American CEOs Addressing 2025's High Tariffs: Using Policy Loopholes to Cut Costs

In 2025, after the Trump administration returned to office, it reimposed high tariffs on imported goods. CEOs of American companies adopted various strategies to cope, including lobbying the government for exemptions and taking advantage of loopholes in foreign trade zones and gray market activities. These actions highlighted the ambiguities in policy implementation and demonstrated the companies' adaptability in response to the restructuring of global supply chains. Companies also influenced policy through political donations and considered nearshoring production and establishing factories directly in the U.S. to reduce the impact of tariffs.

Tariff Policy Background: From Transparency to Obscurity

On April 2, 2025, the Trump administration signed an executive order imposing a 10% baseline tariff on almost all imported goods, with punitive tariffs of up to 145% on Chinese products. Meanwhile, products like semiconductors, pharmaceuticals, energy, and critical minerals were exempted. However, unlike Trump's first term, this time, the exemption application process was kept private, and companies could not submit applications through formal channels but had to engage in private lobbying and internal negotiations.

According to a report by Truthout, this opaque process has raised concerns among trade experts, who believe that companies with good political connections might gain exemptions through behind-the-scenes negotiations. For instance, the reasons for the PET resin exemption were not clearly explained, and even major industry stakeholders were unclear about the reasons for its exemption.

Lobbying and Political Donations: Corporate "Tariff Diplomacy"

Interactions between corporations and the government have also become part of the strategy. Coca-Cola donated $250,000 for Trump's inauguration, and the CEO personally gifted Trump a specially made Diet Coke. Its bottling partner, Reyes Holdings, hired Ballard Partners for tariff lobbying in the fourth quarter of 2024 and began specific policy lobbying with the Department of Commerce in the first quarter of 2025.

The agricultural industry also secured favorable positions on the exemption list, successfully obtaining tariff exemptions for various pesticide and fertilizer components. These actions demonstrate that companies that can effectively leverage political resources have the opportunity to gain advantages in a high-tariff environment.

Foreign Trade Zones (FTZ): The Gray Area of Legal Tax Avoidance

In addition to lobbying, companies are actively using U.S. Customs-approved Foreign Trade Zones (FTZ) to delay or avoid paying tariffs. According to a report by Hellenic Shipping News, the number of FTZ applications has reached a historic high since the 2024 presidential election. Companies can store imported goods in FTZs until deciding to sell them in the U.S. or re-export them to other countries, thereby avoiding or reducing tariff burdens.

For example, GE Aerospace estimated it would face about $500 million in tariff costs and has partially mitigated the impact by expanding the use of FTZs. A spokesperson for Maersk North America noted that as other tax reduction mechanisms (such as rebates) do not apply to the new tariffs, more companies are considering FTZs as a primary strategy.

Gray Trade and Rules of Origin: Cross-Border Supply Chain Reorganization

Another strategy is to circumvent tariffs through "gray trade." According to a report by ZeroHedge, Chinese exporters complete 90% of their products before shipping them to low-tariff countries like Vietnam, Mexico, or Malaysia for final assembly or repackaging, thereby altering the country of origin label to avoid the 145% Chinese tariff.

Although this strategy carries higher risks, it is still widely adopted due to the difficulty in tracking supply chains. According to an analysis by RBC Wealth Management, Vietnam has replaced nearly half of China's U.S. market share between 2017 and 2022, demonstrating the practical effects of such strategies.

Supply Chain Reorganization and Nearshore Production: Long-Term Coping Strategies

Facing an uncertain tariff environment, many companies are choosing to reorganize their supply chains. According to Simon Freakley, Executive Chairman of AlixPartners, companies are reducing tariff burdens by shifting high-cost parts to local production, importing semi-finished products, or changing logistics routes.

For example, Birkenstock pre-imported 90% of its U.S. inventory, leaving only 10% of their products subject to a 20% tariff, which can be absorbed by slightly increasing prices. Meanwhile, Crocs, facing a 45% tariff due to its production base in Vietnam, is considering adjusting its production location.

Additionally, according to a report by Fenix Manufacturing, companies are actively investing in nearshore manufacturing and alternative suppliers to shorten supply chains, reduce transportation costs, and improve market response speed.

Small Packages and "De Minimis" Clause: E-commerce Loopholes

For cross-border e-commerce, the "de minimis" clause offers another avenue for tax avoidance. According to RBC Wealth Management, all major trading partners except China can still enjoy duty-free imports for packages under $800. This allows some Chinese sellers to reroute small packages through third-country logistics centers to bypass high tariffs, although this extends logistics time.

Foreign Companies' U.S. Investment: From Tax Avoidance to Localization

Facing high U.S. tariff policies, some foreign companies are choosing to set up factories directly in the U.S. TSMC announced plans to construct five semiconductor fabrication plants in the U.S. to reduce reliance on Chinese manufacturing and avoid tariffs. This strategy not only helps reduce import costs but also aligns with the U.S. government's policy direction of promoting manufacturing reshoring.

American CEOs Addressing 2025's High Tariffs: Using Policy Loopholes to Cut Costs

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