Grade C. While this might seem like a potential winning strategy, the truth is that the U.S. Trade Representative have not been generous in granting exclusions to the HTS codes. In the first tranche in 2018, the USTR denied about 1,080 and approved none of the 10,650 exclusion requests. The only later exceptions to these were COVID-related exclusions.
Most of these exclusions have since been declined further extensions where comments indicated that importers had no plans to shift sourcing out of China.
2. Sourcing from Tariff-Free Regions. Distributors may have access to suppliers in countries or regions with favorable trade agreements or low tariffs. By sourcing valves from these areas, they can help reduce tariff costs for customers.
Grade B. This is an obvious answer and is a strategy that has been employed by many where available. Known in the industry as China Plus One, many manufacturers have opened locations in countries such as Vietnam and India to help avoid the tariffs. The only reason this strategy might be problematic this time, thus why I gave ChatGPT a B, is if a Global 25% tariff is put into place, these China Plus One countries would be placed back on a more even playing field.
3. Bulk Shipping and Consolidation. Some distributors help by consolidating orders, which may reduce overall shipping costs or minimize tariff impacts. By grouping multiple smaller shipments together, they might lower the number of times duties are assessed.
Grade B. Despite the tariffs, the U.S. is still China’s largest trading partner on a single-country basis, and until other countries such as Vietnam or Mexico can catch up with China’s output, this will probably not change too drastically in the near term. Therefore, the strategy to combine orders or purchase a full container of valves direct from factories, is always a good one especially because shipping container costs have been another pain point for valve importers.
4. Negotiation Leverage. Bulk Purchasing and Discount Negotiations: Distributors often have strong relationships with manufacturers and can negotiate better pricing, even in the face of tariffs, which can help offset the increased costs of goods.
Grade A. This may not be one of ChatGPT’s first suggestions, but it is its best. Any and all purchasing managers who buy valves have already put this strategy into action.
5. Strategic Inventory Management. Stocking Up Before Tariff Increases: If tariffs are expected to rise, distributors may recommend pre-ordering valves or related products before the price hike takes effect, thus avoiding the additional costs later.