Businesses Use Tariff Engineering to Mitigate Trump Trade Costs

Company executives are employing tariff engineering and scrutinizing Harmonized Tariff Schedule codes to offset the impact of new trade tariffs implemented by Donald Trump. The new 10% baseline tariff has pushed the average duty rate from 1.4% to approximately 18%, prompting firms to modify product materials and designs to qualify for lower classifications.

Walmart CEO Doug McMillon reported that suppliers are shifting materials, such as replacing aluminum with fiberglass, to avoid impacted components. Similarly, Bogg CEO Kim Vaccarella shifted 30% of production from China to Vietnam to diversify the supply chain and reduce expenses.

The United States Department of Justice's Criminal Division has designated trade and customs fraud as a top enforcement priority. Misclassifying goods to avoid tariffs can result in seizures and heavy fines, as seen when Ford Motor Company paid $365 million in March 2024 for misclassifying vans to avoid a 25% tariff.