Under the current administration’s trade policies, Chinese imports come with prohibitively high tariffs, approximately $370 billion or so each year. Several U.S. companies are consequently being strategic in how they maneuver around these additional financial challenges while sustaining the steady product supply vital to their domestic businesses, according to the Wall Street Journal.
The Trump administration began levying stronger tariffs on Chinese imports in July 2018. Companies since that time have developed work-arounds to avoid the added costs, though the exact amount is not known and some tariff-related costs have accrued.
“Companies are looking under every single rock to try to save money,” said Marilyn-Joy Cerny, an international trade lawyer with Miami-based firm Sandler, Travis & Rosenberg. The U.S. government received $21.2 billion in tariff-related revenue in Q4 of 2019.
Hylete Inc., an athletic apparel company, will steer its inventory through a Mexican warehouse operated by Baja Fulfillment. Company executives suggest such a move will save $2 million this year.
“We’re all competing with the Amazons of the world, so we needed that speed to delivery,” said Hylete vice president Kate Nowlan, noting her company had $15 million in sales last year.
Strategies such as changing shipping routes and assembly paths aren’t always an option, nor the answer, for many companies. Many need to completely redesign their international supply chain assembly footprint, often securing new logistics firms, which itself can be a challenge.
“They really don’t want to do it because it’s a pain,” said Steven Page, president of Canadian logistics firm Stalco Inc., which is shipping a growing number of tariff-free packages into the United States.
“For everybody that comes in, you poke and you prod,” said Robert Silverman, a New York trade lawyer with Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP. He said sometimes a company just has to face the music and pay the tariff.
“Sometimes, nothing works,” he said.