Changing Trade Routes to Avoid Tariffs: Smart Strategy or Risky Shortcut?
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As global trade rules tighten, more mid-sized exporter or importer businesses are looking to neighbouring countries to move goods in and out of the market. The goal is to avoid high tariffs, access better port infrastructure, and stay competitive. But while these alternative routes can be legal and cost-effective, if done right, they can also expose businesses to serious risks if done wrong.
What’s happening?
Businesses are rerouting goods through countries like Namibia, Botswana, or Mozambique to:
Lower exposure to import/export duties
Access more reliable or affordable transport options
Navigate around political or regulatory bottlenecks.
This is especially common in manufacturing, agriculture, and commodity sectors, where even small increases in cost can cut deep into margins.
What are the risks?
New trade routes are being used (like routing goods through neighbouring countries) to avoid higher tariffs, access more reliable or affordable transport options and navigate around political or regulatory bottlenecks.
Some businesses are unknowingly entering grey areas that could be seen as ‘origin washing’, repackaging goods to avoid customs duties. If not handled carefully, this can lead to fines and reputational damage. There’s increased pressure in sectors like steel and agriculture, where margins are already tight. One wrong move, like a poorly structured contract, can tip a business into crisis. Even unintentional missteps can result in:
Fines or seizure of goods by customs authorities
Loss of trusted trader status
Long-term exclusion from key international markets
Reputational damage with foreign partners and investors.
How you can help your clients stay on the right side of the law:
✅ Review trade structures:
Work with clients to understand how their goods are being routed, and whether proper documentation, processing, and compliance steps are in place.
✅ Flag grey areas:
Advise clients on where their trade practices may cross into legal grey zones — particularly when no real processing occurs in the intermediary country.
✅ Connect with trade specialists:
Encourage collaboration with legal and customs experts to ensure trade structures are defensible and compliant.
✅ Plan for pricing and penalties:
Help clients model different trade scenarios — including worst-case tariff impacts — so they can make informed decisions before changing supply routes.
✅ Document everything:
Stress the importance of having clear records that prove where goods originated, where they were processed, and what value was added. This is key in any dispute or audit.
📢 Bottom line: Rerouting goods can save your clients money, or cost them everything if done incorrectly. Your role as a trusted advisor has never been more crucial.
Read the Source Article here: Moneyweb
