’s operations and the interplay between trade, tax and transfer pricing.

Panel discussion

General considerations for each country

Gisele Belotto highlighted that trade policies serve multiple purposes, such as revenue generation and geopolitical negotiation tools. She emphasised the inherent uncertainty in trade measures, particularly given that many are newly implemented and lack historical precedent. While such measures often take time to stabilise, companies must first deal with their rapid implementation and unpredictable reach. In the US, temporary tariffs have been introduced and adjusted swiftly, particularly on products like steel and aluminium. A key challenge lies in the lack of detailed guidance on the application of such tariffs, including unclear definitions (such as how to quantify the composition of certain product elements). This creates uncertainty but also opportunities for trade professionals.

Fabian Alonso noted that, in Colombia, customs valuation plays a critical role in transfer pricing analysis. However, in the US, the emphasis has been more directly on tariffs themselves. The linkage between transfer pricing and customs is an emerging issue with growing relevance.

Daniel Dominguez explained that Argentina views the US as a significant trading partner for industrial goods. Currently, a 50 per cent tariff is applied to Argentine steel exports to the US, though even higher rates are faced by other countries. From a tax perspective, Argentina imposes export duties, the reduction of which is under active debate.

Luis Miguel Jiménez commented that Mexico opted not to impose retaliatory tariffs against the US, as it was seen as a battle unlikely to be won. Instead, the Mexican government has actively sought to reduce tariffs and maintain favourable trade conditions. It is also important to note that many Mexican corporations are subsidiaries of US companies, which creates pressure to keep tariffs low.

Vera Kanas emphasised that Brazil traditionally imports more from the US than it exports. In 2022, for instance, Brazil imported goods worth US$40.6bn and exported goods worth US$40.3bn. While Brazil is often associated with commodity exports, its main exports to the US now include crude oil and steel. The country is subject to 10 per cent tariffs in general and 50 per cent on specific products like steel and aluminium. Nonetheless, Brazil finds itself in a relatively favourable position compared to other jurisdictions.

Lionel Nobre commented on the constantly changing nature of tariff regulations. He stressed that, from a corporate perspective, it is essential to involve trade experts in strategic decision-making at the executive level, given the complexity and volatility of the environment.

Clara Ramírez noted that in Colombia, transfer pricing and tax advisory services are increasingly intertwined. At the start of the year, Colombia anticipated the imposition of very high tariffs, but ultimately settled on a 10 per cent rate – suggesting a constructive relationship with the US. The country has also seen a rise in import and export activity, contributing to a favourable economic climate. Efforts are ongoing to improve regulatory efficiency and reduce compliance costs. Colombia is currently trying to change regulations, reduce the costs and improve the efficiency of the process.

How to navigate trade regulations?

Belotto stressed the importance of mastering the foundational principles of customs regulations in order to design effective mitigation strategies. Every product that crosses a border must be accompanied by an import declaration. Three globally significant elements underpin customs procedures:

1. harmonised tariff schedule (HTS): this system classifies products under standardised codes recognised by all World Trade Organization (WTO) members. Accurate classification is critical, as it determines whether a product is subject to specific tariffs;
2. country of origin: often misunderstood, the country of origin is not necessarily the country of export. Each jurisdiction applies different rules for determining origin, making it vital to understand local regulations; and
3. customs value: this is not always the same as the commercial invoice value. Customs authorities may apply various valuation methods, especially in related-party transactions, to establish the taxable base.

Martins added that companies are increasingly shifting their supply chains in response to geopolitical and economic pressures. However, such moves come with complex regulatory implications that must be carefully evaluated.

Alonso highlighted the competing interests that arise in related-party transactions. On one hand, customs authorities seek to increase the declared value to collect more duties; on the other, tax authorities may challenge high import prices as a means of reducing taxable income. In the US, customs valuation is not traditionally used for transfer pricing analysis, and even the arm’s length principle is applied differently in each context. Consequently, changes in supply chains can disrupt pricing models and lead to regulatory challenges.

Ramírez explained that, although many Latin American countries have merged tax and customs into a single authority, in Colombia, these remain distinct entities – even for audit purposes. Customs seeks to increase declared values, while tax authorities aim to reduce them. Colombia primarily uses the transactional net margin method (TNMM), which relies on profitability benchmarks that can be significantly affected by tariffs. When tariffs distort profits, tax authorities may challenge the results. Compounding the problem is the lag in updating comparable company data, making it harder to defend intercompany pricing. These challenges call for robust documentation and a proactive approach to compliance.

Dominguez pointed out that the same problem arises in Argentina, where a transfer pricing adjustment can be decided in two different ways by the courts, even if it is the same situation. in addition, customs authorities may use the transfer pricing adjustment for customs purposes. The Supreme Court in Argentina resolved a case in which it was decided that the official price should not be used for transfer pricing purposes.

Conclusion and final remarks

The panel discussion underscored the complex and often inconsistent nature of trade regulations across jurisdictions. With frequent changes, varying interpretations and a lack of harmonisation between tax and customs authorities, companies face significant compliance challenges. These issues are particularly acute in related-party transactions, where the same valuation may be scrutinised in conflicting ways by different authorities.

At the same time, the current environment presents an opportunity for trade professionals to play a strategic role in corporate decision-making. Accurate tariff classification, correct determination of origin and sound customs valuation are essential to minimising risk and optimising cost structures.

Supply chain adjustments, driven by shifts in global trade dynamics, add another layer of complexity. To remain competitive, companies must invest in specialised expertise and maintain flexible, well-documented compliance strategies. Cross-functional collaboration between tax, legal, customs and finance teams is no longer optional – it is essential.

Ultimately, trade professionals are not only helping businesses comply with regulations but also shaping corporate strategy in a world where trade policy has become a central economic force.