Image of containers on a container ship with ropes attached to the dock. Title text is How to Reduce Tariff Costs and Strengthen Your Supply Chain: Expert Insights from Deep SenGupta

How to Reduce Tariffs Costs and Strengthen Your Supply Chain

If you’re navigating global supply chains, tariffs can be a major threat to your bottom line. That’s why Product Realization Group (PRG) recently hosted an in-depth conversation with international trade expert Deep SenGupta, founder and CEO of DSG Global. In this live discussion, moderated by PRG’s Michael Keer, Deep shared eight actionable strategies to reduce tariff exposure and build a more resilient supply chain.

Whether you’re a startup scaling fast or an established OEM with international operations, this blog distills the insights into practical steps you can start applying today.

8 Tariff Minimization Strategies

  1. Start with a Tariff Impact Assessment
    Think of this like reviewing your credit card bill. SenGupta recommends analyzing your Automated Commercial Environment (ACE) data to uncover exactly how much duty you’re paying, where your products are coming from, and if there are errors in classification or sourcing.
  2. Evaluate Customs Valuation
    Duties are based on product value. If you’re importing through non-traditional means (e.g., repairs, consignment, related-party transactions), you might be overpaying. SenGupta highlighted methods like stripping out service costs or using the “first sale” rule to lower declared value.
  3. Get Tariff Classification Right
    Many businesses default to “other” categories when classifying products, often leading to unnecessarily high duties. Accurate classification, backed by customs rulings and technical input, can significantly reduce costs and avoid audits.
  4. Rethink Your Incoterms
    If your supplier handles all Delivered Duty Paid (DDP), you lose visibility and control over potential savings. Deep suggests shifting to Delivered at Place (DAP) terms, where you, the importer, take charge of the clearance process.
  5. Understand Country of Origin Rules
    Avoiding Chinese-origin duties by moving final assembly to Mexico? It may not be enough. Customs looks for “substantial transformation” (ie. a change in name, character, or use) to determine country of origin.
  6. Use Free Trade Agreements (FTAs)
    The U.S. has over 20 FTAs that can reduce or eliminate tariffs if your products qualify. SenGupta warns that just shipping from a partner country isn’t enough. You must meet specific rules of origin, like value thresholds or tariff shifts.
  7. Consider Duty Drawback
    If you’re exporting goods after importing them or destroying them, you may be eligible for a refund of 99% of duties paid. It’s data-intensive but worth it for companies with meaningful volume.
  8. Explore Bonded Warehouses and Foreign Trade Zones (FTZs)
    Both options allow you to defer (or sometimes avoid) paying duties. While bonded warehouses are more limited in scope, FTZs provide greater flexibility and tax advantages for high-volume importers.

Strategic Takeaways for Product Teams

During the Q&A portion, Deep emphasized the value of incorporating tariff strategy early in product development. Choosing suppliers in FTA-compliant countries, avoiding overreliance on high-risk regions like China, and validating country-of-origin claims can save significant time and money downstream.

PRG’s Michael Keer echoed this with a recommendation: move beyond “China + 1” to “China + 2” or even full diversification. Strategic sourcing decisions now can future-proof your supply chain from the next round of trade disruptions.

What Happens If You Get It Wrong?

Tariff classification errors can come back to bite. SenGupta shared real-world stories of startups hit with six-figure penalties due to misclassification. Customs may look back up to five years and charge interest on top of back duties.

The fix? Do your homework. Lean on technical teams. Consult CROSS (Customs Rulings Online Search System). And when in doubt, get expert help to ensure compliance with the 3,000+ page tariff code.

Final Thoughts: Build Smarter

From tariff engineering to using bonded warehouses to simply classifying goods properly, there are many ways to reduce duty spend. But as SenGupta reminds us, none of this happens by accident. Resilience starts with awareness and action.

If you’re not sure where to start, PRG and DSG Global can help you assess your exposure and design a smarter supply chain strategy. Because in today’s volatile trade landscape, staying compliant isn’t enough. You need to be strategic. Contact us to learn more. 

 

Want Expert Guidance?

Get expert advice on supply chain strategy, contact Product Realization Group or DSG Global.

Meet the experts

Deep SenGupta, Founder and CEO of DSG Global

Prior to founding DSG Global in 2014, Deep was at FedEx from 2002-2014 where he was the Principal of FedEx’s regulatory consulting group providing international trade regulatory consulting to numerous entities. Deep was also responsible for providing international trade services to governments on a global basis.

Prior to joining FedEx, Deep was with KPMG’s Asia Pacific Tax practice from 1997 where he helped establish KPMG’s International Trade & Customs practice in India and advised several Fortune 500 clients on market-access issues for their South-Asian operations.

Deep has also assisted the US Government agencies involved in both imports as well as exports, as a subject matter expert.

Michael Keer, Founder and Managing Partner, Product Realization Group 

Michael Keer has over 30 years of high technology New Product Introduction experience in development and manufacturing. As founder of the Product Realization Group (PRG), Michael created a solutions based team of consultants that help companies make the leap from concept to full market scale. We are a mission driven company dedicated to helping companies bring products to market that positively impact both people and the planet. Our clients include medical device, consumer electronic, and high-technology start ups, SMBs, and large companies such as Intuitive Surgical, Mentor Graphics, and NTT. Prior to the PRG, Michael served in senior management roles at SofTEQ, Paramit Corporation, SemiPower Systems, and Ericsson, where he supported bringing over 100 new products to market in both OEM and CM environments.

Michael received a B.S. in Industrial Engineering and Masters in Manufacturing Engineering from Northwestern University, and has mentored at Stanford University’s StartX, Berkeley Foundry, and Lemnos Labs. He is currently a mentor at the CleanTech Open and Sustainable Ocean Alliance. He has lectured at Stanford University, Northwestern University, Santa Clara University, SME, IEEE, ASME, and Lawrence Livermore National Labs.

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