U.S.-Based Assembly Tariff Strategy: Building Smarter Supply Chains Through U.S. Value

A Narrow Path Through a Tightening Trade Landscape

With tariff pressure escalating—especially on goods from China, Hong Kong, and Macau—product companies importing components for assembly in the U.S. are facing significant cost volatility. But amidst the tightening restrictions, there remains a strategic lever that many have overlooked: the IEEPA U.S.-origin exemption rule.

As of April 2025, finished goods that are imported may be exempt from stacking tariffs if at least 20% of the declared value of the product at import is of U.S. origin. For companies with U.S.-based final assembly—like companies that perform full U.S.-based assembly—this opens a narrow but highly actionable window to avoid significant tariff exposure.

U.S.-based assembly tariff strategy - Understanding the 20% U.S.-Origin Exemption Rule

This strategy is at the heart of building smarter supply chains through U.S. value—a growing priority for companies looking to reduce tariff exposure while maintaining control over final assembly and distribution. It’s not just about where things are made—it's about how value is added and where that value originates.

Under the International Emergency Economic Powers Act (IEEPA), goods imported from certain countries may be exempt from elevated tariffs if they meet a threshold of U.S. content. That means:

• At least 20% of the product's total value (as declared at the time of U.S. import) must come from U.S.-origin components, labor, or packaging.

• The exemption applies only to goods imported in their final form—not to raw components themselves.

• Documentation must support the valuation, including BOM cost, labor inputs, and supplier origin.

This provision is especially valuable for brands that import bulk components and perform full or final assembly in the U.S.

Case Context: U.S.-Based Final Assembly for Low-Volume Products

Many companies still performing low- to mid-volume production in the U.S. retain a significant strategic advantage. For these operations, components—such as wheels, motors, handles, and electronic subassemblies—may arrive from various global sources, often in bulk and unassembled. With retail prices of finished goods ranging well above $1,000 per unit, the imported component value typically comprises a small portion of the final product’s declared value.

Because these products are fully assembled domestically, U.S. value creation includes:

• Labor and skilled assembly

• U.S.-sourced packaging and branding

• Integration of any domestic components

  
  

When properly documented, this structure opens the door to avoid stacking tariffs entirely—if 20% or more of the value is attributed to U.S. content at the time of import.

Building a Strategic Response: From BOM to Border

To activate this exemption, product companies must:

1. Quantify U.S. Value Inputs

   • Labor costs (hourly wages, assembly time)

   • U.S.-sourced packaging and printed materials

   • Any U.S.-made components or subassemblies

2. Document Everything

   • Build a line-item BOM with origin designations

   • Maintain cost documentation to support CBP entry

   • Create internal summaries of assembly flow and U.S. value generation

3. Avoid Gray Areas

   • Do not import semi-finished goods that appear to be turn-key

   • Maintain clean separation of duties: import parts, not products

     
     

Supplier Strategy: Blending Domestic Sources Where It Counts

Alongside tariff avoidance, we’re helping clients revisit their sourcing strategy for low-volume runs. The goal is not a full reshoring effort—it’s a blended, surgical approach:

• Update the BOM with known U.S. suppliers from previous relationships and verified domestic sources

• Prioritize easy-to-reshore parts: handles, wheels, brackets, small hardware

• Retain overseas sourcing for complex or tool-intensive components

• Build a dual-sourcing model where possible

This keeps cost efficiency in play while creating insulation from tariff shocks.

Low-Volume Production: Where the U.S. Advantage Lives

When you're not scaling hundreds of thousands of units, you have more room to move. For low- to mid-volume production, a U.S.-based final assembly strategy offers:

• Speed and control

• Reduced shipping risk and lead time exposure

• Stronger IP and branding security

And now—with the 20% exemption rule—it also offers a way to protect margins from unexpected tariff hikes.

Final Takeaway: Don’t Just Absorb Tariffs—Strategically Avoid Them

The goal isn’t to win a trade war. The goal is to navigate it with clarity. For companies that assemble in the U.S., this is a moment to sharpen your sourcing strategy, document your value creation, and use policy windows to your advantage.

We're actively working with clients to:

• Audit their BOMs

• Update sourcing paths

• Build defensible U.S.-origin cost models

U.S.-based assembly tariff strategy isn’t about loopholes—it’s about structure. And for those willing to plan ahead, it can mean the difference between passing along cost and protecting market position.

Want to explore what this looks like for your product? Let’s talk.