In the evening of January 26, 2025, the White House announced in a press release that the US and Colombian governments had reached an agreement on flights carrying individuals deported from the United States and paused efforts to impose tariffs and other measures announced by President Trump and President Petro. Our blog post about measures previously announced by the two countries on January 26 is available here.
Based on this agreement, the “emergency” tariffs and sanctions President Trump threatened will be held in reserve unless Colombia fails to honor this agreement, according to the White House. The visa sanctions implemented by the State Department and enhanced inspections from Customs and Border Protection will remain in effect until the first planeload of Colombian deportees is successfully returned. At the same time, the tariffs announced by President Petro will be held in reserve.
The following key points should be taken into account in light of yesterday’s events:
- Currency Hedging and Exchange Rate Risks
- A significant devaluation of the Colombian peso was projected as a result of these developments. This potential devaluation could have substantial impacts on international transactions and financial stability in Colombia.
- It is vital to review and possibly adjust currency hedging strategies to protect against adverse exchange rate movements. This includes evaluating current hedging instruments and considering additional measures if necessary.
- Companies should also examine their compensation account mechanisms to ensure they are adequately prepared to handle fluctuations in exchange rates, thereby mitigating potential financial risks.
- Origin Verification
- More than 90% of DIAN’s origin verification audits reveal non-compliance with Free Trade Agreement (“FTA”) requirements, resulting in sanctions for importers. (DIAN is the Spanish acronym for “National Tax and Customs Directorate,” the agency in charge of Colombian administration of customs duties and other taxes on foreign trade.) This high rate of non-compliance underscores the importance of thorough and ongoing verification processes.
- To avoid penalties, it is crucial for companies to collaborate closely with exporters and/or producers to ensure all FTA requirements are met. This includes maintaining accurate and comprehensive documentation and conducting regular internal audits.
- Given the likelihood of increased investigations in the coming months, proactive measures should be taken to address any potential compliance issues before they result in sanctions.
- Constant Review of Regulatory Changes
- It is essential to stay alert to any changes in regulations or official communications that may impact international transactions and trigger new international tensions. This includes monitoring announcements from both the Colombian and U.S. governments, as well as any relevant international bodies.
- Review Contracts, Including Dispute Resolution Mechanisms
- Based on President Trump’s decision, it is important to review existing contractual agreements and determine applicable mechanisms for invoking dispute resolution provisions in such contracts. This includes assessing current contracts to ensure they contain clear and effective dispute resolution clauses that can handle potential conflicts arising from the recent developments.
We are one of the few global customs teams with a presence in both the United States and Colombia, which allows us to offer a unique perspective and comprehensive assistance.
