Get Ready for New Tariffs: How to Prepare for Import Duties Increases

With the recent election results signaling potential shifts in trade policies, business owners must prepare for uncertainty—particularly with regard to import duties and tariffs. A return to higher import duties, especially on imports from China, seems likely, along with changes to the de minimis value threshold. Business owners who act now will be better positioned to navigate these challenges, minimize disruptions, and safeguard profitability.

Here are key actions to take now to get ahead of these anticipated changes and ensure your supply chain remains resilient in the face of evolving trade policies and new import duties.

Assess Your Overall Supply Chain Risks and Import Duty Exposure

The first step is to understand where your business could be vulnerable to trade policy changes. Specifically, consider these actions:

• Identify Key Dependencies: Analyze areas where your supply chain heavily depends on imports, especially from China or other regions that may see higher import duties. Conduct a risk assessment to identify high-cost or critical suppliers and potential points of failure.
• Diversify Suppliers: Explore alternative suppliers in different countries to reduce reliance on specific regions. Diversification can help mitigate the risk of unexpected costs and delays, especially if your primary suppliers face higher import duties.
• Scenario Planning: Prepare for potential tariff hikes and new import duties by modeling different tariff scenarios. This allows you to anticipate how increased costs will affect product prices, margins, and overall financial health.

Review How Import Duties Impact Your Landed Costs and Pricing Structures

With new import duties looming, it’s crucial to fully understand your landed costs and assess how the new duties will impact your profitability.

• Calculate True Landed Costs: Beyond just product cost, your landed cost should include import duties, freight charges, insurance, and all costs associated with delivering goods to their final destination. At Supply Chain Shark, owned by Empress Brokers, we help businesses better understand these costs to make informed decisions.
• Adjust Pricing if Necessary: Rising costs due to import duties may require adjustments to your pricing structure to maintain profitability. Review your pricing strategy to determine if you can absorb the additional costs or if price increases are necessary to protect margins.
• Evaluate Contractual Terms with Buyers: For businesses with pre-existing contracts, rising landed costs can lead to unforeseen expenses. Negotiate flexibility into contracts to adjust prices or pass on some of the increased costs to customers if new import duties rise.

Review and Confirm HTSUS Classifications to Understand the Impact of Import Duty Changes

Accurate Harmonized Tariff Schedule of the United States (HTSUS) classifications are crucial to ensuring compliance and managing costs effectively. HTSUS codes determine the duty rate applied to your imports, and misclassifications can result in unexpected costs.

• Audit Current Classifications: Perform a thorough review of your product classifications to ensure accuracy. Misclassifications can lead to incorrect import duties, fines, and compliance issues.
• Respond to Classification Changes Quickly: If tariff rates or new import duties change, accurate HTS codes allow you to quickly assess the impact and take appropriate action. This agility helps mitigate disruptions when policy shifts occur.
• Seek Expert Guidance: HTS classifications can be complex, and errors can be costly. Consider consulting a customs broker or trade expert to ensure correct classifications and readiness for regulatory changes. (See: Unlocking Savings: Why You Need a Tariff Consultant for HTSUS Classification).

Explore the Duty-Free “Made in America” Opportunities

The “America First” approach prioritizes domestic production. The good news is, if you make product in USA and selling in the USA you are not paying import duties (you will pay duties if you export with the country that imports). Evaluating the possibility of U.S.-based production or sourcing could be a strategic move, particularly for industries affected by new import duties.

• Assess Onshoring Viability: For certain products, moving production to the U.S. can reduce exposure to import duties, stabilize costs, and potentially qualify for “Made in America” incentives or tax benefits. Consider production costs, logistics, and market trends to determine if onshoring is viable and financially beneficial.
• Consider Complementary U.S.-Made Products: Many companies are adding “Made in the USA” products to their portfolios, especially in industries affected by import duties on materials like steel or electronics. This can help avoid tariff costs while also providing a strong marketing angle, as consumers are increasingly drawn to domestically produced goods.

Implement Proactive Communication Strategies About the Impact of Import Duty Changes

Trade policy changes, including new import duties, can affect more than just costs—they can also influence lead times, product availability, and customer satisfaction. Effective communication helps manage relationships with both suppliers and customers.

• Engage in Open Communication with Suppliers: Regularly discuss your suppliers’ pricing policies and lead times so you can anticipate any changes in response to new import duties. This transparency helps you spot potential delays or cost spikes early, allowing for quicker adjustments.
• Update Customers on Pricing and Availability: If import duties or policy shifts affect pricing or lead times, proactively communicate these changes to your customers. Set realistic expectations and provide transparency about why changes are happening to maintain trust.
• Plan for Increased Lead Times: Changes in trade policy, including new import duties, can lead to congestion at ports and customs delays. Build buffer times into your production schedule to accommodate potential disruptions and prevent customer dissatisfaction due to late deliveries.

Consider Joining Industry Discussions and Support Networks

Staying informed and connected with industry networks can provide valuable insights and resources, and help you understand the impact of new import duties on your industry. Engaging in discussions on regulatory updates allows you to exchange knowledge and prepare strategies together with other business owners.

• Join Trade Organizations: Trade associations often provide resources on regulatory changes, including import duties, and offer opportunities to connect with other business owners facing similar challenges. Staying informed through these networks can be critical to adapting quickly and confidently.
• Attend Strategy Sessions and Webinars: Participate in events like our upcoming session on November 22, where business owners can discuss supply chain strategies with experts and peers. Register here to join us and share strategies for addressing challenges collectively.

Expected Timeline for Trade Policy Changes and New Duties / Tariffs

While exact timelines depend on new legislative decisions, we can anticipate the following shifts based on historical policy trends:

• Early 2025: Expect initial policy announcements and legislative proposals that may affect de minimis thresholds and introduce new import duties. Businesses should begin implementing the strategies outlined above to stay ahead.
• Mid-to-Late 2025: New import duties or adjustments to existing tariffs may begin to take effect. By this time, businesses with diversified suppliers and established risk mitigation strategies will be in a strong position.
• 2025 and Beyond: The full impact of new trade policies, including import duties, will likely become clearer, with potential long-term changes to trade regulations. Companies that invest in supply chain resilience will benefit by avoiding unexpected costs and delays.

With higher import duties and evolving trade policies on the horizon, business owners must take action now to protect their supply chains. By diversifying suppliers, ensuring accurate HTS classifications, and exploring domestic sourcing, businesses will be better prepared to weather near-term challenges and position themselves for long-term success.

We are dedicated to supporting business owners through these changes. If you have concerns or need tailored strategies, feel free to reach out for a one-on-one consultation. Also, check out our new offerings and toolkit offered by Empress Brokers’ new business Supply Chain Shark.