Tariffied about your margins?

Tariffs are taxes on imported goods by a government. They are used to protect domestic industries, generate revenue or influence trade relations. They can vary by product, country of origin and trade agreements in place.

For businesses, tariffs can have big impacts, positive and negative. On one hand they can protect local industries by making foreign competitor’s products more expensive, giving domestic businesses an edge. On the other hand, if your business relies on imported materials or products, tariffs can increase costs, you have to absorb the costs, raise prices or find alternative suppliers. Tariffs can also trigger trade disputes, which can lead to retaliation from other countries and affect exports if you sell internationally.

Understanding how tariffs affect your industry is key. Monitoring trade policies and exploring cost saving strategies like sourcing from tariff free regions or negotiating better supplier terms can help mitigate the impact.

The Harmonized Tariff Schedule (HTS) code is a standardized classification system to identify goods for import and export. Choosing the right HTS code is crucial to comply with customs regulations, avoid penalties and determine the right tariffs or duty rates.

Steps to Find the Right HTS Code:

• Know Your Product – Start by defining your product, materials, function and intended use.
• Use the Official HTS Database – Government websites or customs authorities provide searchable databases to classify goods: Harmonized Tariff Schedule.
• Check Trade Agreements – Specific trade deals can impact classifications and tariff rates.
• Consult Customs Officials or Experts – If unsure, seek guidance from customs brokers or trade compliance specialists to ensure accuracy.
• Review Similar Imports – Check how similar products are classified to get a reference.

Choosing the right HTS code prevents delays in customs clearance and keeps your business compliant with international trade regulations.

Tariff rates don’t change on a fixed schedule, they change based on various economic, political and strategic factors.

Changes can occur:

1. Through Trade Agreements – Many tariff changes are part of long-term trade agreements, such as free trade agreements (FTAs) or regional trade blocs. These often have scheduled tariff reductions over several years.
2. Due to Policy Shifts – Governments can adjust tariffs to protect domestic industries, respond to economic pressures or align with new political priorities. For example, a country may raise tariffs on certain imports to support local producers or reduce them to combat inflation.
3. In Response to Trade Disputes – Tariffs can change suddenly as part of retaliatory measures during trade disputes. A notable example is the US-China trade war, where both countries imposed and adjusted tariffs rapidly in response to each other’s actions.
4. As Part of Multilateral Negotiations – Organizations like the World Trade Organization (WTO) facilitate negotiations that can lead to tariff changes across multiple countries.
5. Via Emergency Measures – In times of crisis – such as pandemics, wars, or natural disasters – countries may temporarily change tariffs to ensure access to essential goods.

1. Adjust Pricing Strategies
   ‍Reassess pricing models to reflect increased costs or find cost savings elsewhere in the supply chain to maintain margins.
2. Diversify Supply Chains
   ‍Reduce reliance on a single country or supplier by sourcing from multiple regions. This spreads risk and can help avoid tariffs on specific countries.
3. Reclassify Products
   ‍Ensure accurate classification of goods under the Harmonized System (HS) codes. Misclassification can lead to higher tariffs, while correct classification can qualify goods for lower rates.
4. Leverage Trade Agreements
   ‍Take advantage of free trade agreements (FTAs) and preferential trade programs that may offer reduced or zero tariffs for certain goods.
5. Optimize Inventory Management
   ‍Stockpile goods before tariffs take effect or adjust inventory levels to reduce exposure to tariffed items.
6. Invest in Local Production
   ‍Consider reshoring or nearshoring manufacturing to reduce dependency on imports and avoid tariffs altogether.
7. Use Bonded Warehouses or Foreign Trade Zones (FTZs)
   ‍These allow businesses to defer or reduce tariff payments until goods enter the domestic market.
8. Talk to Suppliers
   ‍Work with suppliers to share the tariff burden or renegotiate terms to offset the cost.

The tariff calculator is a speculative tool based on regularly updated tariff data. It’s for a single HTS code. Contact us to get your tariff burden and pricing strategies for your entire product range.
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The calculator does not consider:

• 'De minimis', personal use, donations, or related exemptions
• Anti-dumping/countervailing rules
• TRQ/Quota based criteria
• US Content % of articles for tariff reductions
• Regional (within country) provisions
• Product valued at tiered rates
• Tariffs across multiple UOM inputs
• Mode of transport / vessel specific tariffs
• Steel / aluminum derivative / content-based tariffs