{"id":20378,"date":"2025-07-25T05:37:39","date_gmt":"2025-07-25T12:37:39","guid":{"rendered":"https:\/\/www.fictiv.com\/?post_type=cpt_help&#038;p=20378"},"modified":"2025-08-18T14:02:38","modified_gmt":"2025-08-18T21:02:38","slug":"tariffs-101-qa-a-guide-for-manufacturers","status":"publish","type":"cpt_help","link":"https:\/\/www.fictiv.com\/help\/production-and-fulfillment\/tariffs-101-qa-a-guide-for-manufacturers","title":{"rendered":"Tariffs 101 Q&amp;A: A Guide for Manufacturers"},"content":{"rendered":"\n<h2 class=\"wp-block-heading\" id=\"h_30a61b0b23\"><strong>What Is a Tariff?<\/strong><\/h2>\n\n\n\n<p>A tariff is a <strong>tax imposed on the importer<\/strong> of a product. While it targets imports, the exporting country often feels the impact, as tariffs can increase the final cost of materials, making them less competitive in the global market.<\/p>\n\n\n\n<div style=\"color:#0369a1;background-color:#e0f2fe\" class=\"wp-block-roelmagdaleno-callout-block has-text-color has-background is-layout-flex wp-container-roelmagdaleno-callout-block-is-layout-8cf370e7 wp-block-callout-block-is-layout-flex\"><div>\n<p><strong>\ud83d\udca1 <\/strong><a href=\"https:\/\/www.fictiv.com\/articles\/2025-u-s-tariff-updates-key-trade-policy-changes\">Check here for an ongoing list of recent tariff changes and trade policy developments.<\/a><\/p>\n<\/div><\/div>\n\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h_32a43290a4\"><strong>What Types of Tariffs Are There?<\/strong><\/h2>\n\n\n\n<p>There are several categories of tariffs, each based on specific policy reasons:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Section 301<\/strong>: Applied in response to <em>unfair trade practices<\/em>.<\/li>\n\n\n\n<li><strong>Section 232<\/strong>: Imposed for reasons related to <em>national security<\/em>.<\/li>\n\n\n\n<li><strong>IEEPA (International Emergency Economic Powers Act)<\/strong>: Used to address issues related to <em>public health or national security<\/em>.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h_6813f1e6d0\"><strong>Are the New Reciprocal Tariffs Cumulative?<\/strong><\/h2>\n\n\n\n<p><strong>Yes<\/strong>, the new reciprocal tariffs are cumulative, but there are <strong>exclusions<\/strong> depending on the situation.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h_fbc29be3c1\"><strong>Do the New Reciprocal Tariffs Include Any Exclusions?<\/strong><\/h2>\n\n\n\n<p><strong>Yes<\/strong>. For example, if a product is already subject to a <strong>Section 232 tariff<\/strong>, the new reciprocal tariff <strong>will not apply<\/strong> to that product.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h_caf26ed164\"><strong>What\u2019s the Impact of Importing an Aluminum Part From China?<\/strong><\/h2>\n\n\n\n<p>In this case, <strong>aluminum is already subject to a Section 232 tariff<\/strong>, so the <strong>reciprocal tariff will not apply<\/strong>. However, aluminum will still be taxed under:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>General Duty<\/strong><\/td><td>2.5%<\/td><\/tr><tr><td><strong>Section 301<\/strong><\/td><td>25%<\/td><\/tr><tr><td><strong>IEEPA<\/strong><\/td><td>20%<\/td><\/tr><tr><td><strong>Section 232<\/strong><\/td><td>25%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><\/p>\n\n\n\n<p>This results in a <strong>cumulative tariff rate of ~72.5%<\/strong>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h_5dcb516d57\"><strong>Should I Avoid Sourcing From Certain Countries?<\/strong><\/h2>\n\n\n\n<p><strong>Not necessarily<\/strong>. It\u2019s important to evaluate the <strong><a href=\"https:\/\/www.fictiv.com\/help\/placing-an-order\/know-the-full-cost-upfront-with-built-in-ddp-ior-services\">Total Landed Cost<\/a><\/strong>\u2014which includes <strong>labor, transportation, and duties\/tariffs<\/strong>. While one country may have higher tariff rates, <strong>lower manufacturing costs<\/strong> might offset the duties, making it a <strong>cost-effective option overall<\/strong>. Strategic sourcing should be based on a comprehensive cost analysis, not just tariffs.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h_2d09b5cc85\"><strong>What Is a <em>De Minimis<\/em> Shipment and How Does It Affect Tariffs?<\/strong><\/h2>\n\n\n\n<p><em>De minimis<\/em> shipments are &lt;$800 in value (low-value shipments) and used to be duty\/tariff free. <\/p>\n\n\n\n<p>Starting August 29, 2025 (due to an Executive Order signed July 30, 2025) de minimis shipments from all countries will be subject to duties and tariffs. (Previously, as of May 2025, only de minimis shipments from China and Hong Kong were subject to duties and tariffs. That has now changed.)<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h_7531ac4485\"><strong>What Happens If I Ship Aluminum or Steel to Mexico for Assembly Before Importing to the U.S.?<\/strong><\/h2>\n\n\n\n<p>Tariff implications will depend on whether the product <strong>qualifies under the USMCA<\/strong> agreement. Depending on the <strong>classification and transformation<\/strong> of the materials during assembly, the product may still be <strong>subject to tariffs<\/strong>, though potentially at a <strong>lower rate<\/strong>. The specific duty rate hinges on whether the transformation meets USMCA rules of origin.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h_cc1d341cf6\"><strong>What\u2019s the Difference in Duty Between DDP and Ex Works Terms?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>DDP (Delivered Duty Paid)<\/strong>: The vendor (Importer of Record) pays the duties, typically calculated using the <strong>transfer price<\/strong>, which is often lower than the sales price\u2014potentially reducing overall duty costs. The customer may reimburse the vendor, depending on the agreement terms.<\/li>\n\n\n\n<li><strong>EXW (Ex Works)<\/strong>: The customer (Importer of Record) is responsible for duties and tariffs, which are calculated based on the <strong>sales price<\/strong>. The customer pays these costs directly to their customs broker.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h_629821d4c3\"><strong>What Is a Derivative?<\/strong><\/h2>\n\n\n\n<p>A <strong>derivative part<\/strong> is a product classified under an HTS (Harmonized Tariff Schedule) code that <strong>contains tariffed materials<\/strong>, such as <strong>aluminum or steel<\/strong>. Even if the part isn\u2019t directly listed for tariffs, it can still incur duties based on the <strong>content of those materials<\/strong> within it. The tariff is applied to the <strong>portion of aluminum or steel<\/strong> at the current duty rate.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h_e8f39280dc\"><strong>How Can I Mitigate Tariffs?<\/strong><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h_4f551f02ab\"><strong>1. Diversifying Supplier Networks<\/strong><\/h3>\n\n\n\n<p>A diversified supplier base is crucial for reducing tariff exposure. By sourcing from multiple regions, companies can shift production to lower-tariff countries and avoid sudden cost spikes. Countries like Mexico, India, and Vietnam have emerged as attractive alternatives due to their competitive manufacturing capabilities and favorable trade agreements.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h_f51b443ec3\"><strong>2. Nearshoring and Onshoring<\/strong><\/h3>\n\n\n\n<p>Bringing production closer to home reduces dependency on high-tariff regions while improving supply chain resilience. Nearshoring to countries like Mexico allows businesses to benefit from trade agreements such as the USMCA, while onshoring manufacturing operations within the U.S. can provide long-term stability despite initial setup costs.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h_2c9241f912\"><strong>3. Leveraging Trade Agreements and Tariff Exemptions<\/strong><\/h3>\n\n\n\n<p>Understanding and utilizing existing trade agreements can significantly reduce tariff burdens. Free trade agreements (FTAs) such as the USMCA, CPTPP, and others offer reduced or eliminated tariffs for qualifying products. Additionally, companies should explore tariff exclusions and duty drawback programs to recover costs from previously paid duties.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h_68d4f76172\"><strong>4. Implementing Digital Supply Chain Solutions<\/strong><\/h3>\n\n\n\n<p>Advanced digital tools, including AI-driven supply chain management and real-time pricing analytics, enable businesses to make informed decisions about sourcing, production shifts, and cost optimization. Platforms like Fictiv provide visibility into supplier networks, helping companies identify lower-cost manufacturing options while maintaining quality and efficiency.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h_6f5f8698f1\"><strong>5. Strategic Inventory Management<\/strong><\/h3>\n\n\n\n<p>Stockpiling critical materials before anticipated tariff increases can help companies avoid sudden cost hikes. However, this strategy requires careful demand planning and financial forecasting to prevent excess inventory costs.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h_06e83a8d9f\"><strong>What Does the Future Hold for Tariff Management?<\/strong><\/h2>\n\n\n\n<p>As trade conditions shift, staying agile is essential. Staying informed on trade policy changes, leveraging strategic sourcing, and investing in technology-driven solutions will be critical for maintaining competitive advantage in an unpredictable market. <\/p>\n\n\n\n<p>Fictiv helps manufacturers adapt\u2014offering sourcing alternatives, supply chain visibility, and total landed cost transparency. We&#8217;re here to help you stay resilient in a tariff-weary world.<\/p>\n\n\n\n<p><strong>Questions? <\/strong>Your Fictiv account representative or support team is always here to help.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Learn the basics of tariffs, including definitions and types, in this Q&#038;A guide for manufacturers.<\/p>\n","protected":false},"author":135,"featured_media":0,"parent":0,"menu_order":0,"template":"","categories":[294],"coauthors":[148],"class_list":["post-20378","cpt_help","type-cpt_help","status-publish","hentry","category-production-and-fulfillment"],"aioseo_notices":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v24.2 (Yoast SEO v24.2) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Tariffs 101 Q&amp;A: A Guide for Manufacturers - Fictiv<\/title>\n<meta name=\"description\" content=\"Get clear answers to tariffs FAQs\u2014what they are, how they\u2019re calculated, and how they impact global sourcing, pricing, and compliance.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.fictiv.com\/help\/production-and-fulfillment\/tariffs-101-qa-a-guide-for-manufacturers\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Tariffs 101 Q&amp;A: A Guide for Manufacturers\" \/>\n<meta property=\"og:description\" content=\"Get clear answers to tariffs FAQs\u2014what they are, how they\u2019re calculated, and how they impact global sourcing, pricing, and compliance.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.fictiv.com\/help\/production-and-fulfillment\/tariffs-101-qa-a-guide-for-manufacturers\" \/>\n<meta property=\"og:site_name\" content=\"Fictiv\" \/>\n<meta property=\"article:modified_time\" content=\"2025-08-18T21:02:38+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.fictiv.com\/wp-content\/uploads\/2025\/03\/fictiv-jpg.webp\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"675\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"4 minutes\" \/>\n\t<meta name=\"twitter:label2\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data2\" content=\"Team Fictiv\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.fictiv.com\/help\/production-and-fulfillment\/tariffs-101-qa-a-guide-for-manufacturers\",\"url\":\"https:\/\/www.fictiv.com\/help\/production-and-fulfillment\/tariffs-101-qa-a-guide-for-manufacturers\",\"name\":\"Tariffs 101 Q&amp;A: A Guide for Manufacturers - Fictiv\",\"isPartOf\":{\"@id\":\"https:\/\/www.fictiv.com\/#website\"},\"datePublished\":\"2025-07-25T12:37:39+00:00\",\"dateModified\":\"2025-08-18T21:02:38+00:00\",\"description\":\"Get clear answers to tariffs FAQs\u2014what they are, how they\u2019re calculated, and how they impact global sourcing, pricing, and compliance.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.fictiv.com\/help\/production-and-fulfillment\/tariffs-101-qa-a-guide-for-manufacturers#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.fictiv.com\/help\/production-and-fulfillment\/tariffs-101-qa-a-guide-for-manufacturers\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.fictiv.com\/help\/production-and-fulfillment\/tariffs-101-qa-a-guide-for-manufacturers#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.fictiv.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Tariffs 101 Q&amp;A: A Guide for Manufacturers\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.fictiv.com\/#website\",\"url\":\"https:\/\/www.fictiv.com\/\",\"name\":\"Fictiv\",\"description\":\"On-Demand Manufacturing, CNC Machining &amp; 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