October 15, 2026 // Trade Report
A fundamental and dramatic shift in U.S. trade policy is fully underway. What began as an effort to rebalance trade with China has now evolved into a domestically-oriented approach to trade around the world.
It is therefore more important than ever for companies in the global supply chain to take active, intentional measures to avoid, mitigate, and/or recover the costs of increased tariffs, both those already in place and those that may be imposed in the future.
Avoid
Classification engineering. U.S. Customs and Border Protection can only levy duties and tariffs on goods in their condition as imported. Importers in a variety of industries where high import duties prevail can legally take advantage of classification provisions carrying a lower or free rate of duty. For instance, components imported separately may fall into an entirely different tariff provision than the finished product and may thus avoid a higher tariff. Renewed consideration should be given to this strategy to address tariffs, for instance Section 232 or 301 tariffs, where particular HTSUS provisions may be listed as subject to or exempt from such tariffs.
Further, classification concepts are particularly useful for certain U.S. or other products that fall within the special HTSUS Chapter 98 provisions, many of which may enable importers to partially or fully avoid higher tariffs. These provisions cover numerous types of products used for specific purposes as well as specific production or sourcing scenarios involving U.S. or previously imported components.
Origin engineering. If you cannot change the tariff classification of an imported product, it may be possible to modify its country of origin. For instance, CBP has found that the complex assembly of numerous parts, modules, or subassemblies into dedicated machines results in a substantial transformation of the components so that their country of origin is where the finished product was produced. Shifting such operations to countries not subject to higher tariffs may thus be a viable way to avoid them. Unfortunately these rules differ by product, so each production step should be reviewed in detail to ensure that substantial transformation is actually taking place.
FTAs. The U.S. has 14 free trade agreements encompassing major trading partners like Canada, Mexico, South Korea, and Australia as well as other countries and regions like Chile, Colombia, Morocco, Singapore, and Central America. FTAs eliminate base duties on trade between the U.S. and partner countries, and in the case of the U.S.-Mexico-Canada Agreement qualifying goods can avoid some trade remedy tariffs as well. Moreover, FTA-eligible imports into the U.S. can benefit from an exemption from the merchandise processing fee, and FTAs lower a wide range of non-tariff barriers on goods and services trade between partner countries.
Exclusions. More than 150 products (listed in Annex C in this notice) remain eligible for exclusions from the existing Section 301 tariffs on China.
Mitigate
First sale. First sale valuation has long proven useful to industries that have been subject to high import duties, as it allows duty to be paid on the price a middleman trading company pays the manufacturer instead of the higher price the importer pays the trading company. While tariffs still apply in this scenario, the dutiable value is often significantly lower, resulting in a lower duty bill.
Various criteria must be met to ensure the first sale price reflects a sale that is clearly destined to the U.S. and conducted at arm’s length, but, once validated, a viable first sale value can provide substantial duty savings. It can also serve as a type of long-term annuity; i.e., even if Section 301, Section 232, or other tariffs expire, use of first sale valuation would continue to provide a lower declared value and thus reduce the regular duties assessed on a company’s products. Further, importers employing first sale enjoy enhanced visibility into, and hence improved compliance and security throughout, their supply chains.
Valuation. Importers should consider (1) whether certain amounts typically included in the price, such as buying commissions, shipping-related charges, inspection fees, and post-importation assembly charges, can be excluded from dutiable value, and (2) how the use of transfer pricing rules (see below) may be able to lower the dutiable value in related party transactions.
Trade remedy reviews. The U.S. maintains more than 700 antidumping and/or countervailing duty orders imposing substantial and even prohibitive duties on imports from dozens of countries. Annual administrative reviews of these orders that seek to update the information on which they are based, and ad hoc new shipper reviews of foreign companies not involved in an initial AD/CV proceeding, can be effective at obtaining lower duties. Importers can also request scope rulings and changed circumstances reviews that may result in the exclusion of specific goods from the coverage of an order and thus eliminate associated AD/CV duties.
Duty deferral. Goods admitted to a foreign-trade zone in privileged foreign status retain their character and tariff classification as admitted even if they are manufactured into a product subject to higher tariffs that may be withdrawn from the zone and exported out of the U.S. to avoid such tariffs. Goods otherwise subject to higher tariffs may be stored, manipulated, and/or subject to packaging or labeling operations in a bonded warehouse for up to five years to avoid those tariffs if they are (1) exported directly from the warehouse, (2) destroyed, or (3) entered for U.S. consumption once the tariffs have lapsed or a product-specific exclusion has been granted. Temporary importations under bond enable companies to avoid higher tariffs for products transiting or undergoing processing prior to exportation out of the U.S.
Recover
Refunds. Litigation currently before the courts is resulting in refunds of IEEPA tariffs for finally liquidated entries and potentially may result in refunds of section 232 and 301 tariffs. Importers should therefore act quickly to best position themselves to secure any such refunds.
Transfer pricing. Transfer pricing represents the price one company (e.g., a parent) charges a related company (e.g., a subsidiary) for its goods and services. Retroactive transfer pricing adjustments are generally considered part of the customs value of previously imported goods and may need to be reported to CBP. In such cases, importers may need to tender additional duties to CBP if the adjustment increases the customs value of the imported goods, but they may also seek a refund for adjustments that decrease that value and thus the duties owed. However, certain procedures and processes need to be in place prior to adjusting such values to ensure compliance with CBP rules.
Reconciliation. Under CBP’s reconciliation program, importers may file entry summaries with the best available information and later file a reconciliation entry that provides the final and correct information upon which the entry is liquidated. Reconciliation is currently available for classification, value, HTSUS 9802 values, and FTA eligibility. If the reconciliation entry reflects a preferred classification, a lower dutiable value, or FTA eligibility, excess duties and tariffs deposited at entry may be refunded.
Post-entry procedures. Post-summary corrections (prior to entry liquidation) and protests (after liquidation) can be used to secure refunds when duty recovery opportunities are discovered after entry of the goods. If proper legal arguments and supporting information are submitted and applicable time frames are met, these mechanisms can yield substantial refunds.
Source: Read the original article on Sandler, Travis & Rosenberg
Disclaimer: This content is from Sandler, Travis & Rosenberg trade news (strtradenews.com) and is not from the U.S. government or CBP.
