How US Businesses Are Legally Avoiding Trump Heavy Tariffs
In recent months, certain unfamiliar terms like “bonded warehouses” and “harmonized system codes” have quickly become essential knowledge for many American business owners. What was once niche trade jargon is now central to survival in a market shaken by sweeping tariff hikes.
With former President Donald Trump imposing an unprecedented 145% minimum tariff on most Chinese goods—alongside additional tariffs of 25% on items like automobiles, auto parts, steel, and aluminum, and a 10% levy on imports from almost every country—U.S. companies are facing mounting pressure. Naturally, this has led many to explore any and every legal route to cut costs.
Two strategies have emerged at the forefront: deferring duties through bonded warehouses and reducing rates via meticulous product classification under the harmonized system (HS) code.
The Art of ‘Tariff Engineering’
Tariff engineering isn’t new, but it’s gained fresh relevance. The idea is simple—small modifications in a product’s material or design can lead to classification under a more favorable tariff code. Globally, over 5,000 HS codes are used to categorize products, and the category a product falls under can significantly impact the duties applied.
Take clothing, for example. The average consumer might not notice whether a jacket is technically a raincoat or a windbreaker. But for importers, that classification could mean paying 5% or 20% in tariffs—a major difference when working at scale.
One of the more well-known examples involves Converse’s classic All Stars. By using a felt sole instead of rubber, these shoes may qualify as “house slippers” under customs classification—a category historically subject to lower tariffs. While Nike, which owns Converse, has not confirmed this intent, industry insiders suggest such decisions are often deliberate.
Columbia Sportswear is one company that openly acknowledges its use of tariff engineering. In a 2019 interview, Jeff Tooze, Columbia’s Vice President of Global Customs and Trade, revealed that his team actively collaborates with designers to factor in tariff impacts during the early stages of product development. A tiny zippered pocket added to a shirt, for instance, might shift its classification, reducing the tariff applied.
Despite new rounds of tariffs aimed at Chinese imports and select sectors, businesses still have options. Erik Smithweiss, a partner at GDLSK and an expert in trade compliance, says there’s room to maneuver—especially when seeking exemptions or reclassifying goods that fit under lower-duty categories.
That said, it’s not as simple as reassigning a code on paper. Customs and Border Protection (CBP) takes product classification seriously. Officials often conduct lab tests, especially on textiles, to verify if a product genuinely meets the claimed classification. If it doesn’t, importers not only face the original high tariff—they can also be penalized.
Bonded Warehouses: A Strategic Delay
For businesses unwilling or unable to modify their products, bonded warehouses present another solution. These government-regulated storage facilities allow companies to bring in foreign goods and store them in the U.S. without immediately paying tariffs. In fact, as long as the goods remain in the warehouse, no duty is required.
Companies can leave products in bonded storage for up to five years. The hope is that tariff rates will eventually drop, allowing the goods to be released into the market at a more favorable rate.
Jennifer Hartry, president of customs brokerage firm Howard Hartry, has seen firsthand how this method is gaining traction. Her company, based near the Port of Los Angeles, rents bonded warehouse space and has experienced a surge in demand since the new tariffs took effect.
According to Hartry, the vast majority—around 95%—of recent inquiries are related to Chinese imports. The items stored range from lithium batteries and electronics to metal rods and fitness equipment, with individual inventories valued anywhere between $37,000 and half a million dollars.
Interestingly, Hartry acknowledges the irony. While tariffs have made life harder for many American importers, they’ve provided a critical lifeline for her family-owned business. “It’s saving our business,” she told CNN, “which we’re grateful for.”
The Bigger Picture
These strategies underscore a broader truth: when trade policies shift dramatically, businesses adapt. Whether by altering product materials, rerouting supply chains, or leveraging logistical workarounds, companies are determined to protect their bottom line.
But it also highlights the complexity of international trade—and how even legal compliance can demand creativity, technical expertise, and a willingness to evolve quickly.
For small and mid-sized firms, the challenge is even greater. Unlike large corporations with legal teams and trade consultants, smaller players must navigate these changes with limited resources. It’s not just about staying competitive—it’s about staying in business.
As U.S. trade policy continues to evolve, these tactics are likely to remain in play. For now, bonded warehouses and tariff engineering are among the few tools left for businesses trying to weather the storm.
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