KPMG Expert Andrew Siciliano on Tariff Mitigation Strategies

Navigating Tariff Disruptions

• 🚨 Tariff triage is the current operational focus for many companies, dealing with widespread and higher-than-expected tariffs announced recently.
• 💡 CEOs and CFOs are concerned about cash flow, current orders, and the complexity of new tariff rules.
• 🛠️ Companies are actively pulling every lever to minimize tariffs, including supply diversification, contract negotiation, onshoring, and tariff mitigation.

Understanding Tariff Mitigation Pillars

• 📌 Tariffs are determined by three key pillars: country of origin, tariff classification, and valuation.
• 🌍 The country of origin is where a good is made or substantially transformed, not necessarily the country of export.
• 🏷️ Tariff classification is crucial as it dictates which specific tariffs apply to a good.
• 💰 Valuation rules are complex, requiring accurate transaction values and correct methods of appraisement to ensure only dutyable values are included.

Opportunities for Tariff Reduction

• 📈 A key opportunity is country of origin tracing, where up to 20% of a good's value if it's US origin can be excluded from tariffs.
• 📄 To leverage this, companies need to obtain and authenticate certificates of US origin.
• 🔗 The difficulty in tracking finished goods and materials across multiple nations makes this process challenging, especially when goods are transshipped.
• 🔍 Companies are scrambling to put systems in place for supply chain traceability to prove the origin of components and materials.