Tariffs are a tax – treat them accordingly | Home Accents Today

No matter your political leanings or beliefs within the deserves of tariffs, it’s time to just accept that tariffs are a tax—and they need to be managed as such. As corporations and an trade, we’ve got an obligation to our shareholders and prospects to reduce the monetary affect of those taxes, maximizing profitability and avoiding pointless worth will increase for our prospects.

I’m JJ Hjalmarson, founding father of First Sale Tariff (FST), a consultancy and platform designed to information importers by means of the complexities of worldwide commerce in 2025. Our experience contains product and Harmonized Tariff Schedule (HTS) code optimization, First Sale declaration implementations, and complete tariff-related tax discount methods. I’ve partnered with House Accents Right now to share actionable insights for importers seeking to cut back their Value of Items Bought (COGS) by means of strategic tariff administration.

When assembly importers for the primary time, the first query I pose is, “Do you prioritize margin {dollars} ($) or margin proportion (%)?” The response to this foundational query guides the method to sudden COGS will increase ensuing from tariffs. Whereas there isn’t a proper or mistaken reply, your group’s strategic emphasis right here straight influences your pricing and tariff mitigation methods. Let’s contemplate the sensible affect of a hypothetical new 20% tariff from China:

The pricing and margin technique you undertake in response to tariffs won’t solely form your monetary outcomes however may even affect buyer notion of your model within the market. Whereas each firm’s determination will rely upon its distinctive construction and targets, I advocate prioritizing margin {dollars}, as this straight pertains to your capability to pay payments and preserve wholesome operations.

The second crucial query is, “When was the final time your group evaluated and optimized your Harmonized Tariff Schedule (HTS) codes, together with incorporating product improvement methods to leverage lower-duty codes?” Many companies default to historic classifications with out re-examining potential financial savings. For example, contemplate ornamental versus useful steel lanterns: traditionally, ornamental lanterns (HTS 8306.29.0000) have had considerably decrease duties in comparison with useful lanterns (HTS 9405.50.4000), which incur larger tariffs. By navigating the nuanced variations between ornamental and useful classifications, corporations can strategically design and supply merchandise to cut back responsibility publicity considerably. HTS optimization gives rapid financial savings, whereas product redesign and sourcing changes usually require an extended timeframe to implement.

The third, and sometimes most impactful, query is, “Have you ever stripped non-dutiable prices from the declared worth of your items?” Many importers historically declare the total buy worth paid to suppliers because the customs worth. Nonetheless, tariff rules permit particular non-dutiable prices to be excluded by means of a First Sale declaration.

Identical to another type of taxation — property, earnings, property — the affect of tariffs can’t be fully eradicated, however it might probably definitely be minimized. By strategically aligning organizational targets with actionable tariff and sourcing methods, your group can mitigate the antagonistic monetary impacts and preserve sturdy market competitiveness, even in difficult tariff environments.