Tariffs: Mitigating Effects

Tariffs: Mitigating Effects

Tariffs on certain U.S. trading partners likely hits the bottom line for importers and manufacturers.  Those new tariffs range from 10% to 25% and include products from China, Mexico, Canada, UK, European Union and likely others to come, including Chinese-owned factories wherever situated.

Proposals are also pending to make merchandise subject to trade or national security actions ineligible for the de minimis exception that allows duty-free entry for most shipments under $800 daily (think goods mailed by the Chinese retailer Temu).  Who knows what will happen in the end or whether the threatened tariffs are only a bargaining tool for high-level negotiations to make the import/export field for U.S. goods more fair and/or to extract concessions from trading partners on border security and other administration goals.

Companies that have thinner margins must assess the impact of tariffs, take action to remain profitable and consider:

  • •Taming production costs

  • •Negotiating/renegotiating pricing for supplies

  • •Negotiating/renegotiating pricing for customer contracts (e.g. surcharges for tariff costs)

  • •Re-sourcing product to avoid the harsh effects of the tariffs; moving production to other regions with favorable trade agreements

  • •Ensuring compliance with all tariff regulations

Manufacturing Locations

  • •Consider relocating production to offset costs

  • •Evaluate the relationship and characterization of manufacturing facilities in different countries

  • •Adjust intercompany pricing between U.S. and facilities in other countries subject to the higher tariffs

Tax and Tariffs

  • •Integrate tariffs within the tax and transfer pricing business division

  • •Coordinate logistics and customs with tax planning

Re-Negotiate Supplier Prices

  • •Consider negotiating for suppliers to absorb some or all of the cost of tariffs

  • •Consider negotiating with customers for them to absorb some or all of the costs of tariffs

  • •Separate intangibles to isolate charges to lower overall tariff costs on goods

 

Epps & Coulson, LLP will work with clients to mitigate the impact of tariffs on operations and the bottom line.  Please contact dawn@eppscoulson.com.

Information contained in this Memo is intended for informational and educational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.  It is likely considered advertising.  Epps & Coulson, LLP encourages you to call to discuss these matters as they apply to you or your business.  Epps & Coulson, LLP has staff licensed in France and affiliated Counsel offices in New York and Connecticut with lawyers also admitted in Connecticut, District of Columbia Massachusetts (pending), New Jersey, Hawaii, European Union, England and Wales, France (Paris Bar) and Sweden.

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