Tariff Engineering: Legally Designing Products for Lower Duty

Tariff engineering is designing or importing a product so that it is classified under a lower-duty HTS number. U.S. courts have long accepted that importers may shape goods to lower their duty, as long as the change is real and the goods are declared honestly as they are imported. The line is misdescription: a product that is changed on paper but not in fact is evasion.

How it works

• Change a material, such as the fiber content of a textile, which can move it to a different heading.
• Change a feature, such as adding or removing a function that defines the heading.
• Change the condition at import, such as importing components rather than a finished article, where the rules allow it.
• Change where processing happens, which can change origin. See substantial transformation.

What makes it hold up

• The change has a real effect on what the product is.
• The declaration matches the goods as imported.
• A binding ruling confirms the classification before you scale. See binding rulings.

Where it goes wrong

• Cosmetic changes that do not change the product's essential character.
• Features removed after import to restore the original product.
• Declaring the engineered version while shipping the original.

Frequently asked questions

Is tariff engineering legal? Yes, when the product is changed in fact and declared accurately.

Does it work for Section 301 duties? It can, when the change moves the product to an HTS number not covered by the lists, or changes origin. See Section 301 explained.

How Caspian helps

Caspian reviews classification options for your catalog. See HTS classification services.

Works Cited:

• USITC: Harmonized Tariff Schedule of the United States
• 19 U.S.C. 1592, Penalties for fraud, gross negligence, and negligence

This article is general information, not legal advice.