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🧠 Tariff Hacks: How U.S. Businesses Are Outsmarting Import Costs

In recent months, many companies have found themselves scrambling to avoid sky-high import costs. With a 145% minimum tariff on most Chinese goods, 25% on cars, auto parts, aluminum, and steel, and 10% on imports from nearly every other country, the pressure is on.

But where there’s a challenge, business owners are finding opportunity. Enter: bonded warehouses and harmonized system codes — two not-so-secret weapons helping companies navigate this tricky landscape.

It turns out that a product’s classification — down to the tiniest detail — can dramatically change how it’s taxed.

There are over 5,000 product classification codes (called harmonized system codes) that governments use to assign tariffs. While the average shopper may not care if their coat is technically a raincoat or a windbreaker, businesses absolutely care. That distinction can mean the difference between high tariffs and low ones — and sometimes, between profit and loss.

This is where tariff engineering comes into play.

👟 Converse’s iconic All Star sneakers, for example, feature felt in their soles rather than pure rubber. Why? Products with felt bottoms can be classified as “house slippers,” which historically face much lower tariffs compared to sneakers. While Converse’s parent company Nike hasn’t publicly confirmed this strategy, it’s a textbook case of tariff engineering.

👕 Columbia Sportswear has been open about its own creative approach. According to Columbia’s vice president of global customs and trade, Jeff Tooze, the company works closely with designers and merchandisers during the product development phase — making small tweaks, like adding tiny zippered pockets below shirt waistlines — all with tariffs in mind.

And with Trump’s new tariffs squarely aimed at China and key sectors, legal experts say businesses still have options.

“There are still plenty of opportunities for companies to tariff-engineer their products,” says Erik Smithweiss, a trade compliance lawyer at GDLSK. While companies can’t escape the initial 20% tariff Trump imposed on China earlier this year, they can sometimes avoid the additional 125% Trump added last month. That’s because some products are quietly exempt.

“We help companies look at their tariff codes and determine if modifications can shift them into one of these exempt categories,” says Smithweiss. But beware — you can’t just slap on a new label. Customs officials carefully check that products meet the technical requirements, sometimes sending materials to labs for analysis. If a product doesn’t match the claimed code, the importer risks stiff penalties on top of the higher tariff. ⚠️

For businesses that can’t or won’t alter their products, bonded warehouses offer another powerful workaround.

Here’s how it works: companies can import goods into the U.S. and store them in special customs-regulated warehouses — without paying any tariffs upfront. As long as the goods stay locked away, no tariff is due. Businesses only pay when they remove the goods from storage, based on the current tariff rate at that time.

Essentially, companies are betting that tariffs will drop in the near future — and if they do, they’ll save big. 💰

Jennifer Hartry, president of Howard Hartry, a customs broker and bonded warehouse operator near the Port of Los Angeles, says demand has surged since Trump’s tariffs kicked in. “Ninety-five percent of the inquiries we get are for goods coming from China,” she told CNN.

Hartry’s family-owned business, which once faced a slowdown, is now booming thanks to this tariff workaround. Goods ranging from lithium batteries and metal rods to TVs and treadmills are now flowing into her warehouses, with values ranging from $37,000 to half a million dollars per client. 📦💥

There’s no cap on how much a business can store — only on how much it can physically fit in the space it rents. Companies can even keep goods warehoused for up to five years without paying a dime in tariffs.

While Hartry recognizes the strain tariffs are placing on many businesses, she acknowledges that the boom has been a lifeline for her own company. “It’s saving our business,” she said, “which we’re grateful for.” 🙏

As Trump’s trade policies continue to reshape the global economy, businesses will keep adapting — sometimes in ways that seem surprising to the public but make perfect sense inside the world of international trade.

Whether it’s clever product tweaks or parking shipments in warehouses, American companies are proving remarkably resourceful. But as tariffs rise and fall with political winds, one thing is certain: businesses will keep looking for every legal advantage they can find.