In the midst of today's fluid situation, 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, please contact your ST&R professional or tariffs@strtrade.com.
For updates on the evolving tariff situation, please 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.
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. FTA-eligible imports into the U.S. can also benefit from an exemption from the merchandise processing fee. FTAs also lower a wide range of non-tariff barriers on goods and services trade between partner countries.
Additionally, preference programs like the Generalized System of Preferences (though congressional authorization for GSP has been lapsed for several years), the Caribbean Basin Initiative, the African Growth and Opportunity Act, and the Haiti HELP and HOPE acts allow unilateral duty-free and reduced duty treatment to imports from more than 100 developing countries.
Exclusions
ST&R continues to lead a coalition advocating before USTR and Congress to re-establish a broad exclusion process, renew expired exclusions, and provide for retroactive application of those exclusions. For more information, or to become part of this effort, please contact strdc@strtrade.com.
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 additional 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.
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
Importers who have paid tariffs imposed under the International Emergency Economic Powers Act should take the necessary steps to preserve their right to potential refunds. The Supreme Court has agreed to hear two cases challenging the legality of Trump’s IEEPA-based tariffs. If the courts ultimately invalidate these tariffs importers may be eligible for refunds of tariffs paid —but potentially only if they preserve their rights through timely protests. Even if the tariffs are ruled valid, importers may still be eligible for other refunds to mitigate their impacts. Click here for steps to take now.
Section 301 China Refunds
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. Next steps are under consideration.
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.