The new 25% tariff on tractor-trailers is a potentially expensive change for transportation. Explore strategies to help mitigate costs.
Tractor-trailers imported into the United States are scheduled to face a 25% tariff starting November 1.
This is a potentially expensive change for the transportation industry. Explore some strategies to help mitigate costs:
- Seek domestic suppliers — While this won’t help with any trucks currently on order, seeking domestic suppliers in the future could be a significant savings.
- USMCA tariff exemptions — United States-Mexico-Canada Agreement tariff exemptions apply to some goods imported from Canada and Mexico. Requirements include having a valid USMCA certificate of origin from the supplier and a specific percentage of a product’s materials must originate from North America. The percentages vary by product.
- Invoicing strategies — Invoicing strategies such as invoice splitting (separating invoices into dutiable and non-dutiable costs) or first sale (a strategy when an import transaction includes a so-called middle entity).
- VAT refund — Some countries allow exporters to apply for a value-added tax refund prior to export to encourage international trade.
- Accounting method changes — Accounting method changes and inventory management analysis could provide increased cash flow for some businesses.
- Seek cost reductions — Ask for new supplier terms and discounts.
These are just a sampling of tactics that could help transportation companies reduce tariffs or other costs. Our team has developed a custom tariff mitigation assessment, which can help you determine which of 20 strategies to consider to spread risk and improve your business.
It’s also possible the tractor-trailer tariffs may be delayed or adjusted, as has been the case with several tariffs this year.