such as risk assessment, mitigation, and alternative approaches. Should standard agreements and purchase orders be updated to address tariffs? Consider updates to the provisions mentioned above.
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Consider Tariff Reduction Measures: These vary widely in nature and scope. Examples include seeking alternate suppliers, establishing or relocating a foreign plant or operation, or modifying supply chains. The uncertain duration of the new tariffs, enacted under a declared emergency, clouds this analysis. Other measures include tariff deferral programs, such as the use of a foreign trade zone or bonded warehouse. As a broad generalization, goods imported into such facilities are not considered to enter the U.S. customs territory, and tariffs are not owed until withdrawn for US consumption. If re-exported, the goods may never enter the US customs territory and be subject to payment of tariffs. Tariffs also may be reduced by reclassification of goods under the US Harmonized Tariff Schedule. These include, among others: • Changing the base tariff classification of goods by focusing on the market or primary intended use rather than discrete technical function, or vice versa. However, this will not avoid the new countrywide tariffs of 10-30%. • Changing the foreign content of goods. • Making the seller the importer of record in cases where formerly goods were shipped directly to the buyer. This move reduces the declared value of goods on which the tariff is calculated. BACK TO CONTENTS
• Importing or exporting goods at an earlier or later stage in the manufacturing process.
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Determine Strategy: Based upon the analysis of risk and options, determine strategy, actions needed, and timing. Any new strategy may involve legal and practical challenges. Consider: • Does the strategy make sense? Does it pass the laugh test? • Who has the authority to deal? What approvals are needed? • Where are the hidden risks? Find those risks and address them.
If the strategy involves pausing or terminating contracts or relationships, these will be tough discussions.
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Have Tough Discussions with Key Vendors and Clients: If the strategy involves pausing or terminating contracts or relationships, these will be tough discussions. Consider mutual interests and solutions. In long-term relationships, it may be possible to restructure, extend terms or grant mutual concessions.
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Monitor Developments and Reassess: Assign responsibility for monitoring developments. The specific tariff levels, countries, and economic sectors affected will gain greater clarity with time. Bilateral agreements, if reached, will go a long way in this regard. Keep track of the new tariffs paid in case they are ruled unconstitutional and refunded.
Charles Baldwin, a partner at Brooks Pierce in the port city of Wilmington, North Carolina, uses his broad experience in cross-border transactions to advise businesses on international trade, venture capital, and U.S. market entry. He may be reached at cbaldwin@brookspierce.com. Gabby Supak, an associate at Brooks Pierce, is involved in international trade and business litigation matters. She may be reached at gsupak@brookspierce.com.
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Execute the Strategy: Businesses that execute their tariff response strategies decisively may gain advantages over those that hesitate during periods of trade policy uncertainty. SEPTEMBER/OCTOBER 2025
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