As tariffs enforcement continues to increase operational costs, many U.S. importers are evaluating difficult trade-offs whether to switch to lower-cost suppliers, raise product prices, or reduce payroll expenses.  Before making tough, potentially damaging decisions, it is worth digging into the less obvious but completely legal provisions of the tax code.

Hiring someone with deep knowledge of global trade and tax procedures, and expertise in accounting can unlock valuable opportunities. Together, that’s what an offshore accounting service can offer: strategic financial support that can deliver real relief without compromising your business integrity or performance.

The Changes And Global Impact of Tariffs.

The current tariff climate, driven by renewed U.S. trade actions, is reshaping global commerce. Sharp increases on Chinese imports and potential hikes on others are raising costs for U.S. businesses. With retaliation looming, companies must navigate rising supply chain expenses and make smart adjustments to offset tariff burdens and maintain competitiveness in global markets.

First Sale Rule: Legally Lower Import Values

If your imported goods pass through multiple parties before reaching the U.S., you might be eligible for the First Sale Rule. Instead of basing tariffs on the final price paid by the U.S. importer which often includes distributor markups, shipping fees, and profit margins you can legally declare the value from the initial sale between the foreign manufacturer and the first buyer. This can significantly reduce your declared customs value, lowering overall duty costs without altering your supply chain. Though this method has existed since 1992, fewer than 3% of importers use it. That’s changing fast under the current USA tariffs pressure. Proper documentation and transactional transparency are key to successfully applying this strategy.

Reevaluate Transfer Pricing Agreements

Multinational companies importing from their overseas subsidiaries may unknowingly inflate their U.S. customs duties through poorly structured transfer pricing policies. International tax law requires related entities to conduct trade as if they were two independent parties. However, as a fair trade practice, prices of goods and services naturally fluctuate and auditors accept prices to be within an arm’s length range, determined by a thorough functional analysis and benchmarking, to reflect fair market value. Often, bundled costs like marketing, legal, or admin fees get rolled into product pricing, raising the declared import value unnecessarily. Also, significant deviations from market norms can attract scrutiny.

For companies navigating complex financial decisions, Transaction Advisory services can provide critical strategic support. Firms like Magnus offer expert guidance across mergers, acquisitions, due diligence, and valuation, blending AI-powered analysis with deep international tax knowledge. This empowers businesses to make informed choices, minimize risks, and maximize deal value. Discover how Magnus is helping U.S. firms leverage AI to drive smarter, more secure transactions.

Duty Drawbacks and IC-DISC: Exporters, Pay Attention

If your business re-exports goods after importing them, you may be eligible for a duty drawback, which refunds up to 99% of the import duties and taxes you originally paid. This can result in substantial savings, especially for companies involved in global supply chains. Additionally, exporters can reduce their overall tax liability by establishing an IC-DISC (Interest Charge Domestic International Sales Corporation)—a legal tax structure that allows profits from exports to be taxed at lower dividend rates instead of higher ordinary income tax rates. 

While these strategies offer meaningful financial advantages, they require careful planning, documentation, and compliance with IRS rules. Offshore accounting services are well-equipped to manage the technical workload, ensuring accuracy while helping you unlock these export-related benefits.

Optimize Payroll Tax with Fringe Benefits

Reduce employer FICA tax obligations by creatively shifting compensation into fringe benefits such as:

• Retirement contributions
• Tuition reimbursement
• Health plan premiums
• Dependent care
• Commuter plans

Example:
Instead of offering a $5,000 cash raise (which triggers payroll taxes), an employer might contribute that amount to a qualified pre-tax retirement plan (like a 401(k)) on behalf of the employee or cover health insurance premiums through a Section 125 plan. The employee receives valuable benefits, and both the employer and employee can legally avoid FICA taxes on those specific pre-tax contributions.

Hire Smart with WOTC Credits

The Work Opportunity Tax Credit (WOTC) offers up to $9,600 per eligible employee, aimed at encouraging businesses to employ individuals from groups that face significant barriers to employment. This can be a powerful tool for reducing tax liability while building a socially responsible workforce.

WOTC-eligible categories include:

• Veterans (including those with service-connected disabilities)
• Long-term unemployed individuals
• Supplemental Nutrition Assistance Program (SNAP) recipients
• Temporary Assistance for Needy Families (TANF) recipients
• Individuals living in designated Rural Renewal or Empowerment Zones
• Youth hired for summer jobs
• Vocational rehabilitation referrals 

Offshore accounting teams can support this process by pre-screening candidates, managing IRS Form and other documentation, and integrating WOTC tracking into HR or payroll systems. With proper implementation, this credit can generate thousands in savings per employee while streamlining compliance and reporting.

Final Thoughts: You Don’t Need to Break the Law to Break Even

With the right strategy—and the right partner—your business can navigate high USA tariffs legally and effectively. Avoid shortcuts like mislabeling goods or falsifying values. Instead, lean on expert services that integrate compliance, automation, and actionable strategy.

Magnus Consulting is here to help you stay compliant, save money, and outpace your competition, even in a tough tariff landscape.