Strategizing for Tariffs Amid Legal Uncertainty

Traditionally a seldom-used policy instrument, tariffs have dominated the news cycle and injected uncertainty into global trade. As businesses face intensifying trade disputes, new tariffs, and retaliatory actions, one thing has become clear—understanding tariffs and their impact on your business is no longer optional.

To help you stay prepared, our team at Clark Nuber has launched a dedicated article series offering insights and practical tools to help navigate ongoing trade tensions with agility and foresight.

• Click here for an introduction to tariffs.
• Click here to learn about tariffs and navigating global uncertainty.
• Click here for an overview of the tax implications of tariffs.

Coming soon in the series:

• How Tariffs Impact Transfer Pricing

Strategizing for Tariffs Amid Legal Uncertainty

This week, the U.S. Supreme Court is hearing a landmark case that could fundamentally change how tariffs are imposed and challenged in the United States. The case focuses on the legality of certain emergency tariffs, such as those enacted under the  , and carries broad implications for importers, exporters, and supply chains. While arguments are underway, most experts anticipate that a final decision won’t be reached until sometime in 2026.

In the meantime, businesses must continue to operate under the current, often unpredictable, tariff landscape. Rather than waiting for clarity, now is the time to take proactive steps. Below are practical strategies finance professionals can use to help their organizations navigate tariff and trade policy uncertainties and ways they can lead these efforts.

Strategies for Delaying Tariffs

Bonded Warehouses

Bonded warehouses are secure facilities where imported goods can be stored for up to five years without paying duties until they enter the U.S. market. If the goods are exported directly from the warehouse, no duties are owed. For instance, a wine distributor in Washington state may use a bonded warehouses to manage inventory and delay duty payments while awaiting changes in tariff regulations, improving cash flow and operational flexibility.

Foreign Trade Zones (FTZ)

FTZs are designated areas within the U.S. where imported goods can be stored, processed, or manufactured without being subject to customs duties until they enter U.S. commerce. A manufacturer operating in a Washington FTZ can defer duties on imported components and eliminate tariffs on finished goods that were exported, significantly reducing costs and improving supply chain efficiency. There are hundreds of active FTZ production operations in place across the country. Any qualified public or private corporation, including small manufacturers, can apply to operate within an FTZ or contract. You do not need to build a new plant or warehouse; existing facilities can be designated as FTZ.

ATA Carnet & Temporary Importation Under Bond (TIB)

ATA Carnets and TIBs allow duty-free importation of goods for temporary use, such as trade shows or product demonstrations. Following this, companies may bring prototype devices into the U.S. for a major industry expo without paying thousands of dollars in import duties. Similarly, manufacturers may import machinery under TIB for testing and re-export it within the allowed timeframe, incurring no tariff costs.

Strategies for Reducing Tariffs

First Sale Rule

The First Sale Rule applies when goods are sold multiple times before reaching the U.S. importer. This allows U.S. importers to base the customs value of imported goods on the price paid in the initial transaction—typically between the manufacturer and a middleman—rather than the final sale price to the U.S. importer. For example, a distributor importing electronics from Asia may reduce their duty obligation by documenting the initial sale price between the factory and a trading company, rather than the final invoice to the U.S. entity. This approach can significantly reduce duty costs, especially in industries like electronics, apparel, and consumer goods.

Harmonized Tariff Classification & Engineering

By reclassifying products or adjusting the bill of materials, businesses can reduce duty rates. For example, a furniture importer may modify the composition of its products to qualify for a lower tariff category, saving significantly on import costs. Sometimes, a single component, such as synthetic leather, can trigger a higher duty. Swapping it for a lower-duty alternative, such as coated polyester, can reduce the tariff rate dramatically without affecting product performance.

Best Practices for Harmonized Tariff Schedules

• Collaborate with customs brokers and legal advisors to ensure accurate classification. Misclassification can lead to penalties or shipment delays.
• Periodically review HTS codes to uncover reclassification opportunities as product lines evolve.
• Document everything: maintain detailed records of product specs, sourcing changes, and classification rationale to support compliance.

Country of Origin Review

When a product is composed of components sourced from multiple countries, the country of origin is typically determined by the location of the last substantial transformation—meaning a manufacturing or assembly process that fundamentally changes the product’s character or use.

Properly documenting the country of origin can unlock exemptions and lower tariffs, particularly under free trade agreements (FTAs). To take advantage of this, some companies are restructuring their supply chains—moving final assembly or key production steps to countries such as Vietnam, Mexico, Cambodia, and Indonesia—to qualify for preferential tariff treatment.

However, it’s important to note that merely shipping raw materials to another country and importing from there is unlikely to qualify as a substantial transformation. Customs authorities scrutinize these arrangements closely, and superficial changes may not meet the legal threshold for origin reclassification.

This strategy has become one of the most widely used—second only to tariff classification review—because it offers direct, substantial duty savings and enhances supply chain flexibility. As tariffs increasingly target specific countries and remain in place for extended periods, businesses are incentivized to diversify sourcing and manufacturing locations to benefit from favorable trade agreements.

As tariffs persist, a robust country of origin review, paired with strategic use of FTAs and proper documentation, is essential for effective tariff mitigation. Given the complexity and legal sensitivity of origin determinations—especially when restructuring supply chains—consulting with trade counsel or customs experts is strongly advised before implementing changes.

Key Takeaways

Legal uncertainty around tariffs is likely to persist for some time. By proactively exploring strategic manufacturing and importing/exporting practices, finance professionals can help their organizations manage costs, improve cash flow, and maintain operational flexibility.

If you have questions about optimizing your manufacturing processes for tariffs, connect with a Clark Nuber professional.

© Clark Nuber PS, 2025. All rights reserved.