Latest news with #NormaGaleana
Yahoo
07-05-2025
- Business
- Yahoo
Businesses have found strange but legal ways to avoid Trump's tariffs
A cargo ship arriving at the Port of Los Angeles. Nearby are bonded warehouses where businesses pay money to have imports locked up to defer tariff payments. - Norma Galeana/CNN A few months ago, the words 'bonded warehouse' and 'harmonized system codes' might not have been on the minds of many American business owners. Now they're in a massive spotlight. After President Donald Trump slapped a whopping 145% minimum tariff on most goods coming from China, 25% tariffs on cars, auto parts, aluminum and steel and a 10% tariff on almost every country's imports, US businesses are desperate for ways to lower their import costs. Two popular — and legal — strategies involve those bonded warehouses to defer tariffs and harmonized system codes to qualify for lower rates. 'Tariff engineering' There are over 5,000 different product classification codes that governments across the globe use when assessing tariffs. Consumers don't care whether the imported coat they're wearing was officially classified as a windbreaker or a raincoat. But for businesses, that distinction can be the difference between lower and higher tariff rates – and potentially turning a profit or not. And to qualify for the lower rate, all a manufacturer would have to do is tinker with the product's materials, otherwise known as tariff engineering. For instance, Converse's signature All Stars sneakers have a sole that contains felt as opposed to the fully rubber one traditionally seen in sneakers. That may have been a purposeful decision, since foreign-produced shoes with felt bottoms could be considered 'house slippers' for the purpose of tariff codes. And house slippers have qualified for significantly lower tariff rates compared to other kinds of footwear in the past. (Nike, the parent company of Converse, didn't respond to CNN's request for comment. CNN could not determine the latest tariff rates for sneakers versus house slippers given their respective classification codes.) Columbia Sportswear has not been shy about its use of tariff engineering. 'I have a whole team of people that work … with the designers and developers and merchandisers and with customs, actually, and to ensure that during the design process that we're considering the impact of tariffs,' Jeff Tooze, the vice president of global customs and trade at Columbia Sportswear told Marketplace in 2019. Among its uses of tariff engineering: adding small zippered pockets below shirt waistlines to qualify for lower tariff rates, he said. Even in the current environment, with Trump's efforts to target tariffs at China and specific sectors, there are still plenty of opportunities for businesses to tariff engineer products, said Erik Smithweiss, a partner at the law firm GDLSK, who specializes in trade compliance.
Yahoo
07-05-2025
- Business
- Yahoo
Businesses have found strange but legal ways to avoid Trump's tariffs
A cargo ship arriving at the Port of Los Angeles. Nearby are bonded warehouses where businesses pay money to have imports locked up to defer tariff payments. - Norma Galeana/CNN A few months ago, the words 'bonded warehouse' and 'harmonized system codes' might not have been on the minds of many American business owners. Now they're in a massive spotlight. After President Donald Trump slapped a whopping 145% minimum tariff on most goods coming from China, 25% tariffs on cars, auto parts, aluminum and steel and a 10% tariff on almost every country's imports, US businesses are desperate for ways to lower their import costs. Two popular — and legal — strategies involve those bonded warehouses to defer tariffs and harmonized system codes to qualify for lower rates. 'Tariff engineering' There are over 5,000 different product classification codes that governments across the globe use when assessing tariffs. Consumers don't care whether the imported coat they're wearing was officially classified as a windbreaker or a raincoat. But for businesses, that distinction can be the difference between lower and higher tariff rates – and potentially turning a profit or not. And to qualify for the lower rate, all a manufacturer would have to do is tinker with the product's materials, otherwise known as tariff engineering. For instance, Converse's signature All Stars sneakers have a sole that contains felt as opposed to the fully rubber one traditionally seen in sneakers. That may have been a purposeful decision, since foreign-produced shoes with felt bottoms could be considered 'house slippers' for the purpose of tariff codes. And house slippers have qualified for significantly lower tariff rates compared to other kinds of footwear in the past. (Nike, the parent company of Converse, didn't respond to CNN's request for comment. CNN could not determine the latest tariff rates for sneakers versus house slippers given their respective classification codes.) Columbia Sportswear has not been shy about its use of tariff engineering. 'I have a whole team of people that work … with the designers and developers and merchandisers and with customs, actually, and to ensure that during the design process that we're considering the impact of tariffs,' Jeff Tooze, the vice president of global customs and trade at Columbia Sportswear told Marketplace in 2019. Among its uses of tariff engineering: adding small zippered pockets below shirt waistlines to qualify for lower tariff rates, he said. Even in the current environment, with Trump's efforts to target tariffs at China and specific sectors, there are still plenty of opportunities for businesses to tariff engineer products, said Erik Smithweiss, a partner at the law firm GDLSK, who specializes in trade compliance.
