Written by Anthony Sardain, CEO of Cavela

Tariffs and trade policies are evolving on a daily basis, creating cost challenges for brands. 

With ongoing U.S.-China trade tensions and other global tariff shifts, brands must stay informed and proactive. 

This brief guide outlines key resources to monitor tariff changes, practical steps to mitigate their impact, and a simple formula to calculate tariff expenses. The focus is on clear actions that drive smart, practical outcomes.

How Do Tariffs Work and How Are They Calculated?

Tariffs are taxes on imported goods, based on the product’s HS code (Harmonized System code) and country of origin. 

They are applied to the declared customs value of the goods—typically the EXW or FOB price (see below). The total tariff rate often includes the base import duty, plus additional surcharges such as Section 301 tariffs, retaliatory tariffs, or safeguard duties. These are assessed at the time of import and must be paid to clear customs.

When calculating the landed cost of your goods, tariffs are factored in as follows:

Total Landed Cost = EXW (or FOB) + Tariff Amount + Freight + Customs & Delivery

Tariff Amount = Declared Customs Value × Total Tariff Rate

(Tariffs are calculated only on the declared product value — freight, customs fees, and last-mile delivery are not part of the tariff base.)

Here’s how this plays out with two example orders: one from Vietnam and one from China:

Under equal tariff rates and freight fees, the China shirt would be more cost-effective due to its lower unit cost. However, with the current 135% tariff applied to Chinese goods, the total landed cost nearly doubles compared to the Vietnam order—turning a cheaper product into a significantly more expensive one.

How to Manage and Mitigate Tariff Impact

At the time of writing of this article, the United States declared a moratorium on import tariffs for all countries but China for 90 days. Given the volatility of the geopolitical and trade environment, the situation may change over the coming days. Although no one knows how the coming weeks and months will play out, here are some things brands are doing to mitigate the impact of tariffs on their business.  

Immediate Actions (Right Now):

• Hold Shipments Temporarily:
  Given current volatility, consider pausing production or delaying shipments until there's more clarity on tariff changes. This avoids sudden tariff spikes impacting products already in transit or production.
  

• Tariff Engineering (Shift to EXW Pricing):
  Change your product valuation to Ex Works (EXW), meaning the buyer arranges transportation directly from the factory. This prevents inflated FOB (Freight On Board)-based tariff calculations, significantly reducing duties—particularly critical if tariffs hit 100%.

>> Why this helps: EXW valuations only account for the product's cost at the factory, excluding freight and logistics fees, lowering your total tariff burden.

Medium-Term Steps (Next Few Months):

• Bonded Warehousing:
  Consider using bonded warehouses, which allow you to store imported goods without immediately paying tariffs. Tariffs are deferred until products physically leave the warehouse and enter the U.S. market. This buys you valuable time and helps manage cash flow strategically.
  

• Finish Products in Alternate Countries:
  Explore partially finishing your products in a tariff-favorable third country (like Vietnam, Mexico, or India). Substantially transforming products (e.g., assembly, customization, adding major components) can potentially change their Harmonized System (HS) code or country of origin, helping you legally avoid direct China-origin tariffs.

Long-Term Strategies (Moving Forward):

• Audit Your Top SKUs for Tariff Exposure:
  Regularly evaluate your highest-selling or highest-margin products for tariff vulnerabilities. Identify items with high tariff burdens and prioritize finding alternative sources or production locations.
  

• Backup Supplier Quotes from Other Regions:
  Always maintain updated quotes from suppliers in multiple regions. Diversification enables rapid sourcing adjustments and minimizes risk if tariffs suddenly shift again (see Resources below).
  

Lock in Pricing with Reliable Factories:
If you anticipate further tariff instability or increases, negotiate and secure pricing agreements with your most trusted factories now, hedging against future tariff-driven cost escalations.

Resources

• Flexport Live Tariff Updates — Daily updates on tariff developments from one of the leading freight forwarders. 

• Customer Tariff Communication Playbook — Actionable advice on how to communicate tariff-related issues to your customers

• Understanding the Broader Geopolitical Context — Long form interviews with current and former administration officials sharing insights on the current and future economic landscape and the implications for businesses.

  • Stephen Miran on Forward Guidance

  • Scott Bessent on All In Pod

  • Steve Pavlick on The Compound

  • Howard Lutnick on All In Pod

• Finding Alternative Suppliers — Start pivoting your supply chain by finding another supplier. Consider using lists of suppliers compiled from import records such as those from ImportGenius or ImportYeti, supplier search engines such as Alibaba, Thomasnet, or GlobalSources, or sourcing agent solutions such as Jing Sourcing or Cavela.

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