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Economic Times
a day ago
- Automotive
- Economic Times
Tariff engineering: How companies are outsmarting Trump
Delta Air Lines pulled off an age-old trick on US President Donald Trump who has imposed steep tariffs on imports which are pinching American companies. Delta took brand-new Airbus jets sitting in Europe, yanked out their US-made engines, shipped those engines back to the States, and left the rest of the aircraft To avoid Trump's to a July 11 report by Bloomberg, Delta has been cannibalising new A321neo aircraft, assembled in Europe and fitted with Pratt & Whitney engines, for parts to keep its grounded US fleet flying. By removing the engines, which are manufactured in the US, and shipping them home separately, Delta avoids the 10% import duty levied on European-made aircraft under Trump-era trade policies. The planes themselves remain parked in Europe. They can't fly in the US yet anyway, their seats haven't cleared US regulatory certification. So instead of paying duties on entire aircraft, Delta is importing only the parts it needs, duty-free. CEO Ed Bastian was frank about the tactic. 'We are not planning to pay tariffs on aircraft deliveries,' he said during the company's latest earnings call, adding that Delta will continue using the workaround. Earlier this year, Delta routed new Airbus long-haul jets through Japan before bringing them into the US, another move to dodge import in 2020, the airline used similar tactics, redirecting deliveries through places like Amsterdam, Tokyo, and El Salvador to avoid tariffs during peak trade isn't a one-off. It's a workaround might look extreme, but it's hardly unusual. US companies across industries, from sneaker makers to car manufacturers, have been using similar strategies to avoid rising import duties. Call it tariff engineering or just smart loophole hunting. The goal is simple: cut import costs without breaking the law. And this is entirely Foote, a customs lawyer at Kelley Drye & Warren in Washington D.C., sees no issue with the practice. 'There is nothing inherently illegal or even untoward about leveraging strategic design choices that result in creating different products that are subject to different tariff classifications and duty rates,' he told CNBC. 'Tariff engineering is one of the few things you can do to try to get it right and reduce your duty liability.' What is tariff engineering? Tariff engineering is the art of designing or altering a product, legally, to qualify for a lower import tax. It doesn't mean cheating the system. It just means working within the rules and playing them to your advantage. Merritt v. Welsh (1882) Tariff engineering isn't new. One of the earliest examples dates back to the 1881 US Supreme Court case Merritt v. Welsh, when a sugar importer found that coating lighter sugar with molasses helped avoid higher tariffs. The case went all the way to the Supreme Court, which ruled that as long as the goods were honestly declared and inspected, there was nothing illegal about gaming the system. At the time, the US taxed sugar based on its colour, using something called the Dutch standard. Darker sugar = lower quality = lower what did the importer do? He took highly refined (white) sugar and added molasses to darken it. That way, it looked like low-grade sugar and qualified for a lower should've worked, until the Port of New York stepped customs office didn't buy it. They ran chemical tests, found the sugar had been intentionally darkened, and slapped on the higher tariff anyway. But the case reached the Supreme Court, and the justices sided with the importer. Why? Because the law at the time said tariffs had to be based only on colour, not chemical analysis or Matthews was of the opinion that even if the sugar was darkened on purpose, that wasn't illegal. 'Great stress is laid on the charge that sugars are manufactured in dark colors on purpose to evade our duties. Suppose this is true; has not a manufacturer a right to make his goods as he pleases?... If the duties are affected, there is a plain remedy. Congress can always adopt such laws and regulations as it may deem expedient for protecting the interests of the government.' Fast-forward to today, and tariff engineering is practically a full-time job for trade compliance teams across corporate America. Take Columbia Sportswear. They've been upfront about it. 'I have a whole team of people that work … with the designers and developers and merchandisers and with customs,' said Jeff Tooze, the company's VP of global customs and trade, in a 2019 interview with Marketplace. Their mission: bake tariff classification into the product design process. For instance, CNN reported that adding small zippered pockets below the waist on shirts is a simple tweak that can shift the product into a lower-duty category. That's how you end up with shirts sporting oddly placed zippers, designed not for fashion or function, but for tariff relief. Footwear brands play the same game. Converse, for instance, has been known to put felt soles on some All Star sneakers. The reason? Classification. Felt soles can move the shoes into the 'house slipper' category instead of 'athletic footwear', and house slippers come with significantly lower around the world use a system of more than 5,000 product classification codes to determine how much tariff to apply to imports, according to manufacturing the shoes overseas with felt soles, Converse can make a case to US customs that they qualify for the lower-duty category. It's not about aesthetics but a strategic design decision aimed at cutting costs. The loophole economy isn't just about design Sometimes, companies don't bother changing the product. They change the route. Or the label. Or where the product waits. Delta's stripped-down aircraft are one version of this. Another is the bonded of it as international limbo. Goods can enter the US and sit inside a government-regulated storage facility, as long as they remain locked up in a customs-regulated warehouse, for up to five years, duty-free, until the importer decides the timing is right to clear them through only pay the current tariff rate when they take goods out of storage. It's a bet that tariff rates will go down in the short or medium Hartry, who runs Howard Hartry, a customs brokerage by the Port of Los Angeles, says the demand for bonded warehouses has exploded since Trump's tariffs took hold. She told CNN that 95% of inquiries she receives now involve goods from no cap on the value a company can store in a bonded warehouse, the only real limit is physical to Hartry, her clients are stashing everything from lithium batteries and metal rods to TVs and treadmills. The value of these goods ranges between $37,000 and $500,000. She's well aware of how hard tariffs have hit her clients. But for her business, they've been a lifeline. 'It's saving our business, which we're grateful for,' she told CNN's Julia Vargas. Why all of this still works Despite the Trump administration's aggressive tariff hikes, loopholes remain. Sometimes products are explicitly exempt. Sometimes a lower rate applies if you swap a fabric or a metal. Other times, it's about knowing the right Harmonised Tariff Schedule (HTS) code, a system with over 5,000 lawyers are seeing a boom in business. Erik Smithweiss, a partner at GDLSK, said that companies come to his firm asking whether tweaks to their products might qualify them for a more favourable code.'We are working with companies who say, 'Gee, I really want to be on this list, look at my tariff codes,'' he told CNN. If the product can be modified, legally and substantially enough, his team will help make it tariff engineering has its limits, and pushing too far can backfire. Customs officials have the authority to test materials, scrutinise designs, and if they suspect deception, they can impose steep fines. Ford learned that the hard way The automaker was accused of sidestepping a steep 25% tariff, known as the 'chicken tax', by disguising cargo vans as passenger vehicles. The 'chicken tax' dates back to 1964, when the US imposed a 25% tariff on imported light trucks in retaliation for European restrictions on American workaround? Ford shipped Turkey-assembled Transit Connect vans to the US with temporary rear seats and minor interior tweaks, just enough to classify them as passenger vehicles and qualify for a much lower 2.5% import duty. Once the vans cleared customs, the seats were removed, and the vehicles were sold as cargo and Border Protection and the Department of Justice called it a clear attempt to dodge higher tariffs, saying the rear seats were never meant to carry passengers and were simply 'an artifice or disguise.'The case spanned years and involved hundreds of thousands of vans imported between 2009 and 2013. Courts consistently ruled in the government's favour. The Supreme Court refused to hear Ford's appeal in March 2024, Ford agreed to pay $365 million, roughly half in back duties, the rest in penalties. The company said it 'strongly disagreed with many of the characterisations' but chose to settle and end the legal battle. It did not admit fine is one of the largest customs penalty settlements in recent history. The risky business of skating the line Not all industries can play this game equally. Apparel and footwear can get by with easy tweaks and quick wins, but for aerospace, electronics, and medical devices, it's a completely different ballgame.'You might be looking at another 12 to 24 months of testing, certification, and validation in order to get that done,' said Andrew Wilson, a supply chain strategist at Supplino, to CNBC. That's time, money, and regulatory for many companies, the savings are worth it. Izzy Rosenzweig, CEO of logistics firm Portless, told CNBC that one of his clients switched hoodie production from synthetic to cotton to save 15% in duties. That's a serious margin in Industries, the RV giant, said earlier this year that it's actively working with trade experts to explore mitigation strategies, tariff engineering and deferrals it's not just the goods themselves. Even small tweaks to product add-ons can lead to big savings. Customs lawyer John Foote described to CNBC a lapel pin that was redesigned to include small pieces of cubic zirconia. That change moved it out of the 'festive article' category (14% tariff) into the 'jewellery' category (lower tariff). A small shift with a big game has rules. You just have to learn them. Tariff engineering is not fraud. But it is a tightrope walk. There's a fine line between clever strategy and misclassification. Companies can request a binding ruling from US Customs and Border Protection to confirm whether a classification will hold. But that comes with a risk: once you ask, you can't walk it back. If Customs disagrees, you're is why many firms prefer to stay just under the radar. Quietly adapting. Carefully designing. Relentlessly optimising.
Time of India
a day ago
- Automotive
- Time of India
Elon Musk's Tesla Hollywood diner: AI robot, cybertruck meals and other futuristic key features revealed
Source: Forbes Tesla's long-awaited Hollywood diner has officially opened, fusing nostalgic 1950s diner vibes with cutting-edge innovation. Situated on Santa Monica Boulevard in LA's lively Media District, the location now appears live on the Tesla app, confirming its grand debut. Designed to be more than just a Supercharger stop, the venue offers a unique experience—featuring high-speed V4 chargers, dual 45-foot LED drive-in screens, smart in-car ordering via touchscreen, and an AI-powered Optimus robot serving popcorn. With Cybertruck-themed meals and limited-edition Tesla collectibles, this tech-forward diner isn't just for EV owners—it's a must-visit hotspot for anyone intrigued by Elon Musk 's vision of the future. Elon Musk's Tesla Hollywood Diner : Where is it and what is inside Situated in the heart of LA's Media District, the Tesla Hollywood diner sits on Santa Monica Boulevard and is designed to be more than just a pit stop. The diner is equipped with 80 of Tesla's newest V4 Superchargers, each capable of delivering up to 325 kW, making it a powerful charging hub for electric vehicles. Construction began in September 2023, and now, the site is officially visible in the Tesla app, signaling that it's nearing operational status. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like The Groom's Surprise Left Everyone in Tears—Especially His Bride Read More Undo Tesla Diner brings back drive-in movies with a smart tech twist One of the diner's most buzzworthy features is its retro-style drive-in movie theatre. Merritt revealed that the setup includes two 45-foot LED screens for playing movies or curated Tesla videos. The audio plays seamlessly through the Tesla's built-in speakers when connected via Wi-Fi. This feature transforms the Supercharger downtime into an immersive entertainment experience—channeling the golden age of drive-ins with a modern, tech-forward twist. Visitors won't even need to leave their car to grab a bite. The diner allows customers to order food directly from their Tesla vehicle's touchscreen once connected to the local Wi-Fi. The Tesla Diner App appears automatically, streamlining the entire dining experience for EV owners. Tesla Diner menu According to the reports, the food options reflect classic American diner fare, including: Burgers and Fries Hot Dogs and Chicken Wings Hand-Spun Milkshakes Sandwiches Sodas made with cane sugar are priced at $4, available in flavours like cola, root beer, black cherry, and cream. Milkshakes cost $8, with an additional $4 for "pie shakes" featuring apple or pecan pie mixed in. Milkshake flavors include vanilla, chocolate, and strawberry. Tesla's Hollywood Diner blends AI, design, and fun in every detail Beyond food and film, the diner offers some quirky, futuristic experiences. Notably: A Tesla Optimus robot serves popcorn, creating a buzz among fans of Tesla's humanoid AI projects. Burgers and sandwiches come packaged in mini Cybertruck boxes, adding to the novelty. A limited-edition all-black Tesla Bot action figure is also on sale exclusively at the site. Merritt also noted the venue includes a 'cool' bathroom design that aligns with Tesla's sleek, futuristic aesthetic. Also Read | Elon Musk's Tesla Optimus humanoid robot serving popcorn goes viral; says 'This will become normal in a few years'
CBC
a day ago
- CBC
Nicola Lake algae bloom raises public safety concerns
At least one dog has died after swimming in Nicola Lake near Merritt, B.C. due to a toxic algae bloom on the lake. Homeowners, campers and lake users are concerned that not enough is being done to warn the public. Shelley Joyce reports.
Yahoo
2 days ago
- Yahoo
Nicola Lake algae bloom raises public safety concerns
At least one dog has died after swimming in Nicola Lake near Merritt, B.C. due to a toxic algae bloom on the lake. Homeowners, campers and lake users are concerned that not enough is being done to warn the public. Shelley Joyce reports.
Filipino Times
3 days ago
- Entertainment
- Filipino Times
Chace Crawford and Kelsey Merritt spark dating confirmation on actor's 40th birthday
Chace Crawford and Kelsey Merritt have seemingly confirmed their relationship through a series of Instagram stories posted on the actor's 40th birthday. On Friday, Crawford reshared birthday greetings from friends and colleagues on Instagram, but it was the final two images that drew public attention. One photo showed Merritt holding a cake that read 'Happy Birthday, Darling,' topped with '4' and '0' candles. Another image showed the pair taking a mirror selfie, with Crawford standing behind Merritt and his arm wrapped around her waist. The posts have fueled speculation that the Hollywood actor and the Filipino-American model are officially dating. While the two have not publicly confirmed the relationship, online buzz began as early as November 2024 when fans noticed they had started following each other on Instagram. Reports of the pair sharing a kiss in New York City surfaced in April 2025, adding to the rumors. Crawford is widely known for his roles in Gossip Girl and The Boys, while Merritt gained international recognition as the first Filipino to walk the Victoria's Secret Fashion Show.
