18 Tariff Strategies Working Right Now

Strategy 6: Mexico/USMCA Nearshoring

USMCA is the most underutilized trade agreement in North America.

Aaron Alpeter from Izba dropped a stat that floored me: "99% of all crossings into the US could be duty-free under USMCA. Today."

Read that again. Ninety-nine percent.

So why isn't everyone using it? Because when tariffs were 0.1%, nobody cared. Aaron explains: "In the past, people had not filled out the paperwork because we're talking very small dollars. 'I don't want to deal with all the compliance stuff just to validate where my stuff came from.' The reality is, when you have a very high tariff situation everywhere else, USMCA becomes even more valuable."

If a majority of your product's transformation or components come from North American sources, it can enter the US duty-free. Not reduced. Free.

This makes Mexico the obvious nearshoring play. Lower labor costs than the US or Canada, geographic proximity, and USMCA qualification if you structure it right.

Tom from Passport sees specific categories moving there already: "Electronics have been interesting. A lot of electronics have injection molded housings. We've moved people to Mexico for that. Same with anything in line with automotive: natural rubbers, components. Very capable of doing that there."

Stephen Miller adds supplements and cosmetics to the list: "Supplements and pretty much anything FDA regulated is very easy to produce in the US or Mexico. Those industries never really left. They've found ways to automate and get competitive."

Central America and the Caribbean work too. 

Tom: "We have more than 20 trade agreements, many with Central American and Caribbean countries. Dominican Republic, for example, has a strong apparel industry." Same USMCA-style benefits, different labor cost structures.

The catch: USMCA qualification is genuinely complex.

Adam from AMZ Consulting, a customs attorney with 35 years of experience, warns against oversimplifying: "It's not a simple thing to analyze, particularly with apparel. There's thread counts, where the fabric comes from. It's 100% a case-by-case basis."

You need detailed bills of materials. Good record keeping. Potentially a trade attorney to verify you actually qualify. 

As Adam puts it: "I'm starting to sound like an auditor, which I don't like, but there's an opportunity there if you can make the goods in Canada or Mexico and qualify for what's called a tariff shift."

And Section 232 tariffs on steel and aluminum supersede USMCA. If your product is mostly steel, moving to Mexico doesn't help with that portion.

Works when: Your product can be manufactured or substantially transformed in Mexico/Central America, you're willing to do the compliance work to document USMCA qualification, and your volumes justify the transition.

Doesn't work when: Your product requires materials or expertise only available in Asia, you can't document the supply chain thoroughly enough to prove USMCA qualification, or your volumes are too low to interest Mexican manufacturers.

Strategy 7: Southeast Asia Diversification

Vietnam. Thailand. Cambodia. Malaysia. These countries absorbed the first wave of China exodus, and they're still significantly cheaper than China on tariffs.

When Trump's reciprocal tariffs first hit, Cambodia spiked to 49%. Then it settled at 19%. Vietnam is running about 10% less than China's rates. These aren't China-level savings, but when China is at 145%, "10% less" is meaningful.

Stephen Miller has watched the patterns: "We've moved people to Thailand, Vietnam, Cambodia. We've seen people tee it up and wait. They go through sampling and product development, and when the rules finalize, they're ready to place a PO."

That last point matters. Many brands aren't moving yet. They're preparing to move. They're doing the groundwork so they can execute quickly when rates stabilize.

"A lot of people are kind of teeing it up to say, 'When the rules are finalized, I have a direction.' Cambodia, Thailand, Vietnam, that was finalized a few months ago. People placing large orders for next year, who didn't want the risk of agreeing to a price with a retailer and then losing all their margins, went that direction because at least it's final."

Certainty has value, even if rates aren't perfect.

The catch: Southeast Asia isn't plug-and-play.

Factory vetting takes time. Stephen's process: surprise visit ("if you just show up on a random Tuesday and knock on the door, that's honestly one of the best tests"), audit review, reference checks with existing customers. Budget two to three months from first contact to production-ready.

And capabilities vary. Stephen: "Apparel has been very difficult to move out of Asia entirely. We've found solutions in Cambodia, Thailand, Vietnam. India has a lot of capability there, but then tariffs are up really high right now, another 50% added on top."

India specifically is in flux. As of the interviews, India had a 50% additional tariff versus China's extra 30%. That math didn't work. But negotiations continue, and this could change.

Works when: Your product category has established manufacturing in Southeast Asia, you have time to vet factories properly, and you value rate certainty over holding out for a potential China deal.

Doesn't work when: Your product requires China-specific expertise or materials, you need to move immediately (vetting takes months), or you're betting that China rates will drop enough to make the move unnecessary.

Strategy 8: Emerging Markets (Morocco, Egypt, Turkey)

When everyone zigs to Vietnam, sometimes you zag to Morocco.

Stephen Miller surprised me with this one: "Morocco has been very interesting. We have a free trade agreement with them. They went from 0% to a 10% reciprocal tariff, still very small in the grand scheme. And it's 15 days on the water to the East Coast."

Fifteen days. That's half the transit time from Asia.

Morocco's other advantage is its ability to source components from everywhere. "They can pull a lot of raw material and components from Europe, Africa, Middle East, and even China. It's a very interesting place with a trade agreement where you can bring fabric in, transform it there, and change the country of origin."

Stephen has a team on the ground and is actively moving projects there. For a country most supply chain operators have never considered, that's a signal worth paying attention to.

Egypt has capabilities too (soft goods, bedding, apparel) but with a caveat. "It's hard to do business there without someone on the ground and without significant volume. From a mid-market perspective, it really limits who's willing to entertain you if you're not putting in half-million-dollar POs."

Turkey has the manufacturing base but introduces currency risk. Stephen: "The dollar value tends to fluctuate a lot. There's not a lot of stabilization on pricing."

The catch: These are frontier markets for most US brands.

You're not going to find these factories on Alibaba. Stephen's approach: "The best factories have the worst SEO. You have to meet them in person, get referred to them, or get in touch with a trade association from that country."

This is relationship-based sourcing in countries where you probably don't have relationships. That takes time, travel, or a sourcing partner with existing presence.

Works when: You have a sourcing partner with boots on the ground, your product category matches local capabilities (textiles for Morocco, soft goods for Egypt), and you value the combination of low tariffs plus shorter transit times.

Doesn't work when: You need to move fast (building relationships in new countries takes 6+ months), your volumes are too small to interest factories, or you don't have a way to vet and manage suppliers in unfamiliar markets.

Strategy 9: US Domestic Manufacturing

Here's the counterintuitive finding: for some product categories, manufacturing in the US is already cost-competitive with Asia.

Stephen Miller sees this with supplements and cosmetics: "Those industries have never left the US. They've actually found ways to automate and get more competitive. Even at a break-even price, which we've found, sometimes even savings, you're still shaving down on ocean freight, air freight, lead times, cash flow problems, communication issues."

Think about what "break-even" actually means here. Same unit cost, but:

• No ocean freight ($3,000-$15,000 per container)

• No air freight emergencies ($8-12 per kg)

• Lead times in days, not months

• No cash flow tied up in ocean transit

• No 14-hour time zone gaps

• No tariffs. Ever.

That's not break-even. That's a significant total cost advantage hiding behind an identical unit price.

Adam from AMZ Consulting flags another angle: country of origin rules. "Wherever you put semiconductors on the motherboard, that's the country of origin. If you can figure out a way to make motherboards in Canada or the US, you will have a significant market opportunity."

For electronics especially, final assembly location matters. Some brands are keeping component sourcing in Asia but moving final assembly to North America to shift the country of origin.

The catch: This only works for specific product categories.

Supplements, cosmetics, consumables, and some electronics assembly: these have US manufacturing infrastructure. Apparel, furniture, complex electronics? The factories largely don't exist here, and building them would take years and massive capital.

And "break-even" requires volume. US factories that have automated enough to compete on cost need volume to justify their equipment investments. If you're ordering 500 units, they're not interested.

Works when: Your product is in a category with existing US manufacturing capacity (supplements, cosmetics, consumables, some electronics assembly), you have enough volume to interest domestic factories, and you value supply chain simplicity.

Doesn't work when: Your product category has no US manufacturing base, your volumes are too low, or your unit economics require the lowest possible production cost regardless of total landed cost.

Category 3: Customs & Classification

These strategies don't change where you make products or store them. They change how products are categorized when they cross the border. Same product, different paperwork, different duty rate.

Strategy 10: HTS Code Optimization

Every product that enters the US gets assigned an HTS code: a 10-digit number that determines your duty rate. Pick the wrong code, and you're overpaying. Pick the right code, and you might cut your tariff in half.

Aaron Alpeter from Izba shared an example that stuck with me: "We've got one client that makes jewelry. By putting their logo on the jewelry, we were able to call it something different, which went from a 15% tariff to a 2% tariff."

Same jewelry. Add a logo. 13 percentage points saved.

Tom from Passport sees this constantly in footwear: "Footwear is so complex. What is the sole made of? What is the upper made of? What's the percent of the material? There's a lot of variation, and it can go from zero tariff to 30% tariff depending on the interpretation."

The key word is "interpretation." HTS classification isn't always black and white. A product might legitimately qualify for multiple codes, and those codes might have wildly different duty rates.

This is why specialists exist. Tom: "A friend of mine has been doing footwear classification for probably 25 years. That's all she does." 

When the difference between two defensible interpretations is 30 percentage points, that specialist pays for herself on a single shipment.

The catch: You can't just pick the lowest number and hope customs doesn't notice.

Aaron is blunt: "Customs is paying a lot more attention to this. You can't just go from a tariff rate that was 25% and pick one that's 5% and expect them to not flag it, especially if you've been importing a lot."

The right approach is proactive. Aaron: "Submit something to customs and say, 'Based on our research, we think this is the correct tariff code, and here's our documentation.' You've got to provide homework and a reasonable basis. Not just picking the smallest number, but picking the smallest number because you believe it's accurate."

Tom adds a warning about AI tools: "AI has gotten really good, but I wouldn't rely just on AI interpretation. There are great tools out there, but get a second opinion. If it can be classified as several different things, you want the one that's defensible AND has the lowest duty rate."

Works when: You have products with classification ambiguity, you haven't had an expert review your HTS codes recently, or you're importing high volumes where even small percentage changes compound into real money.

Doesn't work when: Your products are straightforward commodities with clear classifications, or your volumes are low enough that the savings don't justify specialist fees. But honestly, most brands should have an expert review their codes at least once.

👉️ How to understand HS codes, from the ITA:

Strategy 11: Tariff Engineering & Product Redesign

HTS optimization works within existing product design. Tariff engineering changes the product itself to qualify for a different classification.

The most famous example is 50 years old and still instructive.

Aaron Alpeter tells the story: "The US produces most of the lightweight trucks in the world. Have you noticed it's very rare to import a pickup truck from Germany? There's a reason." In the 1970s, the EU put tariffs on American chickens (hormone concerns), and the US retaliated with a 25% tariff on light trucks.

"What European automakers were doing is they built a pickup truck, then bolted two seats that were rearward-facing in the bed of the truck so it could be imported as a sedan. When they arrived, before they got to the dealership, they took those seats off and sold it as a lightweight truck."

Physical change to the product. Different classification at the border. Seats removed after import. Legal.

Modern examples are less dramatic but equally effective. Tom from Passport: "There's one with Converse where they put a little piece of felt on the bottom. The felt wears off, but now you're classifying it as essentially a slipper instead of an athletic shoe."

Adam from AMZ Consulting offers a simpler example: "It could be as simple as a purse with a leather strap versus a purse with a steel strap. One versus the other is a different HTS code, completely handled differently, with a different tariff altogether."

The pattern: small, intentional design changes that shift your product into a lower-tariff category.

The catch: This requires knowing the HTS code landscape before you finalize product design.

Most brands design products first and figure out tariffs later. The ones who save money flip that sequence. They understand which classifications have lower rates and design toward them.

Aaron's advice: "Larger brands have already done a lot of this work. They've gone out, gotten customs rulings. Smaller brands can take advantage of that." The CBP Cross ruling database has hundreds of precedents. Research what's already been approved before reinventing the wheel.

And you need documentation. This isn't about gaming the system. It's about intentionally designing products that legitimately qualify for better treatment. If customs asks why your product has a felt bottom, you need a real answer.

Works when: You're designing new products (or refreshing existing ones), your product category has significant tariff variation based on materials or features, and you're willing to let tariff implications influence design decisions.

Doesn't work when: Your products are already in market with established designs, the cost of design changes exceeds the tariff savings, or your category doesn't have meaningful classification variation.

Strategy 12: Component Separation (Section 232/301 Tariffs)

Section 232 tariffs hit specific materials: steel, aluminum, copper, lumber. Section 301 tariffs hit products from specific countries. When your product contains some of a tariffed material but isn't made of that material, you might be overpaying dramatically.

Aaron Alpeter uses cookware as an example: "Let's say a company makes pots and pans out of steel. Moving from China to Vietnam, you're still stuck with that 50% tariff on the actual steel. So that's really difficult."

But here's the unlock: "The best thing you can do is split up your product, the percentages in terms of how much of it is steel. So you're only paying the 50% tariff on the percentage that's steel, not the whole product."

Daniel Lee from Dimerco expands on this: "A lot of customers, when they're looking at Section 232 (steel, aluminum, copper, lumber), they say, 'My product contains aluminum, so my product is 100% aluminum.' If you're looking at that, you pay 50% tariff on the whole thing."

But what if your product is only 10% aluminum?

"You're just paying the 50% tariff on that 10% for your aluminum. The rest, if you're coming from Vietnam, you're just paying 20% reciprocal tariff."

The math matters enormously here. A $100 product that's 10% aluminum:

• Wrong approach: $100 × 50% = $50 in tariffs

• Right approach: $10 (aluminum portion) × 50% + $90 (rest) × 20% = $5 + $18 = $23 in tariffs

Same product. Proper documentation. $27 saved per unit.

The catch: You need detailed bills of materials with percentage breakdowns.

This isn't something you can claim without proof. Aaron: "You've got to provide some homework and reasonable basis. You're providing documentation to show how much of it is steel versus the whole product."

That means working with your factory to get precise material composition data, potentially by weight or by value, and documenting it in a way that survives a customs audit.

Daniel's advice: "Always talk to your freight forwarder. Talk to your trade compliance agent to make sure you fully understand what kind of tariff you're going to pay and that your calculations are correct."

Works when: Your product contains Section 232 materials (steel, aluminum, copper, lumber) but isn't predominantly made of them, you can get accurate composition data from your factory, and the documentation effort is worth the per-unit savings at your volume.

Doesn't work when: Your product is primarily made of the tariffed material (a steel pan is mostly steel, not much to separate), you can't get reliable composition data, or your volumes are too low to justify the compliance work.

Strategy 13: Country of Origin Optimization (Substantial Transformation)

Country of origin determines which tariffs apply. If you can legitimately change where your product is "from," you can access different rates, including potentially zero under USMCA.

Tom from Passport explains the concept: "If you had bike parts that came in from 10 countries and were assembled into a final bike in Mexico, then you could potentially claim Mexico as country of origin and not pay the duties on the origin of the parts themselves."

The key phrase is "substantial transformation." Minor assembly doesn't count. Slapping a label on doesn't count. But genuine manufacturing transformation (turning components into a finished product) can shift country of origin.

Adam from AMZ Consulting flags an interesting example in electronics: "Wherever you put semiconductors on the motherboard, that's the country of origin. So if you can figure out a way to make motherboards in Canada, you will have a significant market opportunity."

The components might come from Asia. But if final assembly happens in Canada, the product is Canadian.

Mexico is actively pushing this for textiles. Tom: "Mexico shut down the Maquila program for finished goods last December. They used to allow finished products to come in through bond, no US duties, no Mexican duties, and sit until a US consumer purchased. They shut that down and said, 'We want to drive the textile industry in Mexico. Bring in raw materials and textiles, and we will finish them here.'"

Mexico wants to be the place where transformation happens, not just a pass-through. For brands, this creates opportunity: Mexican textile finishing that qualifies for USMCA duty-free treatment.

The catch: Customs is scrutinizing this heavily, especially for China-origin goods.

Daniel Lee from Dimerco warns: "CBP has full control to say yes or no right now on trans-shipment. A lot of people ship from China to Vietnam, do minor assembling, and then report Vietnam as country of origin. But CBP may not consider that legitimate."

The bar is "substantial transformation," and customs is the judge. If your Vietnam "manufacturing" is just putting Chinese components in a box, that's not going to hold up.

Tom sees the pattern in trade data: "The decrease in shipments from China is equal to the increase from other countries like Vietnam. Almost a one-to-one relationship. It's pretty clear what's happening." Customs sees it too.

Works when: You can do genuine manufacturing transformation in a USMCA country or other favorable jurisdiction, you're willing to document the transformation thoroughly, and the tariff savings justify the operational complexity of splitting your supply chain.

Doesn't work when: Your "transformation" is superficial (repackaging, minor assembly), you can't document the manufacturing process in detail, or you're trying to disguise Chinese goods as Vietnamese goods. That's not optimization. That's fraud, and customs is watching.

Category 4: Transaction Structure

These strategies change how the purchase flows between entities. Same product, same origin, same classification, but different transaction structure means different declared value for customs.

This is where the biggest savings hide. It's also where the biggest compliance risks live.

Strategy 14: First Sale for Export

When you buy from a supplier, you pay their price. But what did they pay? If you can document that first sale (the transaction between your supplier and their supplier), you might be able to use that lower value for customs purposes.

Tom from Passport explains: "In a multi-tier transaction, you're using that first sale in the tier instead of the final sale prior to import. It goes back two levels."

The legal basis is solid. Tom: "There was a case going back probably 40 years now that went all the way to the Federal Court of Appeals. They claimed the value was actually what the Japanese parent paid the manufacturer, not what the US company was paying their parent."

The US is one of the only countries in the world that allows this. And the savings are substantial.

Tom: "If your supplier is willing to disclose who their supplier is and how much they paid, you're talking about reducing tariffs by another 20 to 40%."

Here's a concrete example. Say you're buying widgets from a trading company for $50 each. That trading company buys from the actual factory for $30. Under first sale, you declare $30 to customs instead of $50. At a 25% tariff rate, that's $7.50 per unit instead of $12.50. A 40% reduction in duties.

The catch: Every word of "first sale for export" matters, and you need full transparency from your supplier.

Tom breaks down the requirements: "It has to be a sale for export to the US. Each word matters. It has to be an arm's length transaction. It has to be a bona fide sale. All documentation must be in place."

The hardest part? Getting your supplier to cooperate.

"Your supplier doesn't always want to tell you what they're paying and what their margins are. That's why these are usually related party transactions. Nike US purchasing from Nike China, and Nike China sourcing from another manufacturer."

If you're buying through a trading company that won't disclose their factory cost, first sale isn't available to you. Full stop.

And you have to tell customs you're using it. Tom: "There's what's called an F indicator that you put on the entry. So customs is looking for it. You have to tell them you're using it, or you don't get to use it."

That means increased scrutiny. The CBP Cross ruling database has about 150 rulings on first sale. Study them before you file.

Works when: You have a multi-tier supply chain with transparent pricing, your supplier will disclose what they paid their supplier, and you can document that the goods were manufactured specifically for export to the US.

Doesn't work when: You're buying through a trading company that won't share factory pricing, you can't prove the goods were made specifically for US export (versus a global pool of inventory), or you have hundreds of thousands of SKUs where documentation becomes unmanageable.

⚠️ Legislative warning: On February 11, 2026, Senators Cassidy (R-LA) and Whitehouse (D-RI) introduced the Last Sale Valuation Act, bipartisan legislation that would eliminate first sale entirely. The bill would require duties be calculated on the final price paid by the US buyer, not an earlier transaction in the supply chain. It hasn't passed yet and faces industry opposition, but watch this closely.

Strategy 15: B2B2C (Related Party Transactions)

This is first sale's cousin. Similar mechanics, different structure, and a minefield of compliance risk.

The concept: create a related entity (often offshore) that purchases from your factory at cost, then sells to your US entity at a markup. Your US entity imports at that lower related-party price rather than the retail value.

Aaron Alpeter from Izba describes the legitimate version: "If you have a warehouse in Canada and another in the US, you're shipping from your Canadian possession to your US possession. Because the key thing is the invoice. If the invoice says this is valued at $15, you pay tariffs on $15."

The math is powerful. Instead of paying duties on a $100 retail item, you're paying on your $15 cost. At 35% tariff, that's $5.25 versus $35.

This is legal. Major multinationals use it. Tom from Passport: "Even Reebok, a massive multinational corporation, had to go through the whole process of demonstrating to customs that this was a legitimate sale, it was arm's length, the valuation was appropriate."

Reebok won. The structure works.

The catch: The "turnkey solutions" being sold right now are almost universally non-compliant.

Tom doesn't mince words: "The scary thing is just the number of providers who are positioning this as a turnkey solution and really giving bad advice to brands. 'Just call it 20% of the retail price.' There's a lot that goes into it. The way they're setting it up is just never gonna be compliant."

The requirements are identical to first sale: arm's length transaction, bona fide sale, sale for export to US, legitimate entity (not just a shell), full documentation.

Tom: "The brand, I don't think, realizes that they're going to be on the hook. They're the importer, not this third party that sold them on the solution."

When customs rejects a B2B2C structure, they don't just collect the difference. They advance to "the other sale that caused the importation" (usually the full retail value) and calculate duties on that. Plus penalties.

Aaron has seen brands try this and fail: "There's been chatter about how customs may go after the brands saying, 'You're not stupid. You can't play the innocent bystander of like, well, I didn't know what they were doing.'"

Works when: You have the resources to set up a genuinely legitimate related-party structure with real entities, real transactions, real documentation, and proper legal guidance. This is a strategy for companies with trade attorneys on retainer, not a hack for scrappy DTC brands.

Doesn't work when: Someone is pitching you a "turnkey solution" that promises 80% duty reduction with minimal setup. That's not optimization. That's a compliance time bomb. If you can't explain exactly why your structure is legitimate to a customs auditor, don't do it.

Strategy 16: Direct-from-Origin Shipping

This is the simplest transaction structure play, and it enabled an entire category of companies like Portless to survive the end of de minimis.

The concept: ship directly from your overseas factory to US consumers. Because there's no intermediate stop, you declare the value as what you (the US brand) paid the factory, not the retail price.

Tom from Passport explains the legal basis: "When you go back to transaction value, the price paid or payable, when sold for export to the US, you have to take that whole sentence and almost diagram it. Each word is really important."

If your US company purchases from an overseas supplier, and those goods ship directly to US customers, the customs value is what you paid the supplier. Not what the customer paid you.

Tom: "Portless raised significant funding. They got opinions from the best trade lawyers on how to structure this compliantly. They survived the end of de minimis by using this structure."

The key requirement is "directly." The goods must ship from origin to the US without stopping elsewhere first.

The catch: If goods touch another country, this breaks.

Tom: "Many brands, if they're not established in the US, are moving inventory to wherever the brand is headquartered: Canada, UK, Australia. And then it's NOT sold for US export. It's been diverted to another country. So you cannot use the price you paid the supplier in that case."

The moment goods enter a warehouse in Canada, they're no longer "sold for export to the US." They're sold to Canada. Any subsequent sale to US customers is a separate transaction, and customs will look at that value.

This also requires operational capability to fulfill directly from your factory or a facility in the country of origin. Not every factory can handle DTC fulfillment. Not every product category works for direct shipping (fragile items, products requiring kitting, etc.).

Works when: You can operationally handle direct-from-origin fulfillment, your factory or a local 3PL can manage DTC shipping, and your customers can tolerate longer delivery times. This works best for higher-value items where the per-unit savings justify the logistics complexity.

Doesn't work when: You need inventory positioned close to customers for fast delivery, your products require assembly or kitting before shipment, or your factory isn't equipped for consumer fulfillment. Also doesn't work if your goods are already sitting in a non-US warehouse.

Category 5: Process & Compliance

These strategies aren't about changing what you import or how you structure transactions. They're about doing the paperwork that unlocks savings you're already entitled to, or recovering duties you've already paid.

Strategy 17: USMCA Qualification & Documentation

This isn't a strategy so much as a massive blind spot.

Aaron Alpeter from Izba shared a statistic that should make every supply chain operator pause: "99% of all crossings into the US could be duty-free under USMCA. Today."

Not could be if you moved manufacturing. Not could be if you restructured your supply chain. Could be today, with proper documentation.

So why isn't everyone doing it?

Aaron explains: "In the past, people had not filled out the paperwork because we're talking 0.1% tariff. Very small dollars. 'I don't want to deal with all the compliance stuff just to validate where my stuff came from.'"

When tariffs were negligible, the paperwork wasn't worth the hassle. But the paperwork requirements didn't change. Just the stakes.

"The reality is, when you have a very high tariff situation everywhere else, USMCA becomes even more valuable. The best thing Canada and Mexico could hope for is that they preserve some semblance of free trade while tariffs stay extremely high everywhere else."

The rule is straightforward in concept: if a majority of your product's transformation or components come from North American sources, it can enter duty-free. Not reduced. Free.

The catch: "Straightforward in concept" doesn't mean simple in practice.

Adam from AMZ Consulting has been doing customs work for 35 years. He warns against oversimplifying: "It's not a simple thing to analyze, particularly with apparel. There's thread counts, where the fabric comes from. It's 100% a case-by-case basis."

You need detailed bills of materials showing exactly where every component originates. You need documentation proving the transformation happened where you claim it happened. You need record-keeping that survives an audit.

Adam, somewhat reluctantly: "I'm starting to sound like an auditor, which I don't like, but if you can make the goods in Canada or Mexico and qualify for what's called a tariff shift, there's significant savings to be found."

And there's a critical exception. Aaron: "You still have these other tariffs on steel and aluminum which supersede USMCA. But from an HTS code perspective, you're totally solid."

Section 232 tariffs on steel, aluminum, and other specific materials apply regardless of USMCA qualification. If your product is mostly steel, USMCA doesn't help with that portion. But for everything else, proper documentation could mean zero duty.

Works when: You're already sourcing from or manufacturing in USMCA countries, you have (or can get) detailed bills of materials, and you're willing to invest in proper documentation. The ROI on compliance work is enormous when the alternative is paying full tariffs.

Doesn't work when: Your products have minimal North American content, you can't trace your supply chain thoroughly enough to prove qualification, or your volumes are so low that the documentation cost exceeds the duty savings. But for most brands already touching Mexico or Canada, this is low-hanging fruit.

Strategy 18: Duty Drawback

Every duty dollar you've paid on goods that were later exported or destroyed? You can get it back.

Aaron Alpeter from Izba explains the basics: "The rules for duty drawback are if you import something into the United States and then export it, you may have paid duties to come in. You get those duties back because it's shown as going through."

Tom from Passport notes this matters more now than ever: "Where it becomes more important is when tariffs are high. If I'm importing furniture from Asia, my tariffs might be a couple hundred dollars per piece. If I'm exporting to Mexico, Canada, or Europe, I can get those funds back."

Parker Burr from Evana breaks down what drives eligibility: "Are you destroying a decent amount of your product? Are you exporting a decent amount? Are you paying a lot in duties? The bigger any one of those gets, the bigger your drawback potential."

Most brands focus only on exports. But destruction counts too. If you're in supplements, food, or any category with expiration dates, those expired goods are money waiting to be claimed. Parker: "If your product expires and you're going to throw it out, you should first contact us because we'll file the paperwork so you can get a drawback. But before you throw them out, you have to file."

The catch: Setup takes time, and most brands don't even know this exists.

Tom on timeline: "Best case is four months. Really, you're looking at about 14 to 16 months."

Parker on why brands aren't doing this: "Number one, they don't know about it. Number two, they've heard about it but they're intimidated by the perceived lift. Historically, you dealt with your broker in a 100-email chain, exchanging PDFs and Excel sheets. Number three, they think their broker is already handling it. I can say with a very high level of confidence, they're not."

The good news: new providers have dropped claim minimums dramatically. The old brokerages required $500,000 minimum claims. Newer startups will process claims as low as $10,000.

One important detail: you must be the importer of record. Not sure if you are? Parker's trick: "Go to importyeti.com and type in your company name. If there's a history of product coming in under that name, you're likely the importer of record."

Works when: You import goods that get exported or destroyed, you have decent inventory tracking, and you're willing to invest months in setup for ongoing recovery.

Doesn't work when: Everything you import is consumed domestically with zero destruction, or you need cash back immediately.

👉️ Duty drawback series, from the ITA:

Quick Filters

• Need results in 30 days: Bonded Warehouses (if space available), Cross-Border Storage, HTS Code Optimization, Component Separation, USMCA Documentation

• Limited operational bandwidth: Bonded Warehouses, US Domestic Manufacturing, HTS Code Optimization, Direct-from-Origin Shipping

• Willing to invest for structural savings: FTZ, Mexico/USMCA Nearshoring, First Sale for Export, Duty Drawback

• High-volume importers ($10M+ annually): All strategies viable. Focus on stacking complementary approaches.

• Mid-market ($1-10M annually): Cross-Border Storage, China Plus One, HTS Optimization, USMCA Qualification, Component Separation

• Earlier stage (<$1M annually): HTS Optimization, USMCA Qualification, Direct-from-Origin, US Domestic (category-dependent)