Your Tariff Action Plan: 5 Smart Steps to Protect Margins

With U.S. tariffs continuing to evolve and compliance expectations rising, cross border businesses must take practical, forward-looking steps to adapt. Whether you’re a manufacturer, importer, or distributor, the cost of inaction is growing.

Tariff exposure doesn’t just eat into margins—it can disrupt supply chains, delay shipments, and trigger compliance issues. But with the right moves, businesses can mitigate risks and gain a competitive edge.

Here’s a practical action plan for preparing your operations for the new trade environment.

1. Are Your Products Classified Correctly?

Many companies assume their product classifications are accurate—but even a small oversight can result in thousands of additional duties. Now is the time to review your Harmonized Tariff Schedule (HTS) codes, customs valuation methods, and country of origin declarations.

Remember that customs value used for duty calculation differs from book or tax values. Inaccurate reporting, even if unintentional, can trigger audits or fines. Additionally, country of origin designations are under more scrutiny, especially for goods with components sourced globally. A misstep here could mean missing out on exemptions under agreements like CUSMA.

Working with a customs broker or trade specialist can help confirm that your classifications align with current enforcement priorities.

2. Can Tariff Engineering Lower Your Duty Costs?

Tariff engineering involves modifying a product, process, or supply chain to legally fall under a lower-duty classification. This isn’t about cutting corners—it’s about optimizing how your product fits into the customs framework.

Even small changes in production sequencing—such as adding waterproofing a product—can significantly impact its tariff classification and potentially move it into a lower tariff bracket.

Another case involves rethinking how a product is assembled or sourced. If a high-duty component can be swapped or relocated to change the product’s origin or classification, the savings can be substantial. These changes often have no impact on quality—just a smarter approach to compliance.

3. Is It Time to Rethink Your Supply Chain?

Geopolitical shifts and tariff updates are prompting many companies to reconsider how and where they source materials. Canadian businesses that rely heavily on one country or route are at greater risk of sudden cost increases or disruption.

Options like nearshoring—moving production closer to end markets—or dual sourcing from multiple suppliers can increase flexibility. Some companies are exploring reshoring, which brings certain operations into the U.S. to reduce tariff exposure altogether.

Before making significant changes, businesses should map their entire supply chain to identify vulnerabilities. They should evaluate which products or parts are most affected by tariffs and consider whether alternate sourcing could reduce costs or simplify logistics.

4. Are You Pricing Dynamically to Protect Margins?

Tariff-related costs aren’t always predictable. That’s why businesses need flexible pricing models that can adjust as costs shift. A dynamic pricing strategy considers the potential impact of tariffs, duties, and other import-related expenses—building the ability to maintain profitability.

Start by analyzing your cost structure under different tariff scenarios. Can you absorb some of the increase, or must you pass it on? And if so, how much can your market tolerate?

Developing clear pricing triggers tied to cost thresholds allows you to act quickly when changes occur. This approach protects margins and helps maintain trust with customers and partners.

5. Who’s on Your Tariff Response Team?

No single advisor can address all the moving pieces of tariff mitigation. This is where a collaborative approach matters. Customs brokers, trade attorneys, tax advisors, and logistics consultants bring a unique perspective—all of which should be part of your response plan.

The businesses navigating tariffs most effectively are leaning on cross-functional teams. They also stay close to trade associations and industry groups, which can help track legislative developments and advocate for sector-specific concerns.

Trade associations often have access to early policy insights and serve as a collective voice for lobbying efforts—something small and mid-sized businesses may struggle to do alone.

Resilience Starts with the Right Strategy

Tariffs aren’t going away. They’re evolving, expanding, and becoming a permanent factor in trade strategy. Waiting to adapt could mean falling behind, both operationally and financially.

Our team helps cross border businesses take a proactive approach, starting with a comprehensive review of their product classifications, sourcing strategies, and pricing structures. Talk to us about a tariff health check—before unexpected costs hurt your bottom line.