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12/02/2024

Increasing Tariffs: How to Protect Your Import Business

Get actionable strategies to manage the Trump Administration’s proposed 10-60% increases in tariffs. Our comprehensive guide shows you how to optimize classifications, diversify suppliers, and maintain profitability despite trade policy changes.

Your business success depends on efficiently managing import duties and tariffs. The incoming Trump Administration is proposing significant changes to U.S. trade policy. Current proposals include:

 

  • A base protective tariff of 10-20% on most imports
  • A 25% tariff on goods from Canada and Mexico
  • A 60% tariff on goods from China, with a possibility of another 10% on top of that
  • Up to a 100% tariff on BRICS countries if they move away from the dollar
  • Possible higher, targeted increases for other countries

 

These changes will reshape import costs and supply chain strategies across industries.

 

This guide will help you protect your margins and maintain your importing advantage, regardless of how trade policy changes.

Key takeaways

 

  • Prepare your business for tariffs of 10-20% on most imports, with possible higher tariffs on goods from China, Canada, and Mexico
  • Review your harmonized tariff codes to identify cost-saving opportunities
  • Start supply chain diversification planning immediately
  • Review and adjust your customs bond coverage to prevent insufficiency notices
  • Implement financial protection strategies before new import duties take effect

How our importing and tariff guide will help protect your business

You'll discover practical, proven approaches to manage increased import duties and protect your margins. Here's what you'll discover.

 

Immediate steps to reduce your tariff costs and import duties

We'll share specific, time-sensitive actions to protect your importing business from tariff increases. You'll discover how to audit your current exposure, identify your high-risk areas, and protect your margins.

 

Strategic planning to optimize trade tariffs

You'll benefit from detailed strategies so you can adapt to the changing trade landscape. We'll help you understand how to diversify your suppliers, optimize your documentation, and develop financial planning approaches that protect your operations.

 

Implementation timeline for protecting your imports

We provide suggested timeframes for each step to help you prioritize your actions and resources. This structured approach balances the steps you need to take against maintaining your day-to-day import operations. 

 

Examples for additional context

We've created illustrative examples of how companies can deal with increased import duties. Although these examples don't come from specific case studies or real-world examples, they do provide helpful insight on how businesses can prepare for changes.

 

Specific focus areas

You'll find detailed sections addressing your key challenges, including:

 

  • Understanding your likely tariff exposure
  • Optimizing your product classifications
  • Developing your alternative sourcing strategies
  • Building your financial strength
  • Managing your Chinese import exposure

 

Detailed timeline for protecting your business

We've also created a recommended timeline that will help to focus and guide the changes you can make and when to make them. 

Talk to our customs and global trade experts about how to reduce your tariffs. Get in touch with GEODIS.

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Understanding the Trump Administration's proposed tariffs and import duty changes

The proposed trade policy changes are a fundamental shift in U.S. import regulations, designed to promote and protect U.S. manufacturing. The universal base tariff would affect the entire spectrum of international trade, while targeted increases for specific countries and products add additional layers of complexity.

These changes could reshape global supply chains in several ways.


Impact on global sourcing

The proposed universal tariff would eliminate many traditional cost advantages of outsourcing overseas. Companies that rely on international suppliers will need to reassess their entire supply network and sourcing strategies.


Changes to Chinese trade

With potential 60%-100% tariffs on Chinese imports, businesses are under increased pressure to diversify their supply chains. This has a major impact on industries and importers with established Chinese manufacturing relationships.

 

Changes to trade with Canada and Mexico

The incoming president has announced possible tariffs of up to 25% on goods from Mexico and Canada.


New import duties and taxes: What to expect

We don't know yet when the new tariffs will be introduced, but preparing now is essential. Early planning helps you understand your options and prevents rushed decisions later on.
 

Recent updates

 

  • Late-November 2024: Revised this guide to take into account Trump’s announcements of 25% tariffs on Canada and Mexico, and additional 10% tariffs on China 
  • Mid-November 2024: Created this guide based on our best understanding of Trump Administration policies as of mid-November

How to reduce import duties and manage tariff costs

Here's our six-step guide on the practical actions you can take to reduce your tariff costs.

 

Step 1: Calculate your import duty exposure

Start by analyzing and evaluating your current import structure and tariff exposure. We recommend completing this step within the first month.

 

Understanding your tariff exposure

Conduct a detailed analysis of your import patterns, focusing on:

 

  • Your current sourcing locations and product volumes
  • The types of product you import and how they're classified for tariff purposes
  • The products facing the highest potential tariff increases
  • Any critical supply chain dependencies
  • Alternative sourcing options

 

Your assessment should examine both direct and indirect tariff exposure.

 

Direct tariff exposure analysis 

  • Create a spreadsheet or database mapping all imported products
  • Calculate your current tariff costs per product category
  • Identify your imports with the highest tariff exposure
  • List all of your current suppliers and their locations
  • Document your current lead times and minimum order quantities
  • Analyze your costs, prices, and profit margins before and after the proposed tariff increases

 

Indirect tariff exposure analysis 

  • Identify suppliers who may pass through tariff costs
  • Review your contracts for price adjustment clauses
  • Analyze any competitor sourcing locations
  • Understand your customers' price sensitivity

 

This analysis is your foundation for all subsequent tariff reduction planning.

 

Multiple scenario planning

Develop contingency plans for:

 

  • Base case (10-20% universal tariff)
  • High-impact case (60%-70% China tariffs)
  • Targeted increases (25% Mexico and Canada tariffs)

 

Important: When planning for new tariffs, remember that pre-filing entries doesn't establish entry timing. Your goods must physically arrive within port limits for CBP to consider the entry filed. This is particularly crucial when tariff rates are changing.

 

Illustrative example: An electronics components importer recently completed this process by creating a risk matrix of their 200 SKUs. They identified that 40% of their products came from China, representing 60% of their import value. They discovered that while some components had ready alternatives in Malaysia and Vietnam, others would require significant supplier development. This analysis helped them prioritize their next steps, focusing first on their highest-value, highest-risk products with available alternatives.

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Talk to our customs and global trade experts about how to reduce your tariffs. Get in touch with GEODIS.

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Step 2: Optimize product classifications and documentation

It's vital to document and classify your products according to the Harmonized Tariff Schedule (HTS). This will help you understand if you can reclassify products and take advantage of areas like tariff engineering. We recommend completing this step within 30 to 90 days.

 

Tariff classification review

Review your current product classifications for accuracy and optimization. This includes:

 

  • Verifying your product HTS codes against the latest Harmonized Tariff Schedule
  • Identifying classification alternatives where products could qualify for a different HTS code
  • Documenting the reason for HTS classifications with supporting technical specifications
  • Updating your procedures and training materials

 

Take a systematic approach to classification:

 

  • Review each product's current classification
  • Document technical specifications supporting each classification
  • Identify products with multiple possible classifications
  • Consult with customs experts on complex cases
  • Create detailed classification guides for your team

 

Document every product and its tariffs in detail

Strengthen your product and tariff documentation processes:

 

  • Make sure you have robust record-keeping with digital and physical backups
  • Create clear audit trails linking classifications to supporting documents
  • Maintain detailed origin documentation including manufacturer affidavits
  • Establish regular review procedures with quarterly audits
  • Develop standard operating procedures for documentation

 

Use tariff engineering to minimize your import duty exposure

Tariff engineering allows you to make changes to your products to potentially reduce duties on them:

 

  • Analyze your products for potential engineering changes that could qualify for lower-duty HTS classifications
  • Review your manufacturing processes and assembly locations to change your country of origin determinations
  • Document all of your engineering modifications with detailed technical specifications and classification rationale
  • Calculate your ROI by comparing any potential duty savings against modification costs
  • Maintain clear records of pre- and post-modification specifications with product samples
  • Consult with customs experts and verify your new classifications before implementing changes

Illustrative example: A home goods importer recently reviewed their classification system and found that several of their wooden furniture products were classified under a general category with higher duty rates. By properly documenting the manufacturing process and materials, they were able to reclassify these items under a more specific HTS code with lower duty exposure.

Medical manufacturing

Want to optimize your imports and tariffs? Talk to our customs and trade experts about protecting your business. Get in touch with GEODIS.

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Step 3: Develop alternative sourcing strategies

If you want to import from different countries, you'll need to consider multiple factors. This isn't a fast process, but we recommend kicking it off in the first 90 days, and seeing if you can complete it within six months to a year.

 

Geographic diversification

Consider suppliers in regions with:

 

  • Lower tariff exposure
  • Stable trade relationships
  • Reliable infrastructure
  • Compatible quality standards

 

Use a careful and methodical approach to diversify your suppliers:

 

  • Map potential sourcing locations
  • Assess the geopolitical stability of the region
  • Understand any trade agreement benefits
  • Consider changes to logistics costs or capabilities
  • Review any regulatory requirements

 

Alternative supplier evaluation

You'll want to create a structured approach for evaluating new suppliers, this should include:

 

  • Production capabilities and capacity
  • Quality control systems and certifications
  • Compliance history and documentation
  • Financial stability and business longevity
  • Communication and technological capabilities
  • Sample quality and consistency
  • References from existing customers

 

Steps for developing alternative suppliers:

 

  1. Initial supplier identification and screening
     
  2. Detailed capability assessment
     
  3. Sample production and testing
     
  4. Trial orders and quality verification
     
  5. Progressive volume scaling

Illustrative example: A textile importer with 70% of their production in China implements a supplier diversification plan. They begin by identifying five potential suppliers each in Vietnam, India, and Bangladesh. After thorough evaluation, they select two suppliers in Vietnam and one in India for trial production. They start with small orders of basic items, gradually increasing complexity and volume. By year two, they successfully shift 40% of their production to these new suppliers, reducing their tariff exposure while maintaining quality standards. Key to their success is maintaining relationships with their Chinese suppliers during the transition, ensuring stable supply during the development period.

Calculations, reporting, and analytics

Step 4: Protect your finances and minimize risks of increased tariffs and import duty

Protecting your financial position requires comprehensive planning. Aim to start this within 30 to 90 days, although it can take a while complete any negotiations or product orders.

 

Cost impact analysis

Begin by modeling various scenarios to understand potential financial impacts. Consider:

 

  • Direct tariff costs at different rate levels and from different countries
  • Related supply chain expenses including logistics—transportation, warehousing, and freight forwarding
  • Currency fluctuation risks and hedging costs
  • Inventory carrying costs and storage needs
  • Quality control and compliance expenses
  • Supplier development costs
  • Technology investment requirements

 

Risk mitigation strategies

Develop approaches to manage increased costs:

 

  • Strategic price adjustments across product lines
  • Cost-sharing agreements with suppliers and customers
  • Inventory optimization and carrying cost reduction
  • Currency hedging and financial instruments
  • Contract renegotiation and terms adjustment
  • Product mix optimization
  • Operating cost reduction initiatives
  • Customs bond sufficiency monitoring and proactive increases

 

Implementation steps:

 

  1. Create detailed financial models
     
  2. Develop pricing strategies
     
  3. Identify cost reduction opportunities
     
  4. Establish monitoring mechanisms
     
  5. Set trigger points for action

 

Tariff implementation timing and impacts

Remember that the charging of tariffs typically follows specific patterns:

 

  • Based on "time of entry" for consumption
  • Applies when goods are released by Customs
  • Considers port arrival and intent to unlade
  • May affect pre-filed entries differently

 

Implementation steps:

 

  • Coordinate shipment timing with expected tariff implementation dates
  • Consider port arrival timing when pre-filing entries
  • Document precise arrival times within port limits
  • Maintain clear records of unloading intent

Illustrative example: An automotive parts importer developed a comprehensive financial strategy to address potential tariff increases. They created a three-tiered pricing model based on different tariff scenarios (10%, 20%, and 60%). For their highest-risk products, they negotiated shared-risk agreements with key suppliers, where both parties would absorb a portion of any tariff increases. They also implemented a currency hedging program for their Asian purchases, which helped stabilize costs during a period of significant exchange rate volatility. Their proactive approach helped them maintain margins while competitors struggled with rapid cost increases.

Review and adjust your customs bond surety coverage

Your customs bond surety amount must be sufficient to cover increased tariff obligations. Since bond amounts are calculated as 10% of your total duties, taxes, and fees (minimum $50,000), higher tariffs mean you may need larger bonds.

 

Take these steps to manage your bond requirements:

 

Calculate your new bond requirements:

 

  1. Project your import value for the next 12 months
     
  2. Multiply by anticipated tariff rates
     
  3. Calculate 10% of this total
     
  4. Ensure this meets minimum requirements

 

Consider potential tariff increases:

 

  1. Factor in proposed tariff changes
     
  2. Include a contingency for additional increases
     
  3. Account for any seasonal import variations
     
  4. Build in a buffer for unexpected changes

 

Avoid multiple bond replacements:

 

  1. Secure adequate coverage
     
  2. Account for a full year of higher tariffs
     
  3. Consider a larger buffer to prevent repeated increases
     
  4. Remember that each bond termination creates stacking liability

 

Understand your ongoing obligations:

 

  1. Monitor your bond sufficiency regularly
     
  2. Watch for CBP insufficiency notices
     
  3. Respond to any notices within 15 days
     
  4. Track your entry liquidation cycles

 

Remember that maintaining sufficient bond coverage is your legal responsibility under informed compliance requirements. Insufficient bonds can lead to customs delays and additional costs. Each time you terminate and replace a bond, you create "stacking liability" that remains active for years, even after bond termination.

Meeting at Belgrade office

Step 5: Stay updated on changes to tariff and import policies

You'll want to monitor developments through multiple channels so you're aware of tariff changes before they happen:

 

  • Assign specific team members to monitor updates
  • Create a regular review schedule across all channels
  • Establish communication protocols with your internal teams and external vendors, partners, and customers
  • Document impact assessments and ensure these are built into your business strategy and risk programs

 

Official sources:

 

 

Trade association updates:

 

  • Weekly newsletters
  • Member alerts
  • Technical bulletins

 

Industry news sources:

 

 

Professional service providers:

 

Production and sourcing sites

Step 6: Manage your exposure to Chinese imports and tariffs

The Trump administration has said that Chinese imports could increase by between 60% and 100%. If you import from China, it's urgent that you prepare now. 

 

Calculate your current Chinese import exposure:

 

  • Review all direct imports from China
  • Identify components sourced through third parties
  • Evaluate assembly locations and rules of origin
  • Assess impact on your total landed costs

 

Identify critical Chinese components requiring priority action:

 

  • Establish the strategic importance to your product line
  • Understand any alternatives and their availability
  • Account for technical complexity and customer requirements

 

Evaluate alternative sourcing options:

 

  • Consider other Asian manufacturing hubs
  • Look into near-shore possibilities
  • Understand if there's domestic production capacity in the U.S. 

 

Analyze your cost implications:

 

  • The direct and indirect tariff impacts
  • Changes to transportation, freight forwarding, and storage costs
  • Quality control requirements
  • Supplier development needs

 

Long-term strategy for Chinese imports

Organizations heavily dependent on Chinese imports should:

 

1. Develop comprehensive supplier diversification plans:

 

  • Multi-region sourcing strategy
  • Phased implementation approach
  • Risk mitigation measures

 

2. Consider establishing relationships in alternative markets:

 

  • Vietnam, Thailand, Malaysia for electronics
  • India, Bangladesh for textiles
  • Mexico for automotive and machinery

 

3. Evaluate nearshoring opportunities:

 

  • Mexico and Central America
  • Eastern Europe via EU trade agreements
  • Caribbean Basin Initiative benefits

 

4. Introduce robust origin verification processes:

 

  • Documentation requirements
  • Supplier certification programs
  • Third-party verification services

Illustrative example: A consumer electronics manufacturer with 85% of their components sourced from China implemented a successful diversification strategy. They began by categorizing their 1,200 components into three tiers based on complexity and strategic importance. For Tier 1 (most critical) components, they maintained Chinese suppliers while developing alternatives in Vietnam and Malaysia. For Tier 2, they shifted 60% of production to Thailand and Vietnam. Tier 3 components were dual-sourced between existing Chinese suppliers and new suppliers in Mexico and Malaysia. The company invested in quality control staff at new locations and implemented a supplier management system to track performance metrics. 

Tariff action timeline and next steps

So, what do you need to do next to protect your import business? Here's a prospective timeline that you can adapt to your business needs.

Conteneurs

Immediate tariff protection priorities (first month)

Understand your tariff exposure and plan to make changes.

 

1. Complete your supply chain audit:

 

  • Gather your existing import data
  • Map all current suppliers
  • Review your current supplier information
  • Document import volumes
  • Calculate potential cost impacts

 

2. Identify high-risk products:

 

  • Review tariff classifications for your products
  • Assess strategic importance and product costs
  • Start evaluating alternative sources and suppliers

 

3. Review current classifications:

 

  • Audit current classifications and HTS codes
  • Update and verify documentation
  • Identify optimization opportunities

 

4. Accelerate critical imports:

 

  • Identify high-risk products
  • Review inventory positions
  • Assess storage capacity
  • Calculate carrying costs
  • Order products

 

5. Review your customs bond surety requirements:

 

  • Calculate your needed bond surety coverage under any new tariffs
  • Assess your current bond sufficiency
  • Make bond increases if needed
  • Consult with a customs broker on your requirements

 

6. Review entry timing procedures:

 

  • Audit current entry filing practices
  • Document port arrival procedures
  • Train staff on timing requirements
  • Update entry filing procedures

 

7: Stay aware of changes to tariff policies

We know there's a huge amount to do, and that's why we're here to help. Contact our customs and trade experts to get the support you need. Get in touch with GEODIS.

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Freight and cargo containers

Near-term tariff protection actions (30-90 days)

Move from planning to implementation.

 

1. Implement inventory strategies:

 

  • Adjust safety stock levels
  • Review order quantities
  • Optimize storage locations

 

2. Begin supplier diversification discussions:

 

  • Research potential suppliers
  • Make initial contacts
  • Request capability statements
  • Set meeting timelines

 

3. Develop pricing plans:

 

  • Understand customer sensitivity to price increases
  • Model cost scenarios for tariff increases
  • Create price adjustment strategies
  • Plan customer communications

 

4. Start product optimization:

 

  • Identify product optimization opportunities
  • Investigate if tariff engineering can help
  • Consult with trade and tariff experts as needed
Freight and cargo containers

Medium-term tariff protection actions (90-180 days)

Optimize your suppliers, logistics, and finances.

 

1. Establish alternative supplier relationships:

 

  • Conduct supplier audits
  • Begin sample testing
  • Negotiate terms

 

2. Optimize your supply chain network

 

  • Adjust logistics routes
  • Implement new processes
  • Monitor performance

 

3. Refine your financial strategies:

 

  • Implement hedging programs
  • Adjust pricing strategies
  • Monitor effectiveness

 

Long-term actions (180+ days)

Complete key transitions and optimizations.

 

1. Finalize supplier diversification:

 

  • Complete qualification process
  • Place initial orders
  • Establish performance metrics

Start preparing your business now. Connect with our customs and trade experts to discuss your needs.. Get in touch with GEODIS.

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The importers that thrive under new tariff policies will be those that prepare thoroughly and act decisively. By optimizing your product classifications, diversifying your supplier base, and strengthening your financial position now, you'll be better equipped to handle whatever changes come. Remember that successful adaptation isn't just about managing costs—it's about building a more resilient supply chain that can flex and adapt as trade policies evolve.

Frequently Asked Questions about Trump Administration tariffs

The Trump administration has proposed base tariffs of 10-20% on most imports, with targeted increases for specific countries. For Chinese imports specifically, tariffs could increase up to 60%-100%, and Trump has also proposed tariffs of 25% on Mexico and Canada. These changes would affect the entire spectrum of international trade and fundamentally reshape import costs across industries.

Start by mapping all imported products in a spreadsheet or database with current tariff costs per product category. Analyze both direct tariff exposure through your imports and indirect exposure through supplier cost pass-throughs. Create a risk matrix identifying high-value, high-risk products that need immediate attention.

Yes, optimizing your harmonized tariff codes can potentially reduce duty exposure. Review your current HTS classifications for accuracy, identify products that could qualify for different codes, and document technical specifications supporting each classification. Consider tariff engineering to modify products for more favorable classifications.

Supplier diversification can take a while to complete. The process involves identifying alternative suppliers in lower-tariff regions, conducting capability assessments, testing samples, and gradually scaling production. Maintaining relationships with existing Chinese suppliers during the transition is crucial for supply stability.

Key alternative manufacturing locations include Vietnam, Thailand, and Malaysia for electronics, India and Bangladesh for textiles, and Mexico for automotive and machinery parts. Each region offers different advantages in terms of infrastructure, trade agreements, and manufacturing capabilities depending on your specific needs.

Develop a comprehensive financial strategy including strategic price adjustments, cost-sharing agreements with suppliers, and currency hedging programs. Create multiple pricing tiers based on different tariff scenarios and negotiate shared-risk agreements with key suppliers to maintain margins.

Businesses should begin implementing protection strategies immediately, starting with a supply chain audit in the first month. Focus on high-risk product identification and classification review within 30 days, then move to supplier diversification and financial planning within 90 days. Complete major transitions within 6-12 months if possible.

Monitor official sources including the Federal Register, Customs and Border Protection bulletins, and USTR notifications. Additionally, follow trade association updates, industry news sources like the Journal of Commerce, and stay connected with customs brokers and legal advisors for the latest developments.

The guide offered on this site is for general informational purposes only, and does not constitute, and should not be considered, to be legal advice or customs advice specific to your company’s circumstances. The information herein is presented without any representation or warranty, including as to the accuracy or completeness of the information presented.

Paul Maplesden

Paul Maplesden

Lead Content Strategist

Paul deeply researches logistics and supply chain topics to create helpful, informative content for our US audience. Read Paul's work in the GEODIS blog, our in-depth GEODIS Insights reports, and our case studies and white papers.
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