Tactics to Protect Margin, Cash Flow, and Competitiveness in a 100 %-Tariff World
Why This Matters in 2025
Tariffs on Chinese and other foreign goods now top 100 % in several categories. Import-heavy companies are watching margins erode overnight.
You can’t change U.S. trade policy, but you can change your playbook.
Below are six legal, field-tested tactics I’ve used—or seen smart operators use—to cut, defer, or offset duties while continuing to sell in the U.S. market.
Strategy 1 — Delivered Duty Paid (DDP)
Shift liability (and declared value) to the supplier.
Effort | Savings Snapshot |
---|---|
Low | ~$1,750 saved on a $10,000 shipment |
How it works
Your supplier ships DDP and declares a lower customs value. Example: Supplier invoices you $10,000 but files $3,000. A 25 % tariff is now $750, not $2,500.
Watch-outs
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Partner only with reputable factories.
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CBP audit risk sits with the importer of record (the supplier under true DDP).
Strategy 2 — Unbundle the Components
Ship parts under lower HTS codes; finish assembly in the U.S.
Effort | Savings Snapshot |
---|---|
Moderate | ~$20,000 saved per $100,000 of treadmills |
How it works
Motors, frames, and consoles each clear customs at 3–5 %. Once they land, you assemble domestically and avoid the 25 % rate on finished treadmills.
Best for complex products—fitness, furniture, appliances—where assembly is straightforward.
Strategy 3 — First-Sale Rule
Declare duty on the manufacturer price, not the final resale price.
Effort | Savings Snapshot |
---|---|
Low | ~$500 saved per $7,000 shipment |
How it works
Manufacturer sells to a trading company for $5,000. Trading company sells to you for $7,000. With proper paperwork, CBP accepts the first sale value ($5,000) for duty.
Fully legal—documentation must prove the arm’s-length first transaction.
Strategy 4 — Tariff Engineering
Modify the product to slide into a lower-duty classification.
Effort | Savings Snapshot |
---|---|
Moderate | 8 %+ duty cut per unit (apparel example) |
How it works
Change fabric weight, add a pocket, alter board thickness—just enough to fall under a lower-tariff HTS code. Common in apparel, electronics housings, even footwear (Converse’s “felt slipper” precedent).
Requires R&D + new BOM, but ROI compounds on every container.
Strategy 5 — Stockpile Ahead of Hikes
Pull forward inventory before announced tariff bumps.
Effort | Savings Snapshot |
---|---|
Low | $100,000 saved on $1 M inventory |
How it works
If a 10 % hike hits July 1, import June 30. You lock in old rates, then ride out new ones. Works if you have predictable sell-through and storage capacity.
Strategy 6 — Bonded Warehousing
Defer duty until goods exit a CBP-bonded facility.
Effort | Savings Snapshot |
---|---|
High | $75,000 duty deferred on $500,000 inventory |
How it works
Goods enter a bonded warehouse duty-free. You pay tariffs only when inventory ships to domestic customers, preserving cash flow.
Ideal for >$500K monthly imports, long inventory turns, or re-exports (drawback eligible).
Quick-Glance Matrix
Final Recommendations
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Grab the low-hanging fruit first (DDP, First Sale, Stockpile).
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Layer in mid-effort tactics (Unbundling, Engineering) as volume grows.
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Use bonded warehousing only when scale justifies setup and compliance.
Even a 2-3 % landed-cost improvement can add seven figures of profit over a year. In a 100 % tariff environment, it might be the difference between growth and collapse.
Need help sizing the ROI or navigating CBP compliance?
📩 DM Luke Peters on LinkedIn
Luke built an $80 M consumer-product brand, sold it to PE, and now helps founders defend margin, scale smart, and prep for exits.