Companies Use Engineering Tactics to Lower Trump Tariffs

Companies are adopting three primary strategies to mitigate the costs of sweeping tariffs imposed by the Federal government of the United States. These methods include tariff engineering, where businesses alter the material composition of products to qualify for lower tax classifications, and product engineering, which involves shifting the manufacturing of critical components to countries with lower rates to change the legal country of origin.

A third approach, valuation engineering, allows companies to pay tariffs based on the first sale price from the original manufacturer instead of the price paid to a middleman. Lenny Feldman, an attorney at Sandler, Travis & Rosenberg, notes that product engineering is designed to enable the importer to declare a different country of origin.

While these tactics require significant changes to sourcing and manufacturing, industry experts suggest the disruption is forcing a comprehensive overhaul of global supply chains. Logistics firm Portless and the law firm Sandler, Travis & Rosenberg are among the entities assisting brands in navigating these legal and operational shifts to reduce tax burdens.