Workers classified clothing from the Artikel2 Classification Center in Stockholm on April 10, 2025.
Jonathan Nackstrand | AFP | Getty Images
Will you be disturbed if your coat is formally classified as a windbreaker or raincoat or shoes as slippers? However, businesses do care because the classification under the preferred category can help them pay lower tariff rates.
Several customs lawyers, supply chain and transportation experts told CNBC that just as U.S. President Donald Trump imposes duties on friends and enemies, manufacturers are increasingly reconsidering the classification of their products and resorting to “tariff projects” to bear lower tariffs.
Tariff works (practice before Trump) involve changing the material of an item, changing its size or composition so that the finished product can be justified “Unified System Code”, Legal experts say.
Although most of the new tariffs added during Trump’s second semester were based on broad, the U.S. government owns Exemption to engrave certain productsTrade lawyers pointed out that opening up for companies and opening up companies to benefit from tariff projects.
After Trump announced “reciprocity” tariffs in April, several overseas manufacturers moved to bundled steel and aluminum elements to make their final products qualify in 25% of their responsibility Chapter 232said David Ringer, a partner at Chicago law firm, Richardson and Colburn.
However, the situation quickly turned 50% in June as Trump raised tariffs on all steel, aluminum products and derivatives.
John Foote said, “Using strategic design options, there is no inherently illegal or even disadvantageous, that lead to the creation of different products that are affected by different tariff classifications and tax rates.”
it’s over 5,000 different product classification codes The U.S. Customs Administration used it when evaluating tariffs. These tariff classifications are determined through decades of negotiations between governments and industry agencies and often vary by product category.
In a quarterly earnings call for March, U.S. RV maker Winnebago Industries said it plans to “work with external experts to develop and implement effective mitigation (tariff) mitigation strategies, including tariff engineering and extensions.”
Aneel Salman, chairman of the Economic Security of the Islamabad Institute for Policy Studies, described it as a “smart art beyond customs” as importers and manufacturers adapted the products “enough” to qualify for lower responsibilities.
Smart drama
Kelley Drye & Warren’s feet said: “I was talking to someone recently and they showed me their lapel pins.” Furt said the nail was worn on the man’s suit and featured “festive design.”
Foote later learned that companies containing cubic zirconia helped companies that manufacture these pins avoid a 14% tariff because the item no longer falls into the festival article category but is classified as jewelry.
“Authorized to the value of cubic zircon is important enough (and) relatively easy to change in manufacturing,” Furt said.
The practice of tariff engineering dates back to 1882, when importers coated with molasses were coated with sugar to avoid imposing higher tariffs on lighter sugars. exist Landmark rulingthe Supreme Court ruled the bill completely legally: “As long as the goods are genuinely invoiced, freely, honestly contacting customs officials for inspection, there is no fraud.”
Since then, companies of all sizes have continued to play chess using the U.S. tariff classification system, and several households have successfully implemented strategic product adjustments to save on tariff costs.
Columbia Jacklyn Adaff (R), 36, checks out her designs of sportswear in a house interview in Cali, Columbia, December 10, 2020.
Luis Robayo | AFP | Getty Images
For example, Colombia Sports Suit has never been shy about using tariff projects. “I have a team working with designers, developers, merchants, and customs to make sure that during the design process we are considering the impact of tariffs.” Market period Trump’s first term.
In its change, the company added small zippered pockets under the waist of the waist shirt US Customs Rules.
Similarly, footwear manufacturers Converse adds blurry fabric On the bottom of its iconic all-star sneakers, rather than a typical all-rubber sneaker, it was classified as a slipper instead of a sneaker, which greatly cuts the tariffs.
Snuggies, a fluffy blanket imported primarily from China, almost cut its tariff cost by almost half by winning lawsuits in 2017 to classify it as a blanket rather than clothing.
Andrew Wilson, supply chain strategist at Consultancy Supplancy Inc., said fast-moving consumer kindness and clothing, clothing and footwear departments can find it relatively easy to implement tariff projects.
“For more complex and “strictly regulated” departments such as automotive, aerospace, electronics and medical devices, “this is especially challenging… because even minor changes can require extensive verification and recognition,” Wilson said. ”
“You may be considering another 12 to 24 months of testing, certification and verification,” Wilson added.
Explain the rules
Companies must impose a fine between redesigning products and fraudulent misrepresenting product classifications.
A good example of the challenge of tariff engineering is Ford Motor. The automaker imported its transport-connected vans as passenger vans for years, then unloaded the second row of seats and sold them as vans. In this way, Ford Avoid 25% tariffs And only 2.5% import tax was paid.
The U.S. Department of Justice says Last year’s ruling That Ford “misclassified the van” and the rear seats “never intended to be passengers and were never used to carry passengers.”
“This post must be a ‘commercial reality’ when importing. The risk is that customs (may) find a change to “fraud or trick”, which (in this case) may reject the tariff work,”
“In some cases, changing certain things about certain products doesn’t change the basic characteristics of goodness,” said Derek Scarbrough, founder of Global Logistics Link. He added: “If you add something to your cart, it’s still a cart.”
U.S. Customs and Border Controls have developed so-called “Constraint Domination” system Before importing, the company can determine where the product classification and HTS code is officially determined.
Adam Lees, attorney for law firm Harris Sliwoski, helped clients prepare letter requests for such rulings, which he described as “a way for companies to receive official CBP blessings before shipment.”
For businesses, even a “small savings may make sense” because the shipment of the rolls can be considerable, Lees said.
