Background
U.S. trade policy has entered a period of rapid evolution. What began as a targeted correction focused on China has expanded into a much broader reset of how the United States approaches global commerce. Tariffs have been layered onto goods from numerous countries for a range of economic and geopolitical reasons, and more changes may come in the near future.
For companies that depend on international sourcing, the result is higher costs, greater compliance challenges, and the constant possibility of additional duties appearing without much warning. Businesses that succeed in this environment take a proactive approach instead of waiting to react.
Krenz & Hannan supports organizations across industries in evaluating current exposure, building compliance programs, and creating strategies that reduce the impact of elevated tariffs. With thoughtful planning, companies can minimize costs, preserve margins, and stay competitive even when trade rules shift.
Below is a three-part planning framework to help importers strengthen their position. If your company would like support with any of these approaches, our team is here to assist.
Avoid
Classification planning.
Tariffs apply based on how a product is classified at the time it arrives in the United States. That means strategic classification practices can lead to meaningful savings. In some situations, individual components or subassemblies may fall under lower duty classifications than a fully finished product. By importing parts separately or altering assembly points, companies may legally land in a more favorable tariff category.
Products that qualify under certain sections of Chapter 98 of the Harmonized Tariff Schedule may also receive reduced or zero duty rates. Some provisions support goods used in specific production processes or include items that incorporate domestic content previously imported into the United States. These sections deserve renewed attention as tariffs expand under authorities such as the International Emergency Economic Powers Act or Section 232.
Country of origin planning.
If classification cannot reasonably be adjusted, companies may consider how origin rules apply. Country of origin is based on substantial transformation, meaning goods can be considered to originate where a meaningful manufacturing or assembly process occurs.
Inserting additional manufacturing steps in regions not subject to punitive duty rates may change the product’s origin and reduce tariff exposure. This approach requires close analysis and clear documentation, since thresholds for substantial transformation vary by product and industry.
Leveraging free trade agreements.
The United States currently supports numerous trade agreements with partners across North America, South America, and the Asia-Pacific region. Qualifying goods moving between countries covered by these agreements may enter duty-free or receive additional benefits.
For example, agreements such as the U.S.-Mexico-Canada Agreement (USMCA) reduce barriers to trade and eliminate duties on many items that meet eligibility criteria. Free trade agreements can also lower processing fees and simplify compliance processes.
Monitoring temporary exclusions.
Some goods remain eligible for tariff exclusions under existing trade actions. Staying informed about active exclusion lists can help importers reduce duty obligations on specific product lines.
Mitigate
First sale valuation.
A long-standing valuation method can help control costs even when tariffs apply. First sale valuation allows importers, in qualifying supply chains, to base the declared customs value on the price paid by an intermediary trading company rather than the final selling price paid by the importer.
The requirements for first sale pricing are strict and documentation-heavy, but once eligibility is confirmed, the approach can lower the dutiable value of imported goods. Many companies use first sale arrangements not only to offset special tariffs but also as a permanent strategy to reduce overall duty costs.
Valuation adjustments.
Importers should take a detailed look at which charges must be included in the dutiable value and which may be excluded. Expenses such as buying commissions or certain inspection-related costs might be removed from the customs value depending on the circumstances.
Companies dealing with related-party transactions should also coordinate customs valuation with transfer pricing rules. Proper planning may reduce declared value without violating regulatory requirements.
Trade remedy reviews and challenges.
Antidumping and countervailing duty orders affect hundreds of products from dozens of countries. Importers are not locked into the original rates applied. Periodic administrative reviews, new shipper reviews, and scope requests offer pathways to reduce the duty burden or remove specific goods from coverage altogether.
Companies that track and participate in these review processes may secure meaningful reductions when circumstances support a new calculation.
Strategic use of duty deferral programs.
Foreign-trade zones, bonded warehouses, and temporary import bonds provide options to postpone or avoid duties on goods that are ultimately reexported or not intended for U.S. consumption. Businesses can use these programs to store, package, or lightly modify products before final disposition. If goods never enter the domestic market, duties may be avoided entirely.
Recover
Potential refunds and legal challenges.
Legal disputes continue around certain classes of tariffs, and outcomes may open the door to recovery of paid duties. Companies should ensure they meet filing deadlines and preserve their rights in case favorable outcomes occur. Timely protests and proper documentation can position importers to reclaim funds if policies change.
Transfer pricing impacts.
Adjustments to related-party pricing may require corrections to previously declared customs values. When downward adjustments occur, importers may be able to seek refunds for excess duties that were initially paid. Because these changes require upfront planning and formal policy alignment, companies should evaluate whether current procedures support recovery opportunities.
Post-entry compliance tools.
Customs provides several mechanisms for amending or correcting entries. Post-summary corrections can be submitted before liquidation, while protests apply after liquidation occurs. When importers identify overpayments or classification errors, these vehicles allow them to secure refunds without reopening the entire entry process.
Conclusion
Tariff challenges are here to stay, but they do not have to dictate the financial outlook for global companies. With proper planning, strategic sourcing, thoughtful valuation, and diligent compliance, importers can reduce tariff risk while strengthening supply chain resilience.
Krenz & Hannan stands ready to help companies explore each of these approaches and build tailored solutions that fit their supply chain profile. Contact us today at 414-570-3550 for more information.