Businesses are finding legal ways to circumvent the Trump tariffs

For many, tariff loopholes are the friends made along the way.

Businesses that import goods into the US have started to implement above-the-law approaches to avoid paying tariffs sometimes well north of 100%. They fall into two main categories:

Tariff engineering: This involves tweaking a product’s materials to make it align with a different tariff code, which are assigned to categories of imported goods.

Converse, for example, makes its signature All Stars sneakers with a sole that contains felt as opposed to the traditional fully rubber—which may have been by design (pun intended). Foreign-produced shoes with felt bottoms can be classified as “house slippers,” which have significantly lower tariff rates compared to other kinds of footwear (other companies, such as Columbia Sportswear, are a little more brash about their approach).

Bonded warehouses: These enable businesses to store products stateside for up to five years without having to pay tariffs until those products are taken out. Companies utilizing these glorified storage units that share the first four letters of their name with a suave secret agent are betting that rates will go down in the short or medium term…

…while others are just canceling orders entirely. Port data from container software company Vizion showed a 43% drop in containers imported into the US between April 14—28, a level of disruption comparable to summer 2020, Vizion CEO Kyle Henderson told CNBC.