• Tariff-driven business model changes may affect P.L. 86-272 protections and trigger throwback exposure.

• Throwback and throw-out rules can tax income in original states when destination states don’t impose income tax.

• Reshoring strategies tied to tariffs should be reviewed through a tax lens to manage nexus and apportionment exposure.

—

Tariff uncertainty continues to challenge manufacturers and distributors. In response, many businesses are making fast, sometimes reactive decisions: shifting fulfillment strategies, diversifying suppliers, and reworking customer contracts. While these steps are often necessary to protect margin, they can have unexpected ripple effects — particularly when it comes to state income tax exposure.

As operations evolve, companies may unknowingly trigger state-level tax rules — including throwback and throw-out provisions — that can increase tax burdens in their home states. These rules are rarely top of mind during operational planning, but, in today’s climate, they should be.

What You Think You Know: Public Law 86-272 Protections

Public Law 86-272 (P.L. 86-272) has long been a helpful shield. It protects companies from state income taxes when their only activity in each state is asking for orders for tangible personal property, and when orders are approved and fulfilled from outside that state.

But P.L. 86-272 isn’t a blanket exemption — and it doesn’t prevent other states from taxing that same income through alternative mechanisms. That’s where throwback and throw-out rules come in.

In response to evolving e-commerce practices and the Multistate Tax Commission (MTC’s) revised Statement of Information on P.L. 86-272, several states have taken steps to limit the scope of this federal protection:

• California: Issued Technical Advice Memorandum 2022-01, aligning closely with the MTC’s guidance. The memorandum specifies that certain internet-based activities, such as post-sale help via electronic chat or email, may exceed the protections of P.L. 86-272.

• New York: Released draft regulations incorporating the MTC’s examples, showing that interactive internet activities could lose P.L. 86-272 immunity. The regulations are currently in draft form and subject to change.

• New Jersey: Announced a policy change to evaluate P.L. 86-272 protection on an entity-by-entity basis within combined groups, potentially altering the tax obligations of group members.

• Minnesota: Circulated a draft revenue notice in April 2023 proposing adoption of the MTC’s revised guidance, signaling a move towards stricter interpretations.

Businesses using these states should closely examine their internet-based activities to assess potential tax implications under the updated interpretations of P.L. 86-272.

Throwback and Throw-Out Rules: Why They Matter

In states that enforce these rules, untaxed sales into other states can be “thrown back” to the state of origin. Here’s how:

• Throwback rules require that if you’re not taxed on a sale in the destination state (for example, due to P.L. 86-272), the income from that sale must be reported in the state where the goods were shipped from.

• Throw-out rules remove untaxed sales from the apportionment formula, which can artificially inflate your tax burden in the states where you do pay.

These rules can significantly shift your tax liability — especially if you’re shipping into multiple states where you have no nexus but generate substantial sales volume.

In a recent engagement for a new client, we found that the location of the client’s warehouse was the largest factor in planning when potential throwback was considered. If the client relocated operations from a throwback state to a non-throwback state, the impact on the sales factor in the apportionment formula was neutralized. Setting up operations in a state with throwback led to an inflated sales factor in the apportionment formula and an unexpected state tax liability.

Having conversations before transactions is extremely valuable as proper planning can lead to potential tax savings.

Why Tariff Responses Are Quietly Changing Your Tax Profile

Tariffs aren’t just a global trade issue, they’re reshaping day-to-day decisions inside U.S. companies. For many manufacturers and distributors, the last year has been a series of rapid adjustments: rethinking where goods come from, how they’re delivered, and how quickly orders get to customers.

You may have shifted fulfillment closer to major markets to cut lead times. Maybe you’ve swapped offshore suppliers to sidestep new tariffs. Some companies have moved toward direct-to-consumer models, while others have quietly changed how customer orders are approved or supported.

Individually, these decisions may feel operational. But taken together, they have a real impact on how income is sourced and taxed across states. They can shift your exposure under throwback or throw-out rules — especially if your sales are increasing in states where you don’t currently have income tax obligations.

In short, what begins as a supply chain fix can evolve into a state tax issue — often without anyone realizing it until filing time.

Reshoring and Tax Considerations Go Hand in Hand

For many companies, reshoring has become a practical response to ongoing tariff uncertainty. Bringing operations back to the U.S. can reduce exposure to trade risk and improve supply chain control — but it also reshapes how and where your business is taxed at the state level.

Operational changes like relocation or restructuring can result in:

• Nexus creation in new states

• A shift in which sales are protected by P.L. 86-272

• Adjustments to your apportionment formula

• New reporting obligations, credits, or incentive opportunities

While every business has unique goals, involving tax professionals early in reshoring or fulfillment planning can help find potential exposure or compliance gaps — without delaying execution.

For example, when companies shift operations to avoid tariffs by opening new distribution hubs or adjusting shipping routes, the tax impact extends beyond coordination. These changes may influence how income is apportioned and whether certain sales fall under throwback or throw-out rules.

Tax professionals can support this process by:

• Modeling apportionment changes: Projecting how operational shifts affect sales factor weighting

• Evaluating throwback exposure: Estimating tax impacts from untaxed destination-state sales

• Finding new nexus points: Highlighting where physical or economic presence may trigger new filings

These insights help companies anticipate tax consequences tied to operational agility (without crossing into trade policy or legal advice). It’s about making sure strategic decisions don’t lead to unintended risk at the state level.

What You Can Do

Protecting your company from unexpected throwback exposure doesn’t require slowing down — it just takes coordination. Here are three practical steps to take now:

1. Evaluate protected sales: Identify where you’re relying on P.L. 86-272 and whether the destination states impose income tax.

2. Map shipping and fulfillment models: Understand where goods originate and whether origin states apply throwback rules.

3. Review apportionment exposure: Determine how throw-out rules or untaxed sales may affect your overall income distribution.

Tax May Not Be the Driver — But It’s in the Passenger Seat

You’re adapting to economic pressure with speed and creativity. But every supply chain move or sourcing shift may have tax implications your business didn’t see coming.

P.L. 86-272 may protect your business in some states, but it doesn’t stop others from taxing that income using throwback or throw-out rules. And when tariff-driven decisions lead to reshoring, the tax impact becomes even more layered.

Understanding how these state rules apply can keep your strategy intact and your risk exposure in check.

Where Tax Strategy Meets Business Agility

MGO is a national tax, audit, and consulting firm serving growth-minded organizations across manufacturing, distribution, and consumer sectors. Our State and Local Tax (SALT) team works with companies navigating complex operational shifts, helping you align your tax strategy with business agility.

From throwback analysis to nexus reviews, we bring practical insight that supports fast-moving decisions and long-term resilience. Talk to us today about how to keep your operations moving — and your tax strategy aligned.

The post How Tariff Changes Could Affect Your State Tax Profile appeared first on MGO CPA | Tax, Audit, and Consulting Services.

• Aligning international tax strategy with global supply chain planning helps reduce tax exposure, capture incentives, and increase operational agility.

• Ignoring exit taxes, transfer pricing, or cross-border compliance risks can create multi-year tax liabilities, penalties, and restructuring costs.

• Involving tax leaders early in global supply chain restructuring leads to smarter decisions, improved timelines, and long-term business scalability.

—

In today’s dynamic global business environment, aligning your organization’s international tax planning with supply chain planning strategy isn’t just a best practice — it’s essential. From shifting trade relationships and tariffs to increased scrutiny from global tax authorities, your company’s ability to make tax-informed supply chain decisions can directly impact cash flow, risk profile, and competitive positioning.

Here’s how your tax and operations leaders can collaborate to build a globally agile structure, and why international tax strategy must be at the core.

Why International Tax Strategy Must Drive Global Supply Chain Decisions

Mid-market organizations are rethinking their operational footprint — reshoring, nearshoring, or diversifying supplier bases. But without a clear international tax lens, these shifts can trigger unintended consequences: exit taxes, loss of treaty benefits, or transfer pricing risks.

A tax-aligned supply chain strategy allows you to:

• Forecast and manage global tax liabilities

• Capture incentives and avoid inefficiencies

• Make faster, more informed decisions across jurisdictions

Integrate International Tax Early in the Planning Process

Waiting until after operations moves are underway can leave your business with a fragmented tax structure that requires costly remediation. This is especially critical for mid-market companies operating across the U.S., EMEA (Europe, the Middle East, and Africa), or APAC (Asia-Pacific) regions, where cross-border structuring can create unexpected tax burdens. Tax should be involved from the outset — modeling scenarios across jurisdictions, projecting costs, and identifying risk exposure.

For example:

• Moving production from China to Mexico might avoid certain tariffs — but could expose your business to exit taxes in China or permanent establishment risk in Mexico.

• Relocating intellectual property (IP) from Ireland to the U.S. might trigger a deemed disposal event under local exit tax regimes.

Technology platforms and predictive models can help tax teams simulate these impacts before major decisions are finalized.

Strengthening Transfer Pricing and Global Compliance

Global tax authorities are tightening enforcement — especially around transfer pricing and cross-border restructurings. If your tax structure no longer reflects your actual operations, you may face:

• Double taxation

• Disallowed deductions

• Penalties and disputes

Update your transfer pricing documentation to reflect the new supply chain model. Intercompany agreements, economic analyses (including IP valuation), and jurisdictional reporting must all align with your post-transition structure.

Unlock Incentives Through Coordinated Strategy

Supply chain shifts aren’t just about avoiding risk — they’re also an opportunity to capture new value. Jurisdictions including the U.S., Canada, Mexico, and certain European Union countries offer targeted tax incentives for reshoring, green investment, R&D, or job creation.

If these incentives aren’t launched early in planning, your business could miss out. Tax should coordinate with operations and finance teams to explore:

• U.S. federal and state credits for manufacturing investment

• R&D credits tied to newly localized functions

• Foreign tax credits or deferrals available in new jurisdictions

Create a Globally Scalable Tax Playbook

Reactive tax planning doesn’t scale. As your organization enters new markets, integrates M&A targets, or adds new suppliers, your international tax model must be flexible and supported by a clear global tax governance framework.

A forward-looking playbook helps you:

• Align tax structure with business decisions

• Build global tax governance into location changes, IP moves, and new legal entities

• Reduce friction during rapid growth or operational transformation

The Path Forward: Strategy, Agility, and Risk Reduction

International supply chain restructuring can unlock efficiency, improve margins, and reduce geopolitical exposure — but only if tax is at the table from the start.

Organizations that treat tax as a strategic partner rather than a compliance function are better positioned to navigate volatility and create long-term value.

How MGO Can Help

At MGO, we help companies navigate the complexities of global tax strategies and cross-border operations. From international structuring and transfer pricing to tax technology and incentive optimization, we serve clients across manufacturing, life sciences, technology, and more.

We work closely with CFOs and tax executives to align tax planning with business transformation — supporting global agility, regulatory compliance, and strategic growth. Let’s talk about how your international tax strategy can support your global operations.

The post How to Align Your Global Supply Chain and International Tax Strategy appeared first on MGO CPA | Tax, Audit, and Consulting Services.

• Tariffs and global uncertainty are driving up construction hard costs and disrupting material sourcing and timelines. 

• Developers and contractors are responding by rethinking supplier relationships, stockpiling inputs, and tightening contract language. 

• Legal and accounting professionals play a key role in helping you manage financial risk, secure financing, and monitor vendor compliance. 

—

In today’s construction market, tariffs change fast — and so do your costs, contracts, and supply chain risks. One week, your project inputs are tariffed at 25%; the next week, that rate drops to 10%. This type of volatility is no longer the exception, it’s the new norm.

As of mid-2025, tariff policy remains in flux. While electrical components, steel, and Canadian lumber remain hot-button items, the broader concern is uncertainty.

“Uncertainty causes a hold or freeze in decision making,” said Eric Paulsen, chief operating officer of commercial real estate firm Kidder Mathews. “With the fluctuation in pricing, contractors used to provide a quote that was good for months, now it’s only good for a week … if not days.”

So, what does this mean for your bottom line — and how can you adapt your contracts, purchasing, and financial planning to respond?

How Tariffs Are Hitting You on the Developer Side

Tariffs are directly affecting hard costs and disrupting the procurement process, especially when it comes to internationally sourced materials like steel and electrical equipment. According to Paulsen, delivery delays for items like electrical transformers and panels have become more severe. Even before recent escalations, delays were stretching out to 12 months or greater — meaning materials had to be ordered before final plans were approved just to stay on schedule.

Paulsen added that uncertainty is now adding “an extra layer of scrutiny” to every purchasing decision.

Practical Steps Developers Are Taking

To mitigate the risk of tariffs, some developers are taking proactive steps, such as:

• Buying in advance or keeping materials on hand: While this can be “brutal for smaller shops,” it’s a practical move to hedge against volatility.

• Seeking out new sourcing options: Paulsen noted that smaller countries like Cambodia are trying to modernize and enter the manufacturing game, though that’s still a longer-term shift.

• Preparing to shift suppliers: “Long-time relationships between contractor and supplier are now at risk,” he said. For some firms, the current environment is “a great time to usurp a previous relationship.”

Ultimately, Paulsen warned that “development at its core has to pencil or the development won’t happen.” Unless it’s a government or public-use project or a user-driven build-to-suit, many speculative projects are currently on hold.

Best-Case Versus Worst-Case Scenario

Moving forward, Paulsen describes the best-case scenario as “stability or at least a sense that the worst is over, so people can make some decisions.” The worst-case scenario? Basically, more of the same: “Flip flopping, start/stop, or anything that causes uncertainty.”

For developers to fully participate in the market, they need to have a sense of where things stand.

“We need the rules of the road,” Paulsen said. “With some final stability, people will figure out the new market measures and re-engage. Until then people who can wait, will.”

On the Legal Side: Modernizing Your Contracts

If you haven’t revisited your contracts in the last few years, now’s the time.

Derek Weisbender, a construction partner at Allen Matkins, a law firm with deep roots in real estate, noted that it’s typical for certain contracts to allow contractors to request more money when there’s an unanticipated change in law (such as a new tariff) that makes performance more expensive. The burden is on vendors to support their claims.

He said there is an “obligation on vendors [to] show baseline costs as of the contract date.” That serves as support to validate future price fluctuations. Without that transparency, disputes are more likely. But if the backup is built in, you’re better positioned to make your case — whether costs go up or down. But what’s newer, and not often considered, is a reciprocal clause that protects an owner or developer when the opposite occurs (such as when a tariff is rescinded).

“Sophisticated owners are using the baseline tariff cost to claw back savings when tariffs are avoided,” Weisbender noted. In other words, if tariff costs are ultimately avoided, the owner or developer can negotiate a partial refund or cost adjustment. Some contractors may disagree. But, as Weisbender explained, “it seems fair that if an owner should bear the burden of a tariff increase, they should likewise enjoy the savings of a tariff decrease.”

The Role of Your Accounting and Finance Team

Adapting to volatility isn’t just a legal or operational issue. It’s a financial one, too.

If you’re considering strategies like prepayment, early ordering, or warehousing materials, you may need short-term capital — and that requires careful planning and documentation. Accountants can help you:

• Model out cash flow scenarios to support big-ticket pre-buys

• Prepare the financial reporting needed for loan applications, especially if you’re approaching lenders outside your primary bank

• Support compliance monitoring for tariff-related contract provisions, validating vendor costs and identifying irregularities

While accountants can’t give legal advice, they can offer critical support when it comes to making your financial strategy align with your contract protections.

Your Next Move: Reassess Your Risk and Recheck Your Language

Tariff policy is beyond your control. But how you plan, purchase, and protect your interests isn’t.

If you’re a developer or general contractor:

• Talk to your lawyer about updating your contracts to include cost claw-back provisions 

• Evaluate whether you need to shift suppliers or purchase materials in advance 

• Engage your accounting team to model cash flow, validate vendor inputs, and support financing conversations 

If you’re relying on old contract templates or handshakes, you could be leaving money on the table, or absorbing unnecessary risks.

In today’s market, your success depends on staying agile, informed, and well-supported.

How MGO Can Help

Our Professional Services team works closely with developers and contractors to provide financial clarity in uncertain markets. From cash flow modeling and budgeting for material pre-purchasing to preparing financial reports for lenders. We help you make confident, informed decisions. We also assist with ongoing compliance support tied to contract terms and vendor costs.

Reach out to our team today to build a financial strategy that keeps your business moving forward.

The post How to Manage Your Construction Costs in a Tariff-Turbulent Year appeared first on MGO CPA | Tax, Audit, and Consulting Services.

Bill: Let’s start with the fun stuff first: by day, you’re an audit partner but your not-so-secret passion is your band.  Tell me about your gig earlier this week.  

Simon: We were playing at the Harp, a bar in Newport Beach. An Irish bar and pub.  

Bill: So, what kind of stuff do you all play? 

Simon: A little bit of everything — rock, classic rock, country, punk, pop, even hip hop. Yeah, we do a Nelly song. We ended up playing until 12:30 AM that night — which is late for us old folks. 

Bill: Impressive. Now, shifting gears — you work with several manufacturing clients. What are they telling you about how tariffs are now, or could potentially, impact their business? 

Simon: Honestly, it’s one of the biggest disruptors they’re facing. Tariffs throw a wrench in long-term planning. A lot of clients had diversified out of China, moving production to countries like Vietnam, Cambodia, or Bangladesh… only to get hit with new tariffs there, too. It makes supply chain strategy feel like a moving target. One of my apparel y clients was doing great shifting manufacturing across countries. But now their strategy’s wiped. They might not make it through the year.  

Bill: That’s brutal. So, you’re telling me it’s not just a China issue anymore? 

Simon: Exactly. Tariffs have become a much broader, more unpredictable challenge. One apparel client had a solid multi-country sourcing strategy, but when U.S. tariffs expanded beyond China, their margins collapsed. They went from thriving to barely surviving, just like that. 

Bill: That’s rough. How do you advise clients to respond 

Simon: There’s no silver bullet, but flexibility, nimbleness, is key. We’re encouraging clients to build sourcing redundancy. Think “China-plus-one” or “China-plus-two.” It’s also about monitoring policy shifts closely, so they’re not blindsided. We help them plan for every scenario and understand where their risks are concentrated. But as with most things, uncertainty is the biggest challenge. Companies don’t know when or where tariffs will hit, so planning can become almost impossible.  

Bill: Are there clients that are weathering this well? 

Simon: The ones who’ve invested in agility — like tech-enabled supply chains, diverse vendors, adaptable logistics — they’re more resilient. But even they’re feeling the pressure. Tariffs are just one part of a much larger uncertainty picture, and you’ve got to stay sharp. 

In today’s volatile global trade environment, manufacturers need more than a Plan B. Let’s talk about how MGO can help you stay agile, mitigate risk, and drive growth. 

The post MGO Stories: From Rock Covers to Real Talk on Tariffs, Audits, and M&A appeared first on MGO CPA | Tax, Audit, and Consulting Services.

• Manufacturers are reassessing supply chains and tax strategies to adapt to shifting tariffs and tighter margins.

• Retailers and overseas suppliers are pushing back on price increases, placing more pressure on distributors.

• Rapid scenario planning and operational agility are essential as companies navigate a fast-changing trade and demand environment.

—

After a brief period of optimism, the U.S. manufacturing sector has slipped back into contraction. The Institute for Supply Management (ISM) reported a decline in activity for July 2025, raising fresh concerns about the resilience of an industry already strained by global instability, cost volatility, and labor shortages.

According to ISM reporting, July continues a multi-month downturn in U.S. manufacturing. Rising tariffs on semiconductors, clean tech components, and electronics are contributing to declining optimism and margin pressure.

In response, manufacturers are accelerating reshoring strategies, rethinking sourcing models, and reallocating capital toward U.S.-based production. But these operational shifts carry downstream effects — including supply chain disruption, pricing tensions with retailers, and growing tax complexity.

Tariff Impacts Driving Operational and Financial Restructuring

The latest round of tariff policy changes — particularly those targeting semiconductors, clean tech components, and consumer electronics — has added urgency to supply chain reassessment across the manufacturing and distribution sector. For many mid-sized companies, this is no longer a matter of long-term planning, but of near-term survival.

In addition to long-term shifts, companies are contending with immediate pressures that demand more agile, real-time responses. With the policy environment shifting rapidly, firms need to be able to redirect sourcing, adjust pricing, and adapt operations quickly in response to new trade terms or economic signals. Retailers are resisting price increases amid soft consumer demand, while overseas suppliers show little willingness to absorb added tariff costs. This dual resistance leaves U.S. manufacturers and distributors caught in the middle — facing rising input costs and shrinking pricing power.

This pricing stalemate has forced many companies to absorb margin pressure themselves, accelerating the need for real-time scenario planning and rapid cost modeling. Facing inflexible suppliers and impatient buyers, some firms are exploring new supplier relationships altogether — often under compressed timelines and uncertain economic conditions.

These dual pressures are driving a shift toward faster, more flexible operational planning. Traditional multi-quarter strategy cycles have given way to real-time adjustments, where pricing models, sourcing plans, and capital deployment decisions are made in weeks rather than quarters. Today, manufacturers are engaging in rapid scenario modeling, adjusting pricing structures on the fly, and mapping out contingency plans for everything from inventory shifts to capital deployment.

These changes are not occurring in silos. Every sourcing decision affects tax exposure, every pricing adjustment impacts working capital, and every supplier switch creates new compliance considerations. That’s why companies are increasingly approaching supply chain restructuring as a cross-functional exercise — integrating finance, tax, and operations into a single planning framework built for speed, resilience, and data-informed execution.

Technology Investment Moves to the Forefront

Despite economic headwinds, many manufacturers are prioritizing tech adoption. Automation, AI, and advanced data tools are being used to improve throughput, reduce waste, and alleviate workforce gaps.

However, technology investments only deliver value when aligned with operational and financial systems. That’s why firms are increasingly focused on integrating data across functions, streamlining reporting, and tracking ROI in real-time. The shift isn’t just about adopting new tools — it’s about embedding them into core workflows and decision-making processes.

Advisory support in this space is helping companies make smarter, phased tech decisions — prioritizing high-impact areas first, then expanding as capacity grows. By focusing on tangible results and incremental wins, companies can build momentum while managing risk and preserving capital.

Operational Risk and Controls Under Strain

As manufacturers digitize operations and integrate more advanced technologies, traditional internal controls are being tested in new ways. Increased reliance on connected systems and data flows elevates operational risk — not just in terms of security, but also in accuracy, oversight, and regulatory compliance.

Legacy systems often require updated controls to support modern processes and maintain reporting integrity and process reliability, particularly as companies scale or reconfigure supply chains. In some cases, control gaps can expose the business to financial reporting risks as well as operational disruptions that affect fulfillment, cash flow, or customer trust.

Many organizations are reevaluating risk frameworks, updating governance structures, and taking a more proactive approach to finding and addressing control deficiencies that legacy operating models may have masked. This includes reassessing control ownership across departments and embedding real-time monitoring into critical workflows.

A Time for Reinvention

Strategic roadmaps are being replaced by agile frameworks that enable cross-functional teams to pivot quickly. Multi-year plans have given way to agile playbooks that allow operations and finance teams to redirect quickly. Tariff pressures, labor challenges, and rising technology demands are converging in an environment that is increasingly unpredictable and fast-moving.

The ability to scenario-plan and reallocate resources in near-real time is becoming a competitive advantage — particularly as pricing power erodes and supplier relationships grow more complex. The ability to act quickly — operationally and financially — is becoming a key differentiator, particularly as pricing power weakens and supplier negotiations become more complex.

For mid-sized firms, this creates both pressure and opportunity. Those that realign operations, improve visibility, and strengthen internal decision-making processes will be better equipped to lead through change. Outside advisors are playing a critical role — supporting companies with financial modeling, tax strategy, and operational planning that’s built for speed and uncertainty.

In this climate, long-term success will favor firms that can move with both speed and precision.

Supporting the Industry Through Change

MGO works with manufacturing and distribution companies navigating disruption and building for what’s next. Our team delivers practical, industry-informed guidance to help middle-market companies make confident, forward-looking decisions in times of change.

As pricing pressures and policy shifts reshape the landscape, we can help your organization respond quickly and strategically — adapting financial strategies, modeling supply chain scenarios, and reinforcing risk and control frameworks. Reach out to our team today to learn how MGO can help you move forward with clarity, confidence, and resilience.

The post Your Manufacturing Strategy in a Tariff-Driven Market appeared first on MGO CPA | Tax, Audit, and Consulting Services.

• Know which regulations apply to your business, such as ITAR or ER, and identify high-risk jurisdictions.  

• Follow key elements of an export control and sanctions compliance program, including senior management commitment, risk assessment, internal controls, and training. 

• Vigilantly assess potential red flags and risk factors on a per-transaction basis, using resources like BIS “Red Flags” and Know Your Customer guidance.  

—

Considering the rapidly changing export controls and sanctions landscape, companies need to ensure their compliance programs respond to the latest-breaking risks and demands from regulators.  While the scope and volatility of trade sanctions may seem daunting, companies can protect themselves from costly violations by proactively bolstering compliance programs.  

Export controls and sanctions risk can exist in any cross-border transaction involving foreign jurisdictions, people, or products.  A responsive sanctions compliance program needs to 1) Respond to specific risks based on your organization’s operations; and 2) Demonstrate to regulators that you have prioritized compliance and leveraged the tools available to you.   

The encouraging part is that you can strengthen an export controls and sanctions compliance program without incurring significant costs by implementing a few practical measures. 

If you are concerned about your sanctions risk, but aren’t sure where to start, ask yourself the following questions: 

1. Do you understand which regulations apply to your business? 

It is imperative to know which regulations and laws may apply to your business. Understand which government regulators (OFAC, BIS, DDTC, EU, OFSI) exercise jurisdiction over your business, products, information and services. For example, are exported items subject to the International Traffic in Arms Regulations (ITAR) (defense articles and defense services) or Export Administration Regulations (EAR) (dual-use and general commercial goods) and has the company classified those items accordingly under the Munitions List and Commerce Control List, respectively? The penalties for non-compliance differ depending on whether exported items are subject to the ITAR or EAR.  

Be familiar with your geography and high-risk jurisdictions/transshipment countries of concern. For example, BIS and FinCen published a joint alert listing transshipment countries of concern including, but not limited to, Armenia, Brazil, China, Georgia, India, Israel, Kazakhstan, Kyrgyzstan, Mexico, Nicaragua, Serbia, Singapore, South Africa, Taiwan, Tajikistan, Turkey, United Arab Emirates, and Uzbekistan. 

2. Do your compliance policies provide a digestible and practical roadmap for your compliance program? 

We recommend that businesses involved in cross-border transactions should follow the key elements of an effective export control and sanctions compliance program. OFAC, DDTC, and BIS all provide separate guidance for an effective compliance program but contain overlapping themes:  

• Senior management commitment – policy statement 

• Risk assessment 

• Internal controls 

• Handling violations and taking corrective action 

• Monitoring, testing, auditing 

• Training 

Additionally, compliance policies and manuals should act as a roadmap for your company’s sanctions compliance program.  These policies should: 

• Reflect requirements of regulatory guidance 

• Encompass all business cycles with sanctions compliance risk (e.g., sales, procurement, supply chain, etc.) 

• Clearly identify and explain compliance risks 

• Detail mitigating controls 

• Designate compliance roles and systems 

• Provide real-life examples to help employee comprehension 

• Identify records to retain and related storage systems 

• Be disseminated/readily available to employees 

• Be periodically updated based on regulatory, system, and business changes 

Regulators expect a risk-based compliance program that is tailored to the business and is routinely updated. Organizations should continually assess their export controls and sanctions compliance risks in a rapidly changing environment. For instance, consider changes in operations, locations, products, services, business relationships, etc. Companies should also monitor regulatory guidance and enforcement actions as a good sanctions compliance program is one that can respond nimbly to regulatory changes and guidance.  

3. Is your company exercising due diligence best practices on a transaction- and system-wide basis? 

Organizations should be vigilant about different warning signs and risk factors on a per-transaction basis. BIS “Red Flags” and Know Your Customer guidance found in Supplement No. 3 to EAR Part 732 is a great resource for ascertaining potential red flags. For example, any transactions with Russia and Belarus are high risk due to the significant OFAC and EAR restrictions involved.  

Companies should utilize enhanced due diligence for higher-risk jurisdictions, customer types, and significant relationships. Business partner due diligence should include several components, including: 

• Documents and electronic records provided by the business team members  

• Independent research of publicly available information and media 

• In-person visits, inspections and verification 

• KYC’s Customer – End Users 

• End Use verification 

• Screening and re-screening parties 

4. Are you enhancing the use of your company’s data and IT systems? 

Every organization has data, and regulators expect that organizations will utilize available data in their compliance programs.  Companies should ask themselves if they understand the extent of their organization’s data, and whether they are able to leverage that data to control sanctions compliance risks. For example, most companies closely track customers and sales, but do they also retain information on their distributors and agents, freight forwarders, shipping routes, and the origin of all the components in any branded products built by third-party manufacturers?   

Retaining all available data and entering it into IT systems in a standard format allows companies to automate transaction analysis for sanctions risk, screen third parties against restricted entity lists, and respond to demands of regulators. Failure to take such measures can lead to enhanced penalties in the event of a violation, whether intentional or not.   

Key essential measures to implement for data and IT systems include: 

• Integrate IT systems and automate restricted party screening when possible 

• Standardize data format across IT systems to allow for full-business cycle analysis 

• Require supporting documentation, including for customer onboarding, travel, shipment, and vendor payment request. This allows for automated matching, e.g., bill of lading to invoices to verify delivery location 

• Generate dashboards to alert for potential risks 

• Perform keyword searches on systems and emails for “code words” pointing to potentially prohibited transactions 

• Periodically test and enhance IT controls 

5. Are your employees equipped with the necessary training, resources, and skills to effectively execute your compliance program? 

Your people are the front line against potential export controls and sanctions violations.  Personnel in key roles perform due diligence on customers, authorize contracts and transactions, and can perform audits and inspections of your compliance activities and those of third parties.  It is critical that these personnel remain well-versed in evolving compliance risks and your company’s risk response.   

Compliance trainings should include: 

• Sanctions and export controls (including EAR and ITAR, as applicable) compliance awareness training for all employees/contractors – front line of defense 

• External trainings for key relationships 

• Job-specific training that is risk-based and tailored to employee roles 

• Multiple formats – online, in-person with Q&A, etc. 

• Knowledge checks and exams 

• Periodic evaluation of training content – is it keeping up with changes in regulations and the sanctions environment? Has it been updated for changes in business? 

• Continuous reinforcement – periodic training reinforced with sanctions compliance communications 

Additionally, organizations should perform quality assurance, audits, and inspections of both their own company and key compliance functions as well as those of their business team members.  Audits should be conducted by personnel that are qualified and independent.  Some key elements of such activities include: 

• Perform focused internal or external audits of your sanctions and export controls compliance program 

• Examine your key internal controls, ensure they are operating as designed 

• Test system/IT controls – e.g., automated screening, transaction holds 

• Conduct random records spot checks to ensure appropriate record retention 

• Audit/Inspect/Visit your business partners (e.g., freight forwarders, distributors, contract manufacturers, warehousing providers) 

• Establish a process to implement corrective actions – tracked milestones, deadlines and accountability 

• Create a feedback loop – communicate results, observations, recommendations and enhancements to key stakeholders 

• Establish a reporting hotline – mechanisms/channels for employees and business partners to report suspected violations for follow up 

In today’s dynamic global trade environment, companies should prioritize the development and enhancement of their export controls and sanctions compliance programs to effectively manage risks and adhere to regulatory demands.  

While the complexity and unpredictability of trade sanctions can be overwhelming, organizations can safeguard themselves against costly violations by taking proactive measures. This involves tailoring compliance programs to address specific risks associated with their operations and demonstrating a strong commitment to compliance to regulators. Importantly, enhancing these programs doesn’t have to be financially burdensome; practical steps can be taken to strengthen compliance efforts.  

For companies uncertain about their sanctions risk, a good starting point is to critically assess their current compliance posture by asking targeted questions about their operations and risk management strategies. 

Written by Richard Weinert and Nate Giarnese (BDO USA) and Luis Arandia and Nicholas Galbraith (Barnes & Thornburg). Copyright © 2025 BDO USA, P.C. All rights reserved. www.bdo.com 

How MGO Can Help 

MGO can help you understand and navigate complex export control and sanctions regulations. Our team of International Tax professionals offers tailored risk assessments, help develop comprehensive compliance programs and provide ongoing support to make sure you remain compliant with the latest regulatory changes. We can also conduct due diligence and training to keep your employees informed and prepared for potential risks. Contact us to help you confidently manage sanctions risk and protect your business from costly violations.  

The post From Uncertainty to Clarity: Key Questions to Help You Get Started with Addressing Sanctions Risk  appeared first on MGO CPA | Tax, Audit, and Consulting Services.

• Resilient growth demands a dual-lens strategy, integrating internal capabilities with external market intelligence.  

• Manufacturers face unprecedented disruptions — from workforce shortages to rapid digital transformation—that require bold strategic responses.  

• Long-term success is built on proactive planning, data-driven insights, and cross-functional alignment, not reactive, short-term fixes.  

—

Integrating Inside-Out and Outside-In Analysis to Future-Proof Decisions 

Manufacturers are navigating an environment of constant disruption, from tariff uncertainty and supply chain issues to geopolitical instability and labor shortages to technological leaps and evolving customer demands. 

Reactive strategies based on temporary conditions run the risk of losing market share and failing to meet customer expectations. Sustainable success requires proactive, long-term strategic planning focused on attractive markets. 

Today, finding new sources of growth is no longer about simply scaling operations. 

It’s about integrating internal analyses while monitoring and understanding external market dynamics. This balanced perspective empowers leaders to make decisions with confidence – even as uncertainties continue to challenge the industry. 

The Manufacturing Growth Imperative 

The Time to Act is Now 

It’s not hyperbole to say that the manufacturing industry is transforming at unprecedented speed. 

The sector faces significant challenges that demand bold strategic responses rather than safe tactical adjustments. 

This transformation is taking place during a time of massive disruption: 

• Supply chain vulnerabilities exposed by global disruptions 

• Workforce shortages amid shifting skill requirements 

• Digital transformation pressures and Industry 4.0 adoption 

• Rising customer expectations for customization and service 

• Increasing global competition and market volatility 

• Environmental sustainability demands and regulatory changes 

In such a turbulent environment, manufacturers can no longer rely on incremental improvements to drive growth. Instead, they need a strategic framework that allows them to systematically, properly evaluate opportunities and make informed decisions about where and how to grow. 

Manufacturing companies have access to a wealth of internal data – from customer reports to margin analyses, to R&D performance to production and supply chain metrics. At the same time, external data such as consumer trends, competitive moves, geopolitical shifts, and emerging technologies provide invaluable context. 

Executives who can blend these two dimensions are uniquely positioned to craft strategies that are both resilient and adaptive. 

The Dual-Lens Growth Framework 

Inside-Out and Outside-In Analysis  

Achieving sustainable growth requires evaluating opportunities through two complementary perspectives that work together to identify the most promising routes for expansion where companies have a “right to win”. 

Strategic Evaluation 

The Ansoff Strategic Growth Matrix  

After conducting outside-in and inside-out analyses, we can apply a framework to simplify complex decisions and provide a structured method to evaluate risks and rewards. 

A modified Ansoff Matrix is a powerful tool to visualize the most promising growth opportunities. This framework divides growth strategies into four quadrants, each addressing different combinations of internal capabilities and external market opportunities. 

From Analysis to Action 

Four Growth Acceleration Levers  

Irrespective of what quadrant in the Ansoff matrix a manufacturing company may decide it wants to play, it has four levers at its disposal to accelerate their growth strategy: 

The Path Forward 

Executing a Growth Strategy  

The integration of internal analyses with external insights—and the application of frameworks like the Ansoff Matrix—provide manufacturing leaders with the roadmap to sustainable growth. By continuously challenging the status quo, engaging with emerging market signals, and investing in transformational technologies, manufacturers can drive innovation, secure market share, and mitigate future risks. 

Forward-looking executives should focus on: 

• Data Integration – Invest in robust data analytics platforms that merge internal performance metrics with external market intelligence. 

• Strategic Flexibility – Use frameworks to stress test strategic choices and adjust priorities as market conditions evolve. 

• Collaboration & Alliances – Establish strategic partnerships that provide access to technological innovations and new consumer segments. 

• Cultural Shift – Promote an internal culture of continuous improvement and experimentation to stay ahead in a competitive marketplace. 

Structured Approach & Roadmap 

Successful implementation of manufacturing growth strategies requires a structured approach that balances immediate action with long-term transformation. 

Phase 1 

Assess and Strategize / 0-6 months 

• Conduct comprehensive inside-out and outside-in analysis 

Systematically evaluate market opportunities and organizational capabilities using the frameworks outlined earlier. Include revenue/margin analyses, customer research, competitive intelligence, technology assessment, and internal capability audits. 

• Segment and pressure test end market capacity 

Conduct internal analysis to assess segmenting business units aligned to end users and markets, root out complexity, and pressure test hypothesis. Ensure adequate end market demand and identify new market opportunities. 

• Identify strategic growth opportunities 

Apply the Growth Matrix to prioritize opportunities based on market attractiveness and organizational fit. Develop specific business cases for the most promising opportunities, including resource requirements, timeline, and expected returns. 

• Align leadership and stakeholders 

Build consensus around the strategic direction through structured engagement of executive leadership, board members, and key stakeholders. Establish clear governance and KPI monitoring. 

• Define your “North Star” 

Develop a compelling vision for the organization that inspires and aligns. Articulate how the growth strategy will create value for customers, employees, and shareholders. 

Phase 2 

Pilot and Scale / 6-18 months 

• Test strategic initiatives 

Implement limited-scope pilots for key growth initiatives to validate assumptions, refine approaches, and demonstrate value. Pilots should be structured as learning experiments with clear success criteria. 

• Validate technology investments 

Evaluate technology solutions through proof-of-concept projects that demonstrate functionality and value without requiring enterprise-wide deployment. Use these projects to build internal capabilities. 

• Refine based on market feedback 

Actively solicit customer and market feedback on pilot initiatives, using this input to refine value propositions, offering design, and go-to-market approaches before scaling. 

• Scale successful initiatives 

Once pilots demonstrate success, develop detailed scaling plans that address organizational requirements, process changes, technology infrastructure, and change management needs. 

Phase 3 

Optimize and Innovate / 18-36 months 

• Enhance operational efficiency 

Apply continuous improvement methodologies to optimize the performance of new growth initiatives. Use data analytics to identify bottlenecks, inefficiencies, and improvement opportunities. 

• Leverage data and analytics 

Develop more sophisticated data capabilities to refine market targeting, customer segmentation, and offering optimization. Implement closed-loop feedback systems that enable continuous learning and adaptation. 

• Explore emerging technologies 

Monitor technological developments and conduct targeted experiments with promising technologies that could enable new growth opportunities or enhance existing initiatives. 

• Build ecosystem partnerships 

Develop strategic relationships with technology providers, channel partners, and complementary solution providers to accelerate innovation and market access. 

Phase 4 

Sustain and Lead / 36+ months 

• Embed growth mindset 

Develop organizational systems and processes that continuously identify and pursue growth opportunities. Include incentive structures, performance management systems, and resource allocation. 

• Maintain competitive advantage 

Invest in capabilities that preserve differentiation as markets evolve and competitors respond. This might include continued R&D investment, talent development, or strategic acquisitions. 

• Adapt with agility 

Establish mechanisms for sensing market changes and rapidly adjusting strategies in response. This requires both market intelligence systems and organizational flexibility. 

• Shape industry standards 

Take a leadership role in influencing industry standards, regulations, and ecosystem development to create favorable conditions for continued growth. 

Turn Disruption into Opportunity 

The most successful manufacturers will be those that maintain a long-term strategic perspective while building the agility to respond to short-term market shifts. Success hinges on continuously assessing the interplay between internal capabilities and the dynamic external landscape. Manufacturers can not only weather disruption but also capitalize on the opportunities it presents, building a robust engine for sustainable growth and competitive advantage. 

Written by Val Laufenberg, Iliya Rybchin and Kevin Medved. Copyright © 2025 BDO USA, P.C. All rights reserved. www.bdo.com 

How MGO Can Help 

At MGO, we understand the unique pressures manufacturers face in today’s disruptive landscape. Our advisors help you blend inside-out and outside-in analysis to build a growth framework that’s both resilient and adaptive. Whether you’re evaluating expansion strategies, navigating regulatory changes, or aligning organizational resources, we’ll help you uncover opportunities and make decisions with confidence. Let’s work together to future-proof your growth strategy. Contact us to learn more.  

The post Manufacturing Growth in the Age of Disruption  appeared first on MGO CPA | Tax, Audit, and Consulting Services.

• Tariffs are driving up costs and forcing companies to rethink supply chains, supplier relationships, and sourcing strategies for resilience. 

• Boards must evaluate pricing models, competitive positioning, and financial strategies to stay agile amid shifting global trade dynamics. 

• Global operations require ongoing compliance reviews and risk assessments as countries respond with retaliatory trade measures. 

—

Tariffs are back — front and center — and disrupting global markets and supply chains. In February and March, the Trump Administration triggered the latest trade war by imposing tariffs on various imports under a 1977 law — the International Emergency Economic Powers Act (IEEPA) — that had never been used to impose tariffs. These tariffs do not discriminate and now impact every trading partner of the U.S. without exception.  

Rising costs are causing organizations to scramble and question their business strategies to manage the significant and immediate cash costs involved with these new tariffs, which are all “above the line” and have to be paid by the U.S. importer of record to U.S. Customs and Border Protection at the time goods are imported. Because other countries have already announced retaliatory tariffs, similar cash costs are facing importers in foreign jurisdictions when they purchase merchandise of U.S. origin. 

Board Navigation Considerations 

Navigating this tumultuous geopolitical environment is a challenge that many boards of directors have not had to face in recent years. As directors begin to adapt to this new normal and rethink their approach to mitigate impact to their organizations, here are some issues they should consider: 

Supply Chain and Operational Resilience 

How will tariffs impact our supply chain and how can we mitigate disruption? Can we identify and prioritize where increased costs from materials and/or finished goods may arise?  

• Do we have strong relationships with our suppliers?  

• Can we partner with our suppliers to jointly offset the tariff impacts and/or improve resilience? 

• Can we renegotiate any existing supplier contracts?  

• Can we diversify our supply chain by introducing other suppliers and exploring alternative sourcing options? 

• If we diversify, how might this impact any sustainability practices in place? 

• How can we adapt and/or evolve so that this doesn’t negatively affect our bottom line? 

Pricing Strategies and Competitive Positioning 

How will tariffs impact our pricing strategy and market competitiveness? 

• Are there opportunities to capitalize on changing trade policies? 

• Are our competitors adjusting their pricing?  

• Do we need to adjust our pricing to account for increased costs?  

• If we increase our prices, will this significantly affect our competitiveness in the marketplace?  

• Are we continually seeking to expand and solidify our relationships with our customer base?  

• Do we understand and agree with assumptions by management to model the financial and operational impacts? 

• Are we investing in R&D initiatives to absorb additional costs incurred or leverage potential cost savings? 

• Have we considered financial hedging strategies to manage currency fluctuations and risk? 

Global Operations and Compliance Assessment 

Have we carried out an assessment of all countries in which we operate? 

• Have these countries introduced retaliatory tariffs or do they plan to do so? 

• Are we too reliant on one country for sourcing and could we shift and/or rely on other countries? 

• How will our customer base react if we shift operations to another country? 

• How stable is the political environment in the countries in which we operate? 

• Are we monitoring changes in trade policies and monitoring our processes to remain compliant? 

Board Composition and Expertise 

Does our board have the knowledge and skills required to oversee global trade and economic policy impacts? 

• Do we need to bring in external subject matter expertise to educate and advise the board? 

• Is the full board or a committee/subcommittee responsible for overseeing and advising on tariff strategy? 

• How can we upskill our directors in global trade and economic policy? 

Other Considerations 

Additional considerations for the board:  

• Are we anticipating trade impacts on strategy in both the near and longer term? 

• How is management prioritizing investments to adapt to tariffs and trade policy shifts? How are they defining ROI? 

• Is management considering efficiencies to be gained in automating processes related to trade and tariff considerations? 

• Do we have an intentional stakeholder communication strategy regarding the impact of tariffs on our business? 

• Is management proactive in gathering and considering feedback from suppliers and customers on pricing changes and/or supply decisions? 

Written by Rachel Moran, Damon V. Pike and Amy Rojik. Copyright © 2025 BDO USA, P.C. All rights reserved. www.bdo.com  

How MGO Can Help 

At MGO, we understand that the return of sweeping tariffs — and the complexity they bring — can threaten every aspect of your organization’s operations, from pricing and supply chains to global compliance and board governance. Our team brings deep experience across international trade, tax strategy, and operational resilience to help you not only manage your near-term cash impacts of tariffs but also reimagine your strategies for long-term stability and growth. 

Whether you’re navigating retaliatory tariffs, reassessing competitive positioning, or future-proofing your supply chain, we can provide the insight and support you need to move forward confidently. Contact us today to learn more.

The post Global Trade Tensions: What Should the Board Know as Tariffs Evolve and Expand?  appeared first on MGO CPA | Tax, Audit, and Consulting Services.

• U.S. imports of UK-made vehicles and aircraft parts will benefit from lower or zero tariffs under new quotas. 

• The UK eliminated or reduced tariffs on key American agricultural and energy exports, expanding trade opportunities. 

• Further negotiations depend on supply chain security standards and outcomes of ongoing investigations. 

—

President Trump and UK Prime Minister Starmer signed an agreement on June 16, 2025, entitled the “US-UK Economic Prosperity Deal,” that will reduce some tariffs on imports from the UK; the treatment of some imports is still under negotiation. The agreement, announced during the G7 summit in Canada, includes reduced tariffs on UK auto and aerospace goods, as well as reduced tariffs on U.S. meat and ethanol but does not address steel and aluminum or pharmaceuticals. In exchange for the lowered tariff treatment, the UK has committed to working to meet U.S. requirements on the security of the supply chains of steel and aluminum products intended for export to the U.S. and on the nature of ownership of relevant production facilities.  

An executive order (EO) and Fact Sheet issued by the president shortly after the signing set out the terms of the agreement. The general terms of the pact were originally announced on May 8, 2025. 

Overview of the Agreement 

Automobiles and Auto Parts

• Automobiles and Auto Parts: The U.S. will establish an annual tariff-rate quota (TRQ) of 100,000 automobiles (Harmonized Tariff Schedule of the United States (HTSUS) Heading 8703) from the UK. Imports within this quota will be subject to a reduced 10% tariff, down from 27.5%. The 10% tariff is comprised of a 7.5% Section 232 “national security” tariff, as well as a 2.5% Normal Trade Relations (NTR) duty. Vehicles exceeding the quota will be subject to the full 27.5% tariff. Automotive parts of the UK for use in automobiles that are products of the UK will also qualify for the 10% combined tariff. 

Aerospace

• Aerospace: Products of the UK covered by the World Trade Organization Agreement on Trade in Civil Aircraft will be tariff-free, eliminating a 10% universal tariff on many civil aircraft components (including engines). 

Steel and Aluminum

• Steel and aluminum: New TRQs are expected for UK-originating steel and aluminum (and their derivatives), contingent on the UK meeting U.S. supply chain security and ownership requirements. Imports exceeding these quotas will be subject to the 25% Section 232 steel and aluminum tariffs, a rate that is now set at 50% for imports from all other countries. 
   

With respect to pharmaceuticals, the EO states that the parties have committed “to negotiate significantly preferential treatment outcomes on pharmaceuticals and pharmaceutical ingredients that are products of the United Kingdom.” The outcome, however, will be contingent on the conclusion of an ongoing Section 232 investigation launched on May 1, 2025. The outcome also hinges on UK compliance with certain supply chain security standards.   

For its part, the UK will eliminate the 20% tariff on U.S. beef exports within a quota of 1,000 metric tons and will create a preferential duty-free quota of 13,000 metric tons for U.S. beef. In addition, the UK has granted a tariff-free quota of 1.4 billion liters of U.S. ethanol. Previously, U.S. ethanol shipments to the UK were subject to a 19% tariff.  

It should be noted that this kind of trade deal is not subject to approval by the U.S. Congress because it is not a formal free trade agreement. Indeed, even the U.S. and UK “recognize that this document does not constitute a legally binding agreement.” The legislation necessary for President Trump to negotiate comprehensive trade agreements (Trade Promotion Authority) lapsed in 2021. Without this authority, the president can only enter into agreements that are “temporary,” i.e., if the succeeding member state governments change hands and the next leader on either side is not interested in continuing the agreement, that country can simply withdraw.  

Insight 

The agreement provides immediate benefits to the automotive and aerospace sectors, but leaves steel, aluminum, and pharmaceuticals subject to further negotiation and compliance requirements. Businesses in these sectors should closely monitor developments and prepare for potential changes in supply chain documentation and ownership structures. 

The U.S. emphasis on supply chain security and ownership transparency, particularly for steel and aluminum, signals a continued focus on national security in trade policy. UK exporters may need to adapt compliance processes to meet these new standards. 

The removal of UK tariffs on U.S. beef and ethanol opens new opportunities for U.S. exporters, particularly in the agricultural and biofuel sectors. 

The current Congress appears to have no appetite for passing Trade Promotion Authority so the new U.S.-UK trade deal may only survive through the end of the current U.S. administration. Only a formal free trade agreement ratified by Congress (and any other party’s legislative body) can continue through successive governments unless the agreement explicitly contains a timetable (for example, the United States Mexico Canada Agreement that became law in 2020 will end in 2026 unless re-authorized by Congress). 

Written by Damon Pike, Mathew Mermigousis and James Pai. Copyright © 2025 BDO USA, P.C. All rights reserved. www.bdo.com 

How MGO Can Help  

MGO’s International Tax team can help your company navigate the complexities of the new U.S.-UK Economic Prosperity Deal, from identifying tariff relief opportunities to ensuring compliance with evolving supply chain security and ownership rules. Whether you’re a U.S. exporter looking to seize new market opportunities in beef or ethanol, or a manufacturer assessing tariff-rate quotas on auto and aerospace goods, we provide strategic guidance to help you stay competitive, reduce risk, and prepare for what’s next — even amid uncertainty. With extensive experience in cross-border trade advisory, we’re here to help you turn regulatory shifts into business advantages. Contact us to learn more.  

The post U.S., UK Sign Framework for Trade Agreement  appeared first on MGO CPA | Tax, Audit, and Consulting Services.

• Tariffs increase material costs and uncertainty, challenging how your U.S. apparel brand manages production and pricing strategies.

• Supply chain volatility from shifting trade policy forces your business to rethink sourcing, inventory, and cash flow management.

• Without clear, consistent tariff rules, it’s harder for apparel companies to invest in long-term domestic manufacturing solutions.

—

If you run a U.S.-based apparel company, you’ve likely heard that tariffs were meant to level the playing field. But for many in the industry, they’ve done the opposite — raising costs, sowing uncertainty, and complicating domestic production. With fabric and components sourced globally and labor-intensive processes still rooted overseas, your business is caught in policy limbo.

Background: The Tariff Trap

Recent rounds of tariffs — particularly under the International Emergency Economic Powers Act (IEEPA) — were intended to push manufacturing back to U.S. soil. But apparel isn’t like steel or semiconductors. Most American-made garments rely on imported fabrics and specialized inputs from Europe and Asia. Now, U.S. companies that cut and sew domestically are hit with fees not only on finished goods but also on raw materials — from Italian linen to recycled goose down from Switzerland.

Your business doesn’t benefit when both your competitors and your suppliers are penalized.

Rising Costs, Limited Gains

Tariffs might raise the price of foreign goods, but for domestic producers that increase rarely offsets the broader challenges:

• The average U.S. clothing item already costs significantly more due to fair labor wages, healthcare, and compliance standards.

• Most local manufacturers serve niche, high-end markets where even slight price hikes reduce demand.

• Investment in automation or workforce expansion becomes risky amid tariff instability.

As one industry leader told The New York Times, “If we know these tariffs are locked in … we can deal with it. But right now, it might change tomorrow.”

Uncertainty Freezes Innovation

Your apparel company needs clarity to make long-term decisions — on hiring, machinery, and sourcing. Yet, recent reversals and pauses in policy have undermined confidence. Business leaders across the sector are holding back on growth initiatives, delaying plans to move production domestically, and watching consumer demand fall as inflation creeps into discretionary spending categories.

Alternative Solutions: Beyond Tariffs

There are more effective strategies to support U.S. apparel than blunt-force tariffs:

• Federal procurement mandates: Extending Buy American rules beyond military contracts could offer your company stable demand.

• Wage subsidies: Redirecting tariff revenue to offset domestic labor costs, as some entrepreneurs suggest, would truly support reshoring efforts.

• Transparent trade policy: Your supply chain planning hinges on consistent, long-term policy, not reactive measures driven by political cycles.

Regulatory Pressure Meets Strategic Insight

With trade policy increasingly shaped by executive authority — like the IEEPA — your business must assess both direct financial impact and indirect regulatory exposure. For apparel manufacturers subject to audit requirements or preparing for financing, aligning your operations with Public Company Accounting Oversight Board (PCAOB) and Financial Accounting Standards Board (FASB) standards is non-negotiable.

MGO works with brands like yours to incorporate shifting cost structures from tariffs in financial statements, inventory valuation, and pricing models — helping you keep your firm aligned with generally accepted accounting principles (GAAP) and investor-ready.

Preparing for What’s Next

Whether you’re producing premium fashion in Houston or high-volume basics in Los Angeles, your apparel business faces complex financial and regulatory pressures. MGO offers audit clarity, tax efficiency, and consulting support tailored to today’s global apparel supply chain.

From understanding tariff impacts on GAAP reporting to improving sourcing strategies amid global disruption, we help apparel brands move forward with confidence.

Learn more at mgocpa.com/apparel

The post How Tariffs Disrupt Your Apparel Brand’s Supply Chain appeared first on MGO CPA | Tax, Audit, and Consulting Services.