Avoid tariffs. Manufacture outside of China.

De minimis exemption still applies to shipments valued under $800, allowing them to enter the U.S. duty-free. However, on May 2, new regulations will change how de minimis is applied, especially in light of current trade changes. You should verify whether your specific products are on the list of affected goods by consulting the HTS (Harmonized Tariff Schedule) codes related to your imports.

Tariffs are typically paid by the importer of record (you or your company) when goods arrive at the U.S. port. The payment is made either at the time of entry or before release from customs, depending on the shipping arrangements. Tariffs are paid via customs brokers or freight forwarders who facilitate the entry process. You can expect tariffs to be paid to U.S. Customs and Border Protection (CBP) directly or through your agent.

Tariffs apply to the "country of origin", meaning where the product is substantially transformed. Even if your products are partially assembled in China, if the final product is still considered to be of Chinese origin, tariffs will likely apply. Shipping to another country first, such as a third-party nation, may help reduce or avoid tariffs if there is substantial transformation in that country; but you'll need to consult a customs broker to assess if this strategy will work for your goods.

The country of origin is typically determined by the last substantial transformation of the product. If parts or components come from various countries, the final assembly or manufacturing process will dictate the country of origin. This is often a complex decision and should be carefully evaluated, especially when dealing with mixed-sourcing products.

HTS codes (Harmonized Tariff Schedule codes) are numbers used by U.S. Customs to classify goods for the purpose of determining tariffs. The correct HTS code is crucial because it impacts the duty rates applied to your product. You can find the appropriate code by using the HTS database or consulting a customs broker to ensure accuracy. Incorrect codes can lead to fines or delays.

Importers are responsible for ensuring their products are properly classified under the correct HTS code. Misclassification can lead to significant penalties, fines, and delays in clearance at customs. If you are unsure, working with an experienced customs broker or legal expert specializing in trade compliance is recommended.

Tariffs can significantly increase the cost of imported goods, especially if your products are affected by the current trade tariffs. To mitigate this impact, you can: diversify suppliers by sourcing from countries with lower or no tariffs; reevaluate supply chains to consider manufacturing or sourcing from new markets; and use tools like Pietra AI to identify suppliers outside China, or review tariff rates using the HTS code lookup.

Incoterms (International Commercial Terms) are standardized terms used in international trade to define the responsibilities of buyers and sellers in the transaction, particularly around risk and payment. The right Incoterm depends on how much responsibility you want to take on for shipping, insurance, and tariffs. Common terms include FOB (Free on Board) and CIF (Cost, Insurance, and Freight). Discussing Incoterms with your freight forwarder or customs broker will ensure you select the appropriate term for your business.

Incoterms determine who is responsible for specific parts of the international trade process. For example: FOB means the seller's responsibility ends once the goods are shipped; the buyer assumes responsibility for tariffs and shipping from that point onward. CIF means the seller assumes responsibility for costs, insurance, and freight, but the buyer is still responsible for import duties and tariffs at the destination port.

To diversify away from China, consider countries with strong manufacturing capabilities such as Vietnam, India, Mexico, or Bangladesh. Start by researching potential suppliers, assessing tariff implications, and identifying local trade agreements or incentives. A good strategy is to pilot smaller orders to test new suppliers before scaling.

Prioritize countries with favorable trade policies, lower labor costs, and strong supply chain infrastructure. Look at factors like: tariffs and trade agreements; shipping logistics (proximity to ports); sustainability and ethics in production; and government incentives for manufacturing.

You can contact a freight forwarder or customs broker by: visiting industry trade organizations (e.g., NCBFAA); asking for recommendations from other businesses in your network; or searching online for qualified professionals. The cost of these services varies depending on the complexity of your shipments and volume. Basic consultation might range from $100-$200 per hour, while more involved services could cost more.

There are limited ways to avoid tariffs without legal ramifications, but you can reduce the impact by: reshoring or onshoring production to the U.S. or other countries with favorable tariff rates; using bonded warehouses or duty drawbacks if eligible; ensuring correct classification and documentation to avoid penalties; and exploring trade agreements that may allow preferential tariff treatment.

There are several programs designed to mitigate the effects of tariffs, including: Section 301 tariff exclusions (if your product is eligible); duty drawback programs, which allow you to claim refunds for duties paid on goods that are exported; and Trade Adjustment Assistance for Firms (TAA), which offers assistance for U.S. companies impacted by tariffs.