Five Checks For … Reducing Tariff Exposure Right Now
Please find our latest “Five Compliance Best Practices” article, which provides quick-hit compliance best practices multinational companies can implement to enhance their compliance programs and internal controls. Additional “Five Things” articles, as well as our What Every Multinational Should Know and Tariff-ied! articles, can be found in the drop-down menu on our Tariff & International Trade Resources page. Click Here to Register for our email list to receive future practical international regulatory compliance tips.
Tariff volatility continues to create operational and financial pressure for U.S. importers. Rapid changes in tariff rates, product coverage, country-specific measures, and enforcement priorities can significantly affect landed costs, customer pricing, sourcing decisions, and broader supply chain planning. For many importers, the challenge is not just reacting to a new tariff announcement but identifying practical steps that can reduce tariff volatility exposure before the next trade action takes effect.
Importers accordingly should take a structured and proactive approach to tariff mitigation. Here are five best practices companies should consider when seeking to reduce and manage their tariff risk exposure:
- Review Classification, Valuation, and Origin Determinations Carefully. Importers should confirm that their tariff classifications, customs valuation methods, and country-of-origin determinations are accurate and well supported. (These items are chosen because they are the key ones most likely to impact the tariff rate imposed.) Errors in these core customs determinations can result in overpayment of duties, heightened audit risk, or both. Particularly in a volatile tariff environment, companies should not assume that historical classifications or sourcing assumptions remain correct.
- Identify Products and Suppliers With the Greatest Tariff Sensitivity. Importers should determine which products, inputs, and supplier relationships are most exposed to current or potential tariff increases. This review should consider duty rates, import volumes, customer commitments, and the availability of alternative sourcing or mitigation strategies. A company cannot reduce tariff exposure effectively unless it knows where that exposure sits.
- Assess Whether Duty-Saving Programs Are Available. Companies should consider whether they may benefit from customs programs and strategies such as first sale valuation, duty drawback, foreign-trade zones, bonded warehouses, tariff engineering, or temporary importation options where applicable. These tools are not available or appropriate in every case, but they can offer meaningful savings if analyzed carefully and implemented correctly.
- Review Commercial Terms and Pricing Flexibility. Tariff exposure is often shaped not only by customs law, but by commercial arrangements. Companies should assess whether contracts, purchase orders, and customer agreements address tariff-related cost increases, pricing adjustments, delivery terms, and importer-of-record responsibilities. Existing agreements may determine whether additional tariff costs can be passed on, shared, or absorbed.
- Build an Internal Escalation Process for New Tariff Developments. Companies should have a clear process for identifying major tariff announcements, assessing business impact, and escalating decisions quickly to the right personnel. This process should include trade compliance, legal, finance, procurement, and supply chain functions so that tariff changes can be evaluated and acted on before unnecessary cost is incurred.
Taken together, these steps can help importers move from reactive tariff management to more deliberate tariff risk reduction. Companies that understand their customs data, evaluate available mitigation tools, and align trade compliance with commercial decision-making will be better positioned to respond effectively as tariff measures continue to evolve.
Would you like more practical compliance tips like these? The Foley International Trade & National Security Team is monitoring all international trade developments, including new tariff pronouncements, which we post as they occur on our Tariff & International Trade Resources blog. Click Here to Register for our email list to receive future emails and practical international regulatory compliance tips.
Our white paper on Managing Import and Tariff Risks During a Trade War outlines a 12-step plan to provide practical steps to help importers navigate the tariff and international trade risks in the current tariff and trade environment, while the companion white paper on Managing Supply Chain Integrity Risks provides practical advice to deal with heightened supply chain risks pertaining to goods imported into the United States, including the increasing use of detentions by Customs.
