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Analyst Insight: Tariffs have re-emerged as a key risk and margin drag amid persistent geopolitical tensions, shifting trade alliances and inflationary cost structures. Businesses are seeing volatility in duty rates, new country-of-origin scrutiny, and tighter enforcement, complicating sourcing and pricing decisions. Leading organizations are navigating this with clear steps to mobilize, quantify, design solutions and execute. As a result, they’re turning uncertainty into advantage by protecting margins, safeguarding supply resilience, and preserving customer commitments.
Leading organizations treat tariffs as addressable, not a sunk cost. Following are four strategies to help navigate the new tariff landscape with speed and rigor.
Mobilize. Establish an executive-backed program office, spanning procurement, supply chain, finance, tax, trade compliance, engineering and legal. Define the scope by Harmonized System (HS) codes, top-spend categories, vendor tiers, lanes and in-flight product changes. Set objectives (such as margin-protection targets, lead-time guardrails, and customer price policies) and a cadence for decision rights, risk review and benefits tracking.
Estimate risk and impact. Quantify exposure by mapping tariff rates to projected spend by HS code, vendor, country of origin and logistics route. Segment SKUs by duty sensitivity and price elasticity. Model scenarios such as rate increases, rule changes, or enforcement actions, and translate to EBITDA impact, landed cost variance and service risk. Prioritize the ‘top-20’ combinations (SKU×supplier×lane) that drive 80% of tariff cost.
Determine tariff solutions. Build an option set that balances speed, savings, resilience and customer impact, covering these elements:
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Contract negotiations. Reopen terms to share tariff burden, add price-adjustment/most-favored-nation clauses, or trigger re-sourcing rights.
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Supplier diversification and reshoring. Qualify alternates (dual/multi-sourcing), nearshore or onshore where total landed cost and resilience improve.
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Import/export strategies. Reroute via alternative ports/countries where compliant, to reduce duty incidence and fees.
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Formula change. Engineer material substitutions or part redesigns that shift duty treatment.
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Packaging material change. Adjust materials or configurations to influence tariff assessments.
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Tariff reclassification audit. Validate HS codes and identify legal reclassification opportunities.
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Trade agreement leverage. Utilize FTAs, special exclusion processes, and country-of-origin rules.
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Duty drawback. Reclaim duties on imported inputs that are later exported.
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Free trade zone (FTZ). Defer/reduce/eliminate tariffs via FTZ admissions and zone-to-zone moves.
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First sale valuation. Where permitted, use the manufacturer price as the dutiable value when intermediaries are involved.
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Execution and monitoring. Establish a program management office with sprint-based execution. Update master data (HS codes, chief operating officer, suppliers), amend contracts, file drawback/FTA claims, adjust routing, and implement engineering changes via engineering change orders. Create instrument dashboards for landed cost, duty spend, cycle time, on-time delivery and compliance key performance indicators. Conduct quarterly reviews to refresh scenarios, retire underperforming options and scale proven plays.
Resource Link: https://www.paconsulting.com/
Outlook: Tariff exposure will remain dynamic, as policies, enforcement priorities and supply footprints evolve. Leading organizations that are operationalizing these steps — combining commercial levers, network design, trade programs and product engineering — can protect margins without sacrificing service. The unique strength of this approach is its cross-functional, data-driven cadence: It converts policy volatility into a structured advantage, accelerating decisions while embedding compliance and resilience in the operating model.
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