How to Navigate Reciprocal Tariffs in Trade Policy

A pharma client was shocked by the duty due on a shipment that arrived yesterday. Duties of this magnitude were not due on previous shipments. It should not have been a surprise since the new reciprocal tariffs were announced last week. Even though the administration paused the tariffs for 90 days, a baseline of 10% on top of the normal duty rate is still in effect for most countries. What can pharma companies do to mitigate the impact? Check tariff classifications  🔹 Many pharma products are exempt from the reciprocal tariffs. 🔹 Check the HTS code exemption list (Annex II of the April 2nd EO). 🔹 Ensure products are appropriately classified in an exempt HTS. Use FTAs where possible 🔹 Check whether the product qualifies for an FTA. 🔹 FTAs can eliminate normal duty rate at least. Review supplier documentation in advance 🔹 Ensure the right HTS code is on the commercial invoice. 🔹 Don’t rely on the supplier to classify. 🔹 Tell suppliers the right HTS code to use. Use the prototype provision where possible 🔹 Qualifying prototypes in Chapter 98 still appear to be duty free. 🔹 Be sure you have good supporting documentation. Here are a few other things to consider in this new high-tariff environment. Increased enforcement ✔️ The government has stated it will use the False Claims Act to enforce trade issues. ✔️ Compliance is more important now than ever Review your current customs bond ✔️ Increased duties may mean importers need to increase bond amounts. Customs broker duty outlays ✔️ Some customs brokers may no longer be willing to outlay duties in advance. ✔️ Consider establishing an ACH account to pay duties directly to the government. What other ways are you mitigating the impact of the new tariffs? _____________________________ I am Elizabeth Lomax, import/export compliance expert helping pharma and biotech companies create more efficient international supply chains. DM me or visit my LinkedIn profile to learn more. To stay updated, click the notification bell on my profile. 🔔

Tariffs Are Reshaping Global Trade, So Now Is The Time to Act As I have been telling clients nonstop for the last several weeks, now is the time for senior management and boards of directors to shift from reactive crisis mode to strategic reinvention. With sweeping new tariffs and threats of retaliation, the risks to cost structures and competitiveness are too significant to ignore. My advice to boards and executive leadership: 1. Quantify exposure. Assess financial impact across product lines, suppliers, and markets. 2. Reimagine your network. “China+1” isn’t enough. Adopt a “Region for Region” model and explore nearshoring thresholds. 3. Leverage regulatory levers. Use Foreign Trade Zones, duty drawback programs, and tariff engineering. 4. Build resilience. Implement cross-functional pricing strategy, scenario planning, and AI-powered modeling. 5. Act at board level. Make supply chain transformation a governance priority—not just a crisis response. This is more than risk mitigation—it’s a chance to build competitive advantage. Treat tariffs as the catalyst to reinvent your supply chain for long-term resilience. #SupplyChainResilience #TariffStrategy #GlobalTrade #ExecutiveLeadership #BoardGovernance #TradePolicy #RiskManagement #DigitalSupplyChain #Nearshoring #CrisisToOpportunity

📦 Navigating Ongoing Tariffs: Strategies for Resilient Supply Chains The impact of ongoing Section 301 tariffs—particularly those targeting U.S.-China trade—continues to challenge global supply chains, especially in high-complexity industries like MedTech and Pharma. For procurement and operations leaders, the question isn’t if tariffs will affect your cost structure, but how prepared your organization is to respond. Forward-looking companies are adopting a multi-layered approach to mitigate tariff risk: ✅ Geographic diversification – Shifting production and sourcing from China to Vietnam, India, Mexico, or Eastern Europe to reduce tariff exposure. ✅ Tariff engineering – Reclassifying product components or altering designs to fit under lower-duty classifications. ✅ Contract restructuring – Negotiating supplier terms to share or offset tariff-related cost increases. ✅ Nearshoring & FTZs – Leveraging free trade zones, bonded warehouses, and regional production models to defer or avoid duties. ✅ Scenario planning – Embedding tariff impact into total cost models and proactively simulating “what-if” supply scenarios. In today’s climate, tariff mitigation is not a one-time event—it’s a strategic discipline. It demands cross-functional collaboration between sourcing, legal, tax, and logistics teams, paired with agile decision-making and up-to-date market intelligence. 🎯 Whether you're reshaping your supplier footprint or designing a more resilient operating model, it's clear that proactive tariff strategy is a critical lever for cost optimization and risk mitigation. 🔍 Want to learn more? Here are some helpful resources: - USTR Section 301 Updates - PwC Trade Insights - Bloomberg Tariff Tracker Let’s connect—what mitigation strategies are working for your organization?

Tariffs, while unpleasant, are just another challenge that business leaders face in the quest to guarantee the best possible performance of their companies. This weekend's #tariffs on Canada (25%, 10% on oil), Mexico (25%), and China (10%), while surprising to many business planners due to their targets, severity, immediate enforcement, and justifications, are no different. Work the problem: 🧠 Assess the immediate impact on your #costs, #profitability, and #pricing. If you haven't done so previously, engage in direct, honest, and transparent conversations with your teams, suppliers, and customers to develop a strategic response. Roll out the plan as quickly and efficiently as possible. 🗺️ Consider the medium-term and long-term implications of protectionist trade policies on your business and explore a comprehensive list of tariff mitigation strategies, including: •Strategic sourcing •Product exclusion requests •Country of origin adjustments •Value reduction/first sale tactics •Foreign trade zones and bonded warehouses •Special Harmonized Trade Schedule (HTS) provisions •Duty drawbacks 💡 Normalize a robust #risk assessment and planning process for your organization. Continuously evaluate diversification of suppliers and manufacturing locations. Conduct financial modeling of all inputs. Evaluate manufacturing process changes. Explore vertical integration and ways to eliminate intermediaries. Assess technology adoption and real time tracking of your supply chain. Don't be tariff-ied - you've got this! 💪

📦💥 TARIFF WARS: What is your plan when the rules change overnight? What do you do then?   Another day, another tariff. Rare earths? Taxed. Semiconductors? Taxed. Predictability? No more.   If your company depends on a global supply chain, this isn't just noise, it's your new reality. So let's talk strategy, so there's no panic at this cautious time:   ⏰ Audit your exposure as soon as possible → If your list of SKUs is related to China and involves essential inputs (such as lithium, chips or rare metals), expect tariffs. The cost will be higher and you need to be prepared.   🌏 China + 1 is old. China + MANY is the change. → Vietnam, India, Mexico - even Mars, if it's shipped in time. Diversify your sourcing as you do your investment portfolio. You need to keep an eye on all markets to take advantage of opportunities that arise.   📝 Reorganize your contracts. → Tariff clauses are no longer optional. Flexibility is an advantage. That five-year contract with the supplier? Rethink it.   🤝 Bring production closer to the market. → Nearshore. If you sell in the US, build in the US. If you sell in Europe, move closer. Global agility is the name of the game.   💻 Commercial technology is your advantage. → There are AI tools for tariff classification and tax optimization. If you're not using them, customs will - and not in your favor.   ✏️ Redesign the product to avoid the tariff. → Change parts, alter specifications or get creative. Your engineering team loves a challenge. So does your CFO.   🖥️ Create a real-time dashboard. → “Tariff Tracker 3000” isn't just a fun name. It's your visibility tool for material costs, policy changes and delivery times.   Conclusion: The tariffs are here. You can't control the storm - but you can come down hard.   At Drummond Advisors, we support businesses navigating the intersection of tax, trade, and regulation across jurisdictions. Our multidisciplinary team helps clients: ✅ Analyze and document transfer pricing in line with OECD standards ✅ Develop global tax strategies across the U.S., Latin America, and Europe ✅ Minimize the impact of tariffs through trade planning and structuring ✅ Stay compliant - and competitive - in a changing global economy Ready to rethink your global position? Let's connect.   #SupplyChainHumor #TariffTrouble #RareEarths #ResilienceByDesign #GlobalLogistics #ManufacturingLife #SourcingStrategy #TradeWarSurvivalKit

50% tariffs are here, but it’s not the end of the world. Dear early-stage founders, I hope you’re not losing sleep over this. As troublesome as this economic situation is, there’s a lot that you can do. Firstly, if you’re not looking into FTZ, now is the time. In the US, good moved to a FTZ aren’t taxed at entry, you only have to pay duties if they enter US commerce. In case the need arises, you can even send it back, no duties paid. Also, if you assemble or transform the product inside this zone, you could even apply for a lower duty rate (if applicable). Secondly, the tariff rate itself may be fixed, but you can control costs around it. For eg, choosing the right port of entry as per your specific needs can reduce fees as well as delays. And if you classify goods under the correct HTS codes you would be paying the lowest legitimate duty rate. ⭐ Thirdly, (my most favourite) tariff engineering. If you slightly modify your final product, it can fall into another lower duty category. And it’s absolutely legal. For eg, if you sell shoes: Ship the shoe and the lace separately. It’ll be treated as raw parts, which means you pay a much lower duty rate. Lastly, challenges like this one will always be there. But not to fret. Do your research, consult, talk to subject matter experts and work to find a solution. There's always a way. If you’re looking to avoid the most common pitfalls or have no idea where to go from here, do check out Assiduus, or just DM me :) Happy to help!

Instead of $6 to $17.07...it could be $9.87 or $9.26? Earlier this week, I covered the tariff and de minimis impact on manufacturing a shirt from China going from $6.00 to $17.07, but there are other options if you can find the right manufacturing partners in other countries through... "Best cost country" scenario planning with cross-shoring or re-shoring. You can check out my prior post for the breakdown of China, but let's take a look at: 1. Vietnam 2. El Salvador In Vietnam, the same $6 shirt might cost $6.95, but due to the normal tariff rate (32%) and reciprocal tariff (10%...at least until July 9), the cost is now $9.87, which is a 64.5% increase from the $6 original baseline. But that is much better than $17.07, which is a 184.5% increase. Note: before the 90-day pause at 10%, Vietnam was at 46%, which would drive the cost up to $12.37. In El Salvador, things start to get very interesting due to the CAFTA - DR Free Trade Agreement, which eliminates the normal tariff rate of 32%. While the same $6 shirt might cost $8.45, the removal of the normal tariff rate and then adding the 10% reciprocal tariff, the new landed cost is $9.26 or a 54.3% increase. Using my example from earlier this week of selling 50,000 shirts, let's see the breakdown of the cost of goods: - China (before): $300,000 - China (today): $853,500 (+$553,500) - Vietnam (today): $493,500 (+193,500) - El Salvador (today): $463,000 (+$163,000) Those are some huge savings if you can find the right partner who can handle your quality, quantity, and timelines. I'll share some more examples next week, but please share how you're approaching this as well in the immediate- and long-term.

I have spoken with many CEOs who are looking for practical approaches to navigate the complex landscape of changing tariffs and trade controls. One effective strategy that many leaders are adopting is the establishment of geopolitical nerve centers to stay proactive and informed. These cross-functional teams: - Analyze Tariff Impacts: Utilize tariff scenario and cost modeling, competitive advantage analysis, trade flow analytics, demand modeling, and supplier risk assessment. - Implement a three-horizon strategy: 💠 Horizon 1: Tackle the most significant tariff exposures 💠 Horizon 2:  Focus on cost control, classification management, commercial actions, and stakeholder engagement 💠 Horizon 3: Re-evaluate manufacturing, supply chains, and business portfolios My colleagues Cindy Levy, Shubham Singhal, and Matt W. share how companies can navigate the evolving global trade landscape. Read the latest here: bit.ly/3RiAu9l #TradePolicies #SupplyChain #BusinessStrategy