Tariff dodging, flight, and drug delivery strategies

Your new Strategy Toolkit newsletter (April 9, 2025)

(1) The artful dodger returns

It was inevitable. Whenever (and wherever) countries decide to impose tariffs, strategists come up with ingenious ways to get around the barrier to trade. Whether you use tariff engineering or first-sale provisions, or other options, necessity continues to be the mother of innovation…

“Not a week goes by without new threats… to slap fresh duties on imports into America. Sweeping tariffs risk becoming “existential” for companies, says Edward Steiner of Sandler, Travis & Rosenberg, a law firm. For many, moving production to America… remains prohibitively expensive. Companies are therefore likely to explore more creative approaches instead…

“Some bosses may look instead at wily workarounds. One of these is known as “tariff engineering”, which includes tweaking products to change their official classification, as the sugar manufacturer did. Duties can vary significantly even when merchandise appears similar, and “therein lies the opportunity,” notes Lawrence Friedman of Barnes, Richardson & Colburn, one more law firm…

“Even if some loopholes are closed, companies are bound to find others. Ultimately, says a trade lawyer, “people want stuff, and they’ll get it one way or another.” Expect plenty of ingenuity in the years ahead.”*

* Anonymous, “Skipping duties”, The Economist (March 1, 2025): 55-6; https://www.economist.com/business/2025/02/24/a-guide-to-dodging-donald-trumps-tariffs