Cost-Saving Strategies: How to Stay Competitive 

While tariffs may seem like an unavoidable burden, businesses still have options to reduce their exposure and maintain profitability: 

• Diversify Supply Chains: Sourcing from countries outside the direct line of fire—such as Vietnam, India, or Malaysia—can help businesses sidestep higher tariffs. Companies that diversified after Trump’s first-term tariffs saw lower cost volatility and more supply chain stability. This may seem like a Herculean challenge, but to quote Nelson Mandela, “It always seems impossible until it’s done”. Plus the benefits can be tremendous and set you up for success long after our current situation.
• Explore Tariff Engineering: By modifying production processes or altering product classifications, some companies can legally shift goods into lower-tariff categories. For example, reconfiguring assembly locations or changing a product’s final processing step might qualify it for a more favorable tariff rate. 
• Negotiate with Suppliers: Now is the time to have tough but necessary conversations with suppliers. Can costs be absorbed jointly? Can contracts be renegotiated? Even small pricing adjustments can lead to significant savings over time.

Next, let’s cover new compliance challenges and how to avoid them, plus tips for avoiding costly disruptions.  

Regulatory & Compliance Challenges: Staying Ahead of New Trade Rules 

With stricter enforcement of trade regulations expected in Trump’s second term, companies must be prepared for heightened scrutiny on imports and supply chains. Compliance missteps—intentional or not—can lead to costly penalties, shipment delays, and reputational risks. 

Key Compliance Risks to Watch 

Businesses navigating the new trade environment need to be especially mindful of the following. I've included some of the first questions to ask when reviewing these areas.

Misclassification of Goods: With increased tariffs, customs officials will be on high alert for product misclassification. Errors, even accidental ones, could lead to audits and fines. 

• Are your current classifications even correct?
• How do you know? Can you prove it through documentation?
• When was the last time they were reviewed? The HTS was revised 10 times in 2024 alone!

Valuation Discrepancies: Expect more scrutiny on declared import values, especially in transactions between related entities. Customs authorities will be looking for signs of underreporting. 

• What are your procedures for declaring the value of your goods?
• Are they documented and reliable? Have they been verified?

Increased Customs Audits: Companies should anticipate more frequent and rigorous audits, requiring strong documentation and trade compliance processes. 

• If CBP showed up today, who would you call and what would you do?
• Do you know your risk exposure both financially and operationally?

Understanding the risks is only part of avoiding costly disruptions. I’ve recommended these important steps to Star USA clients: 

• Conduct a Trade Compliance Audit: Review your classification, valuation, and record-keeping practices now to identify potential vulnerabilities before customs does. The Star USA compliance scorecard is a good place to start! 

• Train Your Team Regularly: Trade regulations change fast. Keeping employees informed about tariff shifts, customs procedures, and documentation best practices can prevent costly mistakes. My team offers training on a variety of topics. 

• Develop Contingency Plans: Prepare for potential supply chain disruptions by identifying alternative suppliers, backup logistics providers, and secondary sourcing locations. 

Companies that take proactive compliance measures will be in a stronger position to avoid penalties, keep shipments moving, and maintain business continuity despite policy shifts. Now, let’s explore opportunities arising from this situation. 

Opportunities for Businesses: Turning Trade Shifts into Strategic Advantages 

Despite the challenges, new trade policies create opportunities, especially for businesses that adapt quickly. Companies willing to reshore production, diversify supply chains, and leverage incentives may gain a competitive edge.  

Key Opportunities to Explore 

• Reshoring & Domestic Production Incentives: Companies moving operations back to the U.S. may benefit from tax breaks, government grants, and preferential contracting. Workforce development programs could also help offset labor costs. 

• Supply Chain Diversification: Shifting sourcing to Vietnam, Malaysia, or other lower-risk regions can help avoid high tariffs while maintaining cost efficiency. 

• Trade Optimization Strategies: Businesses should explore free trade agreements, tariff engineering, and customs programs to legally minimize duty costs. 

The Star USA team recently supported a U.S.-based electronics manufacturer facing steep tariffs on Chinese components. We helped them successfully diversify their supply chain. Here’s how we did it together:  

• Identify alternative suppliers in Vietnam and Malaysia for key components. 
• Invest in a new assembly facility in Mexico to take advantage of proximity to the U.S. market. 
• Implement advanced inventory management systems to optimize stock levels and reduce carrying costs. 
• Collaborate with compliance & logistics partners to establish new, efficient transportation routes. 
• Leverage free trade agreements and tariff engineering to minimize duties on imports from new supplier countries. 

This diversification strategy allowed the company to mitigate the impact of tariffs, reduce overall supply chain risk, and maintain competitive pricing in the U.S. market! 

What’s Different This Term? 

Compared to Trump’s first term, trade policies now have a broader scope and faster implementation. This leaves businesses with less time to react. 

• More Trading Partners Affected: While past tariffs primarily targeted China, this round could include Canada, Mexico, the EU, and the UK. 
• Quicker Implementation: Tariffs have been rolled out faster than expected, catching markets off guard. 
• Potential for Further Expansion: Industries like automotive, semiconductors, and renewable energy should watch for additional tariffs or retaliatory trade measures. 

With those in mind, here’s what I’ve recommended our clients pay attention to in the coming months: 

• New tariffs on key imports: Watch for expansions targeting additional sectors and countries. 
• Global response & retaliation: Pay attention to potential countermeasures from Canada, Mexico, and the EU. 
• Currency fluctuations: A stronger U.S. dollar could impact global trade and pricing strategies. 
• Policy stability: Businesses should assess whether these tariffs will last or if changes are likely based on economic and political pressures. 

How Businesses Can Prepare Now 

Navigating the complexities of international trade in Trump’s second term requires proactive planning. Companies should plan to:  

• Audit supply chains to identify risks and diversification opportunities. 
• Strengthen compliance processes to avoid costly penalties and disruptions. 
• Monitor policy updates and prepare for potential new tariffs. 
• Explore cost-saving measures like tariff engineering and free trade agreements. 

While uncertainty remains, businesses that take a strategic, informed approach will be best positioned to adapt and thrive in this evolving trade landscape. If you’re seeking support to adapt, my team is ready to step up to the plate! Start the conversation here. 

Sources 

Peterson Institute for International Economics 

ITA Trade Agreement Guides 

CPB Trade Statistics