HSBC has introduced TradePay for Import Duties, a digital trade finance solution tailored for US importers grappling with the financial implications of recent tariff increases imposed by US President Donald Trump.

This tool complements letter of credit (L/C) and other trade services by enabling businesses to settle import duties directly through HSBC, either via pre-agreed credit terms with customs brokers or through Automated Clearing House (ACH) payments, thereby enhancing working capital visibility and control .

What it is

Launched in response to Trump's rollercoaster of tariff increases and reductions, HSBC TradePay allows US clients to access immediate financing to cover import duties and settle duty payments directly through HSBC.

This streamlines transaction processing, reduces administrative burdens and improves cash flow management by aligning duty payments with working capital cycles.

Impact on L/Cs

While TradePay does not replace traditional L/Cs, it offers a complementary solution, including simplified duty payments. By handling import duties directly, TradePay reduces the need for separate L/C arrangements specifically for duty payments.

The digital nature of TradePay accelerates the payment process, which can be particularly beneficial when used alongside L/Cs for goods procurement. The solution also provides an alternative financing route for duties, allowing L/Cs to be reserved for other aspects of the trade transaction.

In essence, TradePay enhances the overall trade finance ecosystem by offering a targeted solution for duty payments, thereby allowing businesses to allocate their L/C facilities more strategically.

Why it matters

For US importers, especially small and medium-sized enterprises, the recent tariff hikes have increased upfront costs, straining cash flows.

HSBC's TradePay addresses this challenge by providing a streamlined, credit-backed method to manage import duties, thereby reducing financial strain during customs clearance

The solution allows better allocation of financial resources, particularly when used in conjunction with traditional trade finance instruments like L/Cs.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.