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The latest shifts in U.S. tariff policy have created a lot of uncertainty for businesses and manufacturers. New tariffs may be impacting costs, complicating supply chains, and imposing new compliance obligations that companies must manage carefully.
Compliance teams are on the front lines of this change, responsible for minimizing penalties, safeguarding margins, and ensuring regulatory adherence. Their role is integral to the company's operations in this scenario. This isn’t a “wait and see” situation. Immediate action is required to address compliance risks or face severe consequences.
Additionally, compliance professionals should actively monitor for new Executive Orders, as future adjustments to tariffs or exemptions could be issued at any time.
As you monitor the latest developments, here is what you need to consider, with examples, action steps, and regulations you should pay attention to.
First priority: Make sure every imported product is classified correctly under the Harmonized Tariff Schedule (HTS). A wrong code means incorrect tariff calculation, potential fines, and shipment holds.
Example: If you're importing aluminum parts from Canada, you could be looking at a 25% tariff, not the 10% global baseline. Misclassifying them as miscellaneous metals won't clear Customs and Border Protection (CBP)—it will trigger penalties.
Also, double-check your declared values. CBP is watching for underreporting to avoid higher duties, especially for high-ticket items like German machinery or Chinese electronics.
Action: Audit at least your top 20 imported SKUs immediately.
Relevant Regulation: 19 CFR Part 141 (Entry of Merchandise).
With country-specific tariffs in place, CBP will scrutinize the real origin of goods. "Assembled in Mexico" doesn't automatically mean "origin Mexico" under the USMCA rules.
Example: A company sourcing auto parts assembled in Mexico but manufactured in China will still face the China tariff.
Action: Require suppliers to issue updated, detailed Certificates of Origin. Keep copies for at least 5 years.
Relevant Regulation: USMCA Implementing Instructions (19 CFR Part 182).
Every invoice, shipping document, and customs entry must reflect the correct tariff application. Sloppy paperwork isn't just a risk anymore—it's a liability.
Example: Importing energy products from Canada? Some may be at 10% (energy), others at 25% (manufactured goods). Your commercial invoice must distinguish the correct tariff application.
Action: Train your shipping and logistics teams on the updated invoice requirements.
Relevant Regulation: 19 CFR Part 163 (Recordkeeping), 19 CFR §142.6 (Commercial Invoices).
Tariffs impact Cost of Goods Sold (COGS). That means they impact your P&L statements, inventory valuation, and even transfer pricing calculations for multinational entities.
Example: A pharmaceutical company sourcing ingredients from India may be facing an extra tariff. Ignoring that in quarterly reports is an SEC risk.
Action: Work with Finance to update forecasts, tax planning, and SEC disclosures immediately.
Relevant Regulation: SEC Regulation S-K (disclosure of material risks), ASC 330 (Inventory Accounting).
Many countries, especially China, Canada, the EU, and Mexico, are expected to retaliate. This could mean additional tariffs on U.S. exports, affecting not just imports but exports too. Compliance teams should be prepared for potential changes in their export markets and adjust their strategies accordingly.
Example: A U.S. agricultural exporter could face new tariffs when selling soybeans to Europe or pork to China.
Action: Sales and compliance teams should coordinate to identify vulnerable product lines and markets.
Duty drawback programs, tariff engineering, and Foreign Trade Zones (FTZs) are options for mitigating the impact of tariffs. However, each comes with its own compliance obligations, such as strict security, inventory, and reporting rules for FTZs. Compliance teams should carefully consider these obligations before implementing any mitigation strategy.
Example: If you set up an FTZ to delay tariff payments, you must comply with strict security, inventory, and reporting rules.
Action: Consult trade counsel before launching any mitigation strategy.
Relevant Regulation: 19 CFR Part 191 (Duty Drawback), 19 CFR Part 146 (Foreign Trade Zones).
Compliance teams are mission-critical right now to protect revenue, avoid fines, and keep operations alive. These tariffs have pushed regulatory requirements into every corner of the company: customs, supply chain, finance, legal, procurement, and even marketing and sales. Businesses that act methodically, document thoroughly, and train aggressively will contain the damage and even find opportunities. Those that delay will suffer fines, operational chaos, and serious financial reporting risks.
Compliance isn't just about avoiding penalties anymore—it's about protecting the entire business model. Get started and monitor the situation carefully, stay alert for Executive Orders, and take action now.
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