Since Trump’s tariffs were released on April 2nd, the fallout has been widespread since it was called “liberation day.” Meta has hit $7 billion in advertising revenue as Trump’s Chinese tariffs shake platforms like Temu and Shein. Just this morning, UPS announced plans to cut 20,000 jobs through reduced Amazon volume.
But behind these headlines, the big brands are quietly avoiding new tariffs by using smart legal strategies burned into the system rather than breaking the rules. What startups can learn from playbooks is to protect margins and stay competitive.
The insights in this article are based on a YouTube video by Steve Chou, founder of the MyWifequitherJob e-Commerce channel. In the video, Steve explains how large companies can legally reduce or avoid import duties and how small businesses can apply similar strategies. You can watch the full video here.
How to avoid tariffs and how to make it a big brand
The easiest way to avoid customs duties is the easiest. Buy and sell products made in the United States. Products manufactured domestically will not suffer from import duties. That means there is no unexpected tariff hike, headaches for international documents, or speed of customer delivery times. It is the cleanest solution and for companies that can find reliable US suppliers, it is often the best long-term play.
However, the reality is that not all products can be sourced locally. Whether it’s cost, availability or specific material, many startups still rely on imports to stay competitive.
That’s where big brands get creative. Companies like Nike, Apple and Columbia don’t just absorb tariff costs. They use wise and legal strategies hidden in front of them. These tactics are not reserved for $1 billion businesses. If you know how to use them, they also have access to small businesses.
Here’s how they do it and what startups can learn from their approach:
1. Customs Engineering: Redesign Techniques
Not only do major brands manufacture the products they sell, they also produce products that are expensive to import.
Take the iconic Chuck Taylors of Converse. Have you noticed fuzzy bottoms? It’s not for better traction. By covering more than half of the sole with felt, Converse reclassifies the sneakers as slippers. Payoff? Slippers face 3% tariffs rather than up to 37.5% on regular shoes.
It’s not just a conversation. Columbia’s design team also builds small tricks on clothing. For women’s shirts, they add small, strategically placed pockets near the waistline. Not because everyone needs another pocket, but because US customs regulations reward those pockets with lower tariffs. A basic blouse can be hit with a 26.9% obligation. Adding a pocket or ribbed waistband can reduce the rate to below 16%.
If you are still selling products accurately in the way you designed them years ago, it may be time to rethink. Big brands are doing it all the time – and they save millions.
2. First Sales Rules: Pay Customs Duties at Low Prices
This is a trick for experienced importers mistake: even the first selling rules.
Normally, customs duties are based on what you pay to your supplier. But what if instead, tariffs are legally based on manufacturer prices?
If the supplier acts as a “record importer” under a DDP (delivery obligation) agreement, it can. This means that the duties are based on factory prices and not the marked-up price paid to the supplier.
example:
Our suppliers will make your product for $10.
You pay $20.
Under the first sales rules, customs duties are calculated at $10 instead of $20.
When done correctly, this cuts your tariff bill in half. The trick is to ensure that the supplier agrees to the DDP terminology in the case of customs audits and documents everything properly.
If you’re not asking for a DDP quote, you’re probably burning money.
3. The downside of duty: regaining customs money
The lesser known gems are: Importing goods into the US and later exporting or destroying them will allow you to return to 99% of the duties you paid.
Suppose you import 10,000 custom water bottles from China and pay a duties of $5,000. After that, we will ship 2,000 bottles to Canada. By submitting the shortcomings of obligation to US Customs, you can recover almost $1,000.
It’s real. It’s legal. However, it only works if you submit the appropriate documents.
If you sell internationally and don’t do this, you leave money on the table.
4. Changes in Country of Origin: Assembly Trick
Products are taxed based on where they were made. But “Made in” doesn’t mean where all the parts come from. That means where the product undergoes major conversions.
It opens a big door.
Example: Import Chinese parts of LED desk lamps. Assemble them in Mexico. Mexico is now a country of origin. Instead of facing empty China tariffs, you can qualify for a lower fee in Mexico under a trade agreement.
The brand has been playing the game for years and is recovering again as tariffs rise.
Whenever possible, procuring domestically provides the cleanest path to avoiding tariffs entirely. No legal action is required.
5. Debt Warehouses and Foreign Trade Zones: Delay or Skip Taxes
You don’t need to move your entire supply chain overseas to take a break.
Can a guaranteed warehouse and foreign trade zone (FTZ) be officially sold in the US and store imports without paying customs duties until the goods are re-exported? You can skip customs duties completely.
Another bonus: Assembling or modifying a product within the FTZ may result in lower duties charges based on the finished product.
Global sourcing has its place, but we hope that as tariffs continue to rise, more companies will rethink local production as a long-term solution.
6. Bunding Strategy: Reduce Customs Bills with Better Documents
We may also change our invoices rather than changing our products or suppliers.
Many importers pay customs duties at full invoice prices, including non-tax costs such as software, loyalty and design fees. That’s not necessary.
If you properly divide these costs in a contract or invoice, customs may only charge customs duties on physical goods.
example:
Instead of paying duties for $100, you can only pay duties for $80.
This is a paperwork that saves you 20% or more without touching the supply chain.
7. Reduce: Cutting corners to stay alive
When everything else fails, brands reduce the cost of shrinking, the old fashioned way.
The restaurant serves less portions. E-commerce brands like Grooms Day cut out non-essential items such as free batteries and luxurious packaging. Toy companies use less paint colors and lighter materials.
It’s not attractive, but sometimes staying alive means tightening the belt.
Building a supply chain close to the home provides stability that even clever documents do not match.
Tariffs do not need to be sentenced to death by startups. Large brands use smart and legal strategies to reduce costs. Now we can learn from the cost. From reclassifying products to restructuring the supply chain, there are more options on the table than most companies know.
But while these tactics can save thousands, the easiest way to avoid them completely is still the oldest. As much local sauce as possible. Getting more products closer to your home will not only protect you from rising duties, but will also create a stronger and more resilient business in the long run.
Learning these strategies is one thing. It is equally important to determine how they align with your company’s values and long-term goals.
Whether you go global with a smart import strategy or implement a production nation, the key continues to provide information and moves ahead.
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