Businesses Find Creative Ways to Counter New Tariff Challenges
As the Trump administration’s new tariffs on imports from China, Canada, and Mexico take effect, companies and consumers in the United States are feeling the pressure. The tariffs, aimed at imports from these key trade partners, have already led to retaliatory measures affecting American exports, causing significant fluctuations in the stock market and heightening fears of an economic recession.
Shipping containers sit at the Port of Houston in Texas last month. A raft of new tariffs on imports from China, Canada and Mexico has companies and consumers scrambling.
Brandon Bell/Getty Images
The tariffs have left businesses scrambling to find ways to mitigate their impact. President Trump provided a temporary reprieve to automakers, highlighting the potential for exemptions within his trade policy. On Thursday, executive orders were signed to lift some tariffs on Mexican and Canadian goods until April 2.
Mary Anne Madeira, an assistant professor of international relations at Lehigh University, expressed interest in how the administration’s approach to tariffs will evolve. “I’m really interested to see how much of these threatened tariffs stick, and how many of our big industries will be able to get immediate reprieves like the auto industry has already done,” she noted.
Strategies for Tariff Avoidance
Various methods are being employed by companies to navigate these new challenges. Some tactics include lobbying for exemptions, relocating production, or creatively redesigning products.
Lobbying for Exemptions
Lobbying the government for tariff exemptions is one method. The White House has indicated openness to hearing about additional exemptions, according to White House press secretary Karoline Leavitt. The Office of the U.S. Trade Representative (USTR) handles these requests, with a history of granting a small percentage of exclusion requests.
Shifting Sourcing and Production
Companies are also considering changes in sourcing and production locations. For instance, NOBL Wheels, a Canadian bike wheel manufacturer, plans to open a U.S.-based facility to avoid tariffs. Shifting production and sourcing can be complex, and firms must weigh these costs against tariff expenses.
Reclassifying and Redesigning Products
Another approach is tariff engineering, where products are modified to fall into categories with lower tariffs. For example, Converse sneakers feature fuzzy fabric, classifying them as slippers, which attract lower tariffs than athletic shoes. Similarly, companies like Columbia Sportswear adjust product designs to benefit from lower duty rates.
Despite these strategies, some costs may inevitably be passed on to consumers. “We consumers just sort of see what’s available when we get to the stores,” says Dartmouth University’s economics professor Douglas Irwin, indicating the broader impact of these tariffs on the retail market.
This article was originally written by www.npr.org
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