Overview

As the Trump administration escalates tariffs on imports, many U.S. businesses face increasing challenges in maintaining profit margins. Our regulatory expert, Steven Lehat, offers solutions through tariff engineering, a method that uses legal classification and valuation strategies to reduce tariff burdens while staying fully compliant with U.S. Customs law.

The Shifting U.S. Tariff Landscape

Tariff rates on imports from countries like China have spiked to over 50%, with some cases surpassing 100%. Though recent reductions have eased some pressure, unpredictability continues. As a result, businesses are moving production to tariff-friendlier nations and adapting their supply chains to avoid excessive costs.

 

What Is Tariff Engineering?

Tariff engineering refers to legally modifying products or packaging to reduce the applicable duty rate. Since every item has a specific tariff code under the Harmonized Tariff Schedule (HTS), even small changes in materials, packaging, or assembly can shift an item into a lower-cost classification.  For example, separating a frozen meal into individual components before shipping could reduce the tariff compared to shipping it as a complete meal.

Transaction Structuring for Tariff Savings

Another powerful tool involves structuring the transaction itself. U.S. Customs recognizes six valuation methods. Businesses can benefit by adjusting the timing of ownership transfer, invoicing methods, or distribution logistics to minimize tariff costs—when planned in advance with legal oversight.

Risks of Non-Compliance

Some importers attempt to cheat the system by underreporting the value of goods or using shell companies for false invoices. This is illegal and can result in serious consequences including fines, asset forfeiture, and jail time. Even smaller importers have been penalized for infractions.

How Much Can Businesses Save?

Companies using tariff engineering legally and strategically can reduce their overall duty exposure by up to 20%. These savings help businesses remain competitive even in uncertain global markets.

Schedule a Consultation

If your business is looking for ways to reduce import tariffs legally and effectively, contact Ken Lehat & Associates today for a personalized consultation.