These tariff loopholes may not work after Trump’s ‘Liberation Day’

We have Liberation Day

President Donald Trump declared a holiday to celebrate one of his favorite words

I always say tariffs is the most beautiful word to me in the dictionary

But for many companies, it's less of a celebration and more of a scramble to figure out how to avoid the duties

It reminds me of an old Dr. Seuss rhyme. A tariff, a tariff, oh, what a fright

It's causing big business to stay up all night. They once had a plan

They once knew the way. But now they must change how they work

and they pay. There's on-shoring and near-shoring and off-shoring, oh my. But now I'm just

mixing references, so I'll get back to what I do best, the facts. This isn't the business world's

first round of tariffs by President Trump, but a new and far more exhaustive round calls for new methods

And there are three major categories to go over, on-shoring, near-shoring, or friend-shoring, and

off Let actually start with the off After all it a practice the president is trying to stop Offshoring involves moving some of the company processes or services overseas Generally it used to take advantage of less expensive labor

The most simple example is a company establishing its own factory in China to produce its product

This can expand beyond simple production. Here's a made-up example. AAA Widgets is an American company selling widgets to U.S. customers

To keep prices down and maximize profits, it builds five factors. in China. When done, they ship the product to the U.S. and the rest of the world to sell it

Offshoring shouldn't be confused with outsourcing, which is shipping off operations to a third party

In a real world example, that's like TSM producing chips for Nvidia or Foxconn assembling iPhones for Apple

Those manufacturers still have relationships with other companies. So that's out of the way. Obviously for the Trump administration

onshoreing or reshoring would be the preferred practice. That means moving production to the U creating high jobs and reducing dependence on the likes of China But setting things up in the U can be expensive for American companies and American consumers

When Trump's first term tariffs took effect, most of which targeted China, companies came up with a third

option. This is where near-shoring or friend shoring comes in. But unlike Trump's first term

it might not work so well this time. The philosophy behind French shoring is moving manufacturing

and supply chains to countries allied with the U.S., bonus points to countries that have a

preferable trade agreement with America. Technically, it's still offshoring, but different. So let's give

the AAA widgets another shopped. If the China tariffs are bringing it down, it may friend shore

by moving production to destinations like Mexico, Vietnam, and Malaysia. It reduces dependency on

China, avoids the high costs of American manufacturing, and skirts trade-related levies. Of course

Of course this can open up a whole other can of worms Remember when Vietnam accused Chinese companies of using fake Made in Vietnam labels to avoid Trump first first tariffs Liberation Day could throw a wrench in any plans to near or friend shore

It's not clear with whom the U.S. will remain friends. Trump has promised levies across the globe

and even next door. Like all trade philosophies, the tables can also turn. Take Harley-Davidson

once fully made in America. In response to Trump's first-term tariffs on medals in 2018, the EU put 25

percent retaliatory tariffs on hogs coming into the block. Harley Davidson responded by

offshoring some of its production from the U.S. to Thailand to reduce tariff costs. Still, the company

ate $166 million due to the trade dispute. At the time, Trump called out Harley for being the first

to wave the white flag. This time, Harley is calling for the U.S. to hit back if the EU again

targets its bikes. For more on that, search Harley Davidson for this story at sAN.com or the SAN

app. For S.A.N., I'm Simone Del Rosario