In the wake of President Donald Trump’s tariffs, U.S. businesses have been forced to adapt quickly to an evolving trade environment. With tariffs now set on more than 1,000 products, businesses are seeking new and creative ways to address the bottom line effects. Columbia Sportswear’s Vice President of Global Customs and Trade, Jeff Tooze, leads a team that integrates tariff considerations into the design process, highlighting the strategic shifts occurring within the industry.
This article highlights the creative and legal strategies businesses are employing to meet the challenges presented by these tariffs. It underscores strategies such as making use of bonded warehouses and perfecting Harmonized System codes.
Impact of Tariffs on Design and Strategy
As Jeff Tooze has pointed out, tariffs have a huge impact on how private sector firms, especially manufacturers, run their operations. His team collaborates every day with creative designers, technical developers and online merchandisers. This way, tariff implications are considered as early as possible in the design process. This forward-thinking strategy is designed to reduce the likelihood of rising costs and keep them competitive in a highly competitive market.
The tariff landscape has gotten very confusing, especially with Trump’s original jump-in-the-pool 20% tariff on China—which is not escapable. In this case, businesses can save themselves unnecessary expenses by proactively seeking out alternatives. Specifically, they can identify loopholes to avoid the 125% tariff that was passed later on. Tooze’s strategy is part of a larger movement among U.S. companies to decrease their cost of imports in the wake of these recently implemented tariffs.
Things are getting more complicated still. Governments around the world have adopted more than 5,000 of these distinct product classification codes, or Harmonized System codes. These codes are key to devising market-driven tariff rates to encourage private sector investment. They can unlock pathways for industry to become eligible for reduced tariffs in key sectors.
Bonded Warehouses: A Key Resource
Bonded warehouses have become an essential tool for businesses facing tariffs. These customs-regulated facilities are yet another way that companies can store imported goods for up to five years without paying any associated tariffs. Jennifer Hartry, President of Howard Hartry, customs brokerage firm that specializes in renting bonded warehouses. She shares that 95% of her calls are from companies who are importing product from China.
This stockpiling option gives businesses control over their supply chain and financial health. By utilizing bonded warehouses, businesses can defer tariff payments until they remove goods from the warehouse and into the domestic market. This approach not only saves businesses thousands of dollars in up-front cash, it empowers them to better navigate the unpredictable tides of changing tariff rates.
Erik Smithweiss, a partner at the law firm GDLSK, reminds us that companies are still allowed to partake in “tariff engineering.” This practice, known as tariff engineering, seeks to change the characteristics of imported products or their product classifications to benefit from lower tariff rates. It underscores the importance of understanding both bonded warehousing and Harmonized System codes as key tactics for navigating the current trade environment.
Evolving Strategies Amidst Changing Regulations
With the regulatory landscape still unpredictable, U.S. companies are always looking for fresh strategies to avoid tariffs. Even more recently, President Trump has quietly exempted various products from tariffs, offering further reductions to companies that save money there. The minimum tariffs slapped on most goods from China—up to 145%—go far enough to be harmful.
These tariffs have come with a pretty significant 25% tariff on all cars, auto parts, aluminum and steel. In addition, a 10% tariff on all imports applies from nearly every country. These record-breaking expenses force companies to closely reconsider their supply chains and where they source from.
Columbia Sportswear’s proactive engagement in this area exemplifies how companies can adapt to these challenges. Tooze’s team not only focuses on design but works closely with customs officials to ensure compliance while taking advantage of available resources. This comprehensive, data-driven approach is proving more critical than ever as companies work to remain profitable in the face of mounting tariff regulations and confusion.