Background: Tariff engineering refers to the practice of designing a product (e.g., clothing) to be classified at a lower tariff rate. For example, “women’s or girls’ blouses, shirts, and shirt-blouses of man-made fibers” imported from China can get taxed as high as 26.9%. However, the same blouse added a pocket or two below the waist would instead be classified as a different product and subject to only a 16.0% tariff rate.
US fashion companies like Columbia Sportswear leveraged tariff engineering to mitigate the negative impact of the US-China tariff war. Nevertheless, using tariff engineering requires substantial financial and human resources, which often were beyond the affordability of small and medium-sized fashion companies.
What do you think about tariff and tariff engineering based on the video and our lectures?