Deduction Recovery Strategies for Tariff Impact
- The HRG Team
- Oct 14
- 3 min read
Tariffs don’t just raise your landed cost—they ripple through price files, POs, and freight plans. That’s where deductions sneak in. If you’re feeling the squeeze this fall, you’re not imagining it.
Quick context: the U.S.–China tariff “truce” was extended 90 days to November 10, 2025, keeping rates capped at 30% on Chinese imports and 10% on U.S. goods for now. It’s stability—kind of. Stability with an expiration date.
Meanwhile, protectionist moves elsewhere—like the EU’s plan to slash steel import quotas and apply 50% tariffs over new limits—signal a broader environment where trade costs can swing fast and often. That volatility tends to show up months later as pricing disputes and post-audit debits on your remittance.
How tariff swings become deductions
Price-file lag: Tariffs change, your list & net change… but a buyer’s system doesn’t. Result: pricing claim or “cost difference” debit on every invoice until files sync.
Freight spillover: Congestion & reroutes create missed windows → OTIF chargebacks. (Even with no tariff increase, the 2025 parcel GRIs at 5.9% complicate accruals and approvals.)
Classification disputes: A customs reclass can retroactively alter costs—and retail AP will “true up” via deduction before you can send a revised invoice.
Promotions misaligned with new cost: Promo funding set pre-tariff + post-tariff ship dates = trade spend doesn’t reconcile, deduction follows.
A quick fictional scenario (clearly illustrative)
A mid-market home goods brand updates landed cost models after the truce extension. Purchasing gets the memo; finance updates price files. But one mass retailer’s AP still auto-validates against the pre-tariff rate. Three weeks later, the supplier sees a wave of “Cost Diff – Vendor” deductions. They build a dispute pack tying tariff timing to PO date, showing buyer acknowledgments and freight invoices. Two weeks after filing, most debits are reversed. This is not a real case—just a realistic pattern we see often.
The “Tariff-to-AP” playbook
Date-stamped cost trail Maintain a single “tariff impact” worksheet per item: HTS, duty % timeline, and landed cost snapshots. Put revision dates in your price files.
PO hygiene For any tariff-driven cost shift, confirm that PO currency, unit cost, and effective dates match the buyer’s system before shipment.
Freight-proof stack Archive BOLs, carrier scans, DC appointment confirmations, and exception codes. If a routing change was tariff-driven or mandated, say so in the notes.
Promo guardrails If tariffs move mid-promo, write down the revised accrual math and share it cross-functionally. (Trade spend disputes often masquerade as pricing claims.)
Dispute kits on a timer For any deduction code tied to cost variance, file with: (a) updated quotes, (b) buyer email/portal approvals, (c) HTS/duty evidence, (d) shipment docs. Refile at 30-day intervals until resolved; many portals reset clocks with each submission.
What finance leaders watch weekly
Open debit aging tied to pricing codes (segment by buyer + item).
Post-audit notices referencing “incorrect cost” or “trade funding variance”—these are tariff-adjacent flags.
Carrier SLAs vs. calendar (holidays, peak surcharges, port delays). Remember: higher base rates (FedEx/UPS 5.9% GRI for 2025) amplify the cost of lateness.
Bottom line: You can’t control geopolitics. You can control the paper trail that decides which dollars stay in your bank account. HRG’s stance is simple—tighten the handoff between sourcing, pricing, logistics, and AP; then treat deduction recovery as a continuous control, not a one-off cleanup.
If you want a second set of eyes on your tariff-adjacent deduction? HRG can help.
