Since the launch of the Trump tariffs on April 2 — dubbed “Liberation Day” — the fallout has spread far and wide. Meta is staring down a $7 billion ad revenue hit as Trump’s China tariffs shake up platforms like Temu and Shein. Just this morning, UPS announced plans to cut 20,000 jobs due to lower Amazon volumes.

Behind these headlines, however, big brands are quietly sidestepping the new tariffs — not by breaking the rules, but by using smart, legal strategies baked into the system. Here’s what startups can learn from their playbook to protect their margins and stay competitive.

The insights in this article are based on a YouTube video by Steve Chou, founder of the MyWifeQuitHerJob e-commerce channel. In the video, Steve explains how large companies legally reduce or avoid import tariffs — and how small businesses can apply similar strategies. You can watch the full video here.

How To Avoid Tariffs and How Big Brands Do It

The most straightforward way to avoid tariffs is simple: buy and sell products made in the United States. Products manufactured domestically don’t get hit with import duties, which means no unexpected tariff hikes, no international paperwork headaches, and faster delivery times for your customers. It’s the cleanest solution — and for businesses that can find reliable U.S. suppliers, it’s often the best long-term play.

But realistically, not every product can be sourced locally. Whether it’s cost, availability, or specific materials, many startups still rely on imports to stay competitive.

That’s where big brands get creative. Companies like Nike, Apple, and Columbia aren’t just absorbing tariff costs — they’re using smart, legal strategies hidden in plain sight. These tactics aren’t reserved for billion-dollar corporations. They’re accessible to small businesses, too, if you know how to use them.

Here’s a breakdown of how they do it — and what startups can learn from their approach.

1. Tariff Engineering: The Art of Redesign

Big brands aren’t just making products that sell — they’re making products that cost less to import.

Take Converse’s iconic Chuck Taylors. Ever notice the fuzzy bottoms? That’s not for better traction. By covering more than half the sole with felt, Converse gets its sneakers reclassified as slippers. The payoff? Slippers face a 3% tariff instead of up to 37.5% for regular shoes.

It’s not just Converse. Columbia’s design teams build little tricks into their clothing, too. For women’s shirts, they add tiny, strategically placed pockets near the waistline — not because anyone needs another pocket, but because U.S. customs rules reward those pockets with lower tariffs. A basic blouse might get hit with a 26.9% duty. Add a pocket or a ribbed waistband, and the rate can drop below 16%.

If you’re still selling products exactly the way you designed them years ago, it might be time for a rethink. Big brands do it all the time — and they’re saving millions.

2. The First Sale Rule: Pay Tariffs on the Lower Price

Here’s a trick even experienced importers miss: the first sale rule.

Normally, tariffs are based on what you paid your supplier. But what if you could legally base your tariffs on the manufacturer’s price instead?

If your supplier acts as the “importer of record” under a DDP (Delivery Duty Paid) agreement, you can. That means tariffs are based on the factory price, not the marked-up price you paid your supplier.

Example:

• The supplier makes your product for $10.

• You pay $20.

• With the first sale rule, tariffs are calculated on $10, not $20.

Done right, this cuts your tariff bill in half. The trick is making sure your supplier agrees to DDP terms and documents everything properly in case of a customs audit.

If you’re not asking for DDP quotes, you’re probably burning money.

3. Duty Drawback: Get Your Tariff Money Back

Here’s a little-known gem: If you import goods into the U.S. and later export or destroy them, you can get back up to 99% of the tariffs you paid.

Say you import 10,000 custom water bottles from China and pay $5,000 in tariffs. Later, you ship 2,000 of those bottles to Canada. By filing a duty drawback claim with U.S. Customs, you could recover almost $1,000.

It’s real. It’s legal. But it only works if you file the right paperwork.
If you’re selling internationally and not doing this, you’re leaving money on the table.

4. Changing Country of Origin: The Assembly Trick

Products are taxed based on where they’re made. But “made in” doesn’t mean where every part comes from — it means where the product undergoes substantial transformation.

That opens a big door.

Example: Import Chinese parts for LED desk lamps. Assemble them in Mexico. Now, Mexico has become the country of origin. Instead of facing sky-high Chinese tariffs, you qualify for Mexico’s lower rates under trade agreements.

Brands have been playing this game for years, and it’s picking up again as tariffs climb higher.

Whenever possible, sourcing domestically still offers the cleanest path to avoiding tariffs altogether — no legal maneuvers needed.

5. Bonded Warehouses and Foreign Trade Zones: Delay or Skip Tariffs

You don’t have to move your entire supply chain overseas to get a break.

Bonded warehouses and Foreign Trade Zones (FTZs) let you store imported goods without paying tariffs until you officially sell them in the U.S. And if you re-export the goods? You can skip tariffs completely.

Another bonus: If you assemble or modify products inside an FTZ, you might qualify for a lower tariff rate based on the finished product.

Global sourcing has its place, but as tariffs continue to climb, expect more businesses to rethink local production as a long-term solution.

6. Unbundling Strategy: Cut Your Tariff Bill with Better Paperwork

Sometimes it’s not about changing products or suppliers — it’s about changing your invoice.

Many importers pay tariffs on the full invoice price, including non-taxable costs like software, royalties, or design fees. That’s unnecessary.

If you break out these costs properly in your contracts and invoices, customs may only charge tariffs on the physical goods.

Example:

• $80 for the physical speaker

• $10 for software

• $10 for R&D

Instead of paying tariffs on $100, you only pay tariffs on $80.

It’s a paperwork play that can save you 20% or more without touching your supply chain.

7. Shrinkflation: Cutting Corners to Stay Alive

When all else fails, brands cut costs the old-fashioned way: shrinkflation.

Restaurants are serving smaller portions. E-commerce brands like Grooms Day are cutting out non-essential items like free batteries or fancy packaging. Toy companies are using fewer paint colors and thinner materials.

It’s not glamorous, but sometimes staying alive means tightening the belt.

Building a supply chain closer to home offers stability that even clever paperwork can’t match.

Final Thoughts

Tariffs don’t have to be a death sentence for startups. Big brands are using smart, legal strategies to cut their costs — and now you can learn from them. From reclassifying products to restructuring supply chains, there are more options on the table than most businesses realize.

But while these tactics can save thousands, the simplest way to sidestep tariffs altogether is still the oldest: source locally when you can. Building more products closer to home not only protects you from rising duties but can also create a stronger, more resilient business in the long run.

Learning these strategies is one thing. Deciding how they align with your company’s values and long-term goals is just as important.

Whether you go global with smart import strategies or bring production stateside, the key is staying informed — and staying ahead.