Jimmy Schulz, CPA CVA, MT
Partner
Managing Tariffs: What Manufacturers Should Be Paying Attention To
Tariffs remain a consistent pressure point for manufacturers, particularly as trade policy continues to evolve. According to The Budget Lab at Yale, the effective average tariff rate has risen to 11% in early 2026, up from just 2.5% two years ago.
While tariff rates themselves may be outside your control, how you manage tariff exposure can have a direct and measurable impact on margins.
At a high level, many companies continue to leave savings opportunities on the table—often because tariffs are treated as a fixed cost rather than an area that can be actively managed.
Tariffs Then vs. Now: What’s Changed Since 2025
When the current tariff environment took shape in early 2025, the initial approach was broad and aggressive, with sweeping tariffs introduced across key trading partners. Since then, the landscape has continued to shift:
Policy volatility has increased
Tariffs have been expanded, modified, delayed, and, in some cases, challenged or reversed. While this creates uncertainty, it can also present planning opportunities—including potential refund claims.
A more targeted approach is emerging
Recent developments have focused more on specific industries and strategic goods, rather than broad-based tariffs across all imports.
Supply chains are evolving
Many manufacturers have adjusted sourcing strategies, often diversifying suppliers across multiple countries rather than fully reshoring operations.
Cost pressures remain
Tariffs continue to impact input costs, with many businesses absorbing or passing through those increases.
What this means: Tariffs should no longer be viewed as a one-time disruption—they are an ongoing variable that warrants active oversight.
Key Areas To Focus On
Start with Visibility
Managing tariff exposure begins with clear visibility into your supply chain—from sourcing through final delivery. This includes duty rates, countries of origin, and total landed cost across products and suppliers.
Periodic reviews can help identify where costs have increased, where assumptions may no longer hold, and where opportunities may exist.
Revisit Product Classifications
Tariff classifications (HTS codes) directly determine duty rates, yet they are often established once and left unchanged. Misclassification can result in overpayments or potential compliance exposure.
A focused review can help confirm accuracy and may identify opportunities to reduce duty costs.
Take Advantage of Available Programs
Several established programs can help manufacturers manage or recover tariff costs:
- Duty drawback may allow recovery of duties on imported goods that are later exported
- Foreign-Trade Zones (FTZs) can provide duty deferral or reduction on imported components
- Bonded warehouses allow goods to be stored without immediate duty payment
- “First Sale” strategies may reduce the dutiable value in certain supply chain structures
While these strategies are well established, they are often underutilized in practice.
Evaluate Sourcing and Origin
Where products are manufactured continues to matter. Even modest changes to sourcing—or how and where final transformation occurs—can influence country of origin and applicable tariff rates.
As supply chains evolve, this is an area that may warrant a closer look.
Stay Current on Trade Developments
Trade agreements, exclusions, and regulatory changes can create planning opportunities—but only if they are actively monitored.Ensuring that available benefits are captured, and that supporting documentation is maintained, remains essential.
Keep Documentation in Order
We are seeing increased scrutiny from customs authorities. Maintaining support for classifications, valuations, and country-of-origin positions not only reduces risk but also strengthens the ability to support refund claims or cost-saving opportunities.
Bringing It Together
Tariffs are best managed as part of a broader supply chain and financial strategy—not in isolation. In the current environment, where tariff rules continue to evolve, a periodic review is not just a best practice—it’s becoming a necessity.
If tariffs haven’t been reviewed recently, it may be worth a fresh look. Even small adjustments can translate into meaningful savings over time.
Let’s Protect Your Margins
If your organization has not recently reviewed its tariff exposure, now may be the right time to take a closer look. Our manufacturing advisors work with companies to evaluate classifications, sourcing strategies, documentation, and available tariff recovery opportunities—helping identify practical ways to reduce risk and improve margins.
