Responding to Tariff Increases

Sandler, Travis & Rosenberg offers the below three-pronged approach to avoiding, mitigating and / or recovering tariffs on imported goods.

For more information on any of the following strategies, contact your ST&R professional or tariffs@strtrade.com.

For updates on the evolving tariff situation, subscribe to the ST&R Trade Report.

Strategies to Avoid Tariffs

Classification Engineering

U.S. Customs and Border Protection can only levy duties and tariffs on goods in their condition as imported. Importers in a variety of industries where high import duties prevail can legally take advantage of classification provisions carrying a lower or free rate of duty. For instance, components imported separately may fall into an entirely different tariff provision than the finished product and may thus avoid a higher tariff. Renewed consideration should be given to this strategy to address tariffs, for instance under Section 232 or the International Emergency Economic Powers Act, where particular HTSUS provisions may be listed as subject to or exempt from such tariffs.

Further, classification concepts are particularly useful for certain U.S. or other products that fall within the special HTSUS Chapter 98 provisions, many of which may enable importers to partially or fully avoid higher tariffs. These provisions cover numerous types of products used for specific purposes as well as specific production or sourcing scenarios involving U.S. or previously imported components.

Origin Engineering

If you cannot modify the tariff classification of an imported product, it may be possible to modify its country of origin. For instance, CBP has found that the complex assembly of numerous parts, modules, or subassemblies into dedicated machines results in a substantial transformation of the components so that their country of origin is where the finished product was produced. Shifting such operations to countries not subject to higher tariffs may thus be a viable way to avoid them. Unfortunately there rules differ by product, so each production step should be reviewed in detail to ensure that substantial transformation is actually taking place.

FTAs and Preference Programs

The U.S. has 14 free trade agreements encompassing major trading partners like Canada, Mexico, South Korea, and Australia as well as other countries and regions like Chile, Colombia, Morocco, Singapore, and Central America. FTAs eliminate duties on trade between the U.S. and partner countries, and in the case of the U.S.-Mexico-Canada Agreement qualifying goods can avoid some of the IEEPA tariffs. Moreover, FTA-eligible imports into the U.S. can benefit from an exemption from the merchandise processing fee, and FTAs lower a wide range of non-tariff barriers on goods and services trade between partner countries.

Additionally, preference programs allow unilateral duty-free and reduced duty treatment to imports from designated developing countries, although the major U.S. preference programs (the Generalized System of Preferences, which expired years ago, and the African Growth and Opportunity Act and the Haiti HELP and HOPE acts, which expired Sept. 30, 2025) are currently not in effect.

Exclusions

More than 150 products (listed in Annex C in this notice) remain eligible for exclusions from the existing Section 301 tariffs on China.

Strategies to Mitigate Tariffs

First Sale

First sale valuation has long proven useful to industries that have been subject to high import duties, as it allows duty to be paid on the price a middleman trading company pays the manufacturer instead of the higher price the importer pays the trading company. While tariffs still apply in this scenario, the dutiable value is often significantly lower, resulting in a lower duty bill.

Various criteria must be met to ensure the first sale price reflects a sale that is clearly destined to the U.S. and conducted at arm’s length, but, once validated, a viable first sale value can provide substantial duty savings. It can also serve as a type of long-term annuity; i.e., even if IEEPA, Section 301, or other tariffs expire, use of first sale valuation would continue to provide a lower declared value and thus reduce the regular duties assessed on a company’s products. Further, importers employing first sale enjoy enhanced visibility into, and hence improved compliance and security throughout, their supply chains.

Valuation

Importers should consider (1) whether certain amounts typically included in the price, such as buying commissions, shipping-related charges, inspection fees, and post-importation assembly charges, can be excluded from dutiable value, and (2) how the use of transfer pricing rules (see below) may be able to lower the dutiable value in related party transactions.

Trade Remedy Reviews

The U.S. maintains more than 700 antidumping and/or countervailing duty orders imposing substantial and even prohibitive duties on imports from dozens of countries. Annual administrative reviews of these orders that seek to update the information on which they are based, and ad hoc new shipper reviews of foreign companies not involved in an initial AD/CV proceeding, can be effective at obtaining lower duties. Importers can also request scope rulings and changed circumstances reviews that may result in the exclusion of specific goods from the coverage of an order and thus eliminate associated AD/CV duties.

Duty Deferral

Goods admitted to a foreign-trade zone in privileged foreign status retain their character and tariff classification as admitted even if they are manufactured into a product subject to higher tariffs that may be withdrawn from the zone and exported out of the U.S. to avoid such tariffs. Goods otherwise subject to higher tariffs may be stored, manipulated, and/or subject to packaging or labeling operations in a bonded warehouse for up to five years to avoid those duties if they are (1) exported directly from the warehouse, (2) destroyed, or (3) entered for U.S. consumption once the tariffs have lapsed or a product-specific exclusion has been granted. Temporary importations under bond enable companies to avoid higher tariffs for products transiting or undergoing processing prior to exportation out of the U.S.

Strategies to Recover Tariffs

Refunds

IEEPA Tariff Refunds

New! Read our latest guidance on IEEPA tariff refunds in this Trade Report article on steps to take now.

On February 20, 2026, In a 6-3 decision, the Supreme Court struck down President Trump’s tariffs imposed under the International Emergency Economic Powers Act (IEEPA).

The Court of International Trade is overseeing the refund process, and has held that it need not be chaotic and that they do not want importers to have to file suit to obtain refunds. CBP has indicated that it could have the Automated Commercial Environment programmed to issue refunds within 45 days.

ST&R still advises importers to protest liquidations within 180 days. Importers should also consider filing suit at the CIT for refunds, especially for entries that have finally liquidated, in which case a suit may be the only path to obtaining refunds. ST&R has substantial experience helping companies with all of these measures; contact us at tariffs@strtrade.com for more information. Click here for a more expansive Trade Report article on possible steps.

Section 301 China Refunds

After years of litigation, the Supreme Court has officially closed the door on a challenge to President Trump’s first-term imposition of Section 301 tariffs on hundreds of billions of dollars’ worth of imports from China.

A lawsuit first filed in 2020 and since joined by thousands of importers argues that the Section 301 tariffs on List 3 and List 4A goods from China were wrongly imposed. In September 2025 the U.S. Court of Appeals for the Federal Circuit affirmed the judgement of the U.S. Court of International Trade upholding the tariffs. The Supreme Court’s decision not to review the CAFC ruling means the Section 301 tariffs on List 3 and 4A goods from China will continue to be imposed and there will be no refunds of such tariffs levied in the past.

Section 232 Tariffs on Steel

On January 27, 2026, an importer filed a lawsuit against CBP at the US Court of International Trade challenging how the Base Metals Center for Expertise & Excellence calculates Section 232 duties for products made entirely of steel. Given this lawsuit, CBP is likely to suspend all current and future protests raising the same issue until the court resolves the case. To preserve their right to a refund of the challenged tariffs if the court rules against CBP, we recommend that importers of steel and aluminum file protests on this issue.

Section 122 Tariffs

The U.S. Court of Appeals for the Federal Circuit has granted the federal government’s motion for a stay pending appeal in the litigation challenging the global 10 percent tariff imposed under Section 122 of the Trade Act of 1974. This means that the Section 122 tariffs remain in place.

At least two separate lawsuits filed at the Court of International Trade seek to stop the Trump administration from using Section 122 of the 1974 Trade Act to impose tariffs on all imports into the U.S. Both suits are asking the CIT to declare the Section 122 tariffs unlawful, to stop the federal government from enforcing them, and to order refunds of such tariffs already paid.

Transfer Pricing

Transfer pricing represents the price one company (e.g., a parent) charges a related company (e.g., a subsidiary) for its goods and services. Retroactive transfer pricing adjustments are generally considered part of the customs value of previously imported goods and may need to be reported to CBP. In such cases, importers may need to tender additional duties to CBP if the adjustment increases the customs value of the imported goods, but they may also seek a refund for adjustments that decrease that value and thus the duties owed. However, certain procedures and processes need to be in place prior to adjusting such values to ensure compliance with CBP rules.

Reconciliation

Under CBP’s reconciliation program, importers may file entry summaries with the best available information and later file a reconciliation entry that provides the final and correct information upon which the entry is liquidated. Reconciliation is currently available for classification, value, HTSUS 9802 values, and FTA eligibility. If the reconciliation entry reflects a preferred classification, a lower dutiable value, or FTA eligibility, excess duties and tariffs deposited at entry may be refunded.

Post-Entry Procedures

Post-summary corrections (prior to entry liquidation) and protests (after liquidation) can be used to secure refunds when duty recovery opportunities are discovered after entry of the goods. If proper legal arguments and supporting information are submitted and applicable time frames are met, these mechanisms can yield substantial refunds.