Tariff Exposure Is a Supply Chain Risk You Manage on Two Fronts
Tariff exposure hits mid-size manufacturers through two distinct channels, and most companies catch only one. Direct exposure is what you pay when you import materials yourself. Pass-through exposure is what domestic suppliers charge you after they eat a tariff on their own imports. Both move real money. Fixing one doesn't fix the other.
I've watched procurement teams chase the first channel for a year without noticing the second. Legal or trade compliance owns the import paperwork, so direct tariff costs get logged somewhere. Pass-through costs from domestic suppliers show up as a line-item price increase with no explanation. Whoever approves invoices waves it through, and it vanishes into COGS. Nobody ever traces it back to a tariff.
The two fronts of tariff exposure
Direct exposure is what you pay when you import materials or components yourself. Under IEEPA, the tariff rate depends on the country of origin and the product's HTS classification. You know the number because you wrote the check.
Pass-through exposure is what your domestic suppliers charge you when their own imported inputs get more expensive. A domestic distributor sourcing subcomponents from Vietnam or China absorbs a tariff hit on their end, then raises your price to protect their margin. You never touch customs. You never see the word "tariff" on the invoice. You just see a higher number.
Research from the Federal Reserve Bank of New York's Liberty Street Economics found that roughly 90 percent of tariff costs land on U.S. firms and consumers, not on foreign exporters. The same research found that 44 percent of manufacturers surveyed still had tariff-driven price increases coming. Most planned to spread those increases over the next six months instead of raising prices all at once. Pass-through costs arrive in small increments from suppliers who have no obligation to explain why the price moved. That delay is what makes them so easy to miss.
Front one: recovering direct costs through the ACE portal
For imports you handle yourself, the fix is procedural. U.S. Customs and Border Protection launched a new module inside its Automated Commercial Environment portal in April 2026. It processes IEEPA duty refunds faster than the old entry-by-entry method.
The process runs in four steps:
Submit a claim file listing the entry summaries you believe qualify for an IEEPA refund.
CBP runs mass validation and recalculates duty owed as if the tariff line never applied.
Qualifying entries move through liquidation, with interest calculated automatically.
CBP disburses the refund by ACH, consolidated by liquidation date and importer of record.
You still have to know which entries qualify, and you still have to file. CBP isn't finding this money for you. If your trade compliance team isn't pulling entry summaries and checking them against current IEEPA eligibility, you're leaving your own refund sitting at customs.
Front two: managing pass-through from domestic suppliers
This side runs on negotiation, not paperwork, and it starts with asking a question most manufacturers never ask. Send every domestic supplier a short questionnaire. Ask whether any of their inputs carry tariff exposure, and whether that has changed their pricing to you in the last twelve months. Most suppliers won't volunteer this. Most will answer if you ask.
When a supplier's price jumps without a stated reason, check whether their input materials carry tariff exposure and whether the timing lines up. If it does, you have grounds to ask for documentation, and grounds to negotiate.
Then close the loop going forward. Put a renegotiation clause in every supplier contract you sign or renew. It should let you revisit pricing when tariffs move more than a set threshold. Long-term contracts without that clause are part of why pass-through costs move so slowly in the first place. Suppliers locked into fixed pricing just wait for renewal to reset their numbers, which means today's contract terms are quietly setting tomorrow's exposure.
What this looked like for one client
A $180 million industrial equipment manufacturer I worked with had both problems running at once and didn't know it. On the direct side, they imported motor assemblies from a Vietnamese supplier and had never filed for IEEPA refunds on entries going back to December 2025. That was $340,000 sitting at CBP, unclaimed.
On the pass-through side, a domestic distributor supplying control components had raised prices three times in eight months, each time citing "market conditions." An audit showed the distributor's components used Chinese-sourced semiconductors carrying a tariff line. Once we had that documentation, we renegotiated the contract to include a tariff-indexed clause. That brought the annual cost down by $125,000 compared to where unchecked increases were headed.
Combined, that's $465,000 in a single year, from two problems that looked like one line in the budget until somebody split them apart.
Building the tracking system that catches both
You need one log, not two efforts that never talk to each other. Track direct import entries and their refund eligibility on one side. Track supplier price changes and their tariff justification on the other. Review both quarterly. The moment either side shows movement, act on it, whether that means filing a claim or opening a renegotiation.
Flambeau Consulting helps mid-size manufacturers build this kind of dual-tracking system, one that catches direct tariff exposure and supplier pass-through costs before either erodes margins over a year. That's not a hypothetical service description. It's the same audit-and-recover approach that found the $465,000 above, applied to your own supplier base and import entries.
Two risks, two fixes
Tariff exposure runs on two tracks: a compliance process for what you import directly, and a negotiation process for what your suppliers pass through to you. Track only one, and you'll see, at best, half the number. For most mid-size manufacturers, that missing half is worth hundreds of thousands of dollars a year. Sometimes more.
Ready to find out how much of your tariff exposure is sitting unclaimed or unchallenged? Discover how a dual tariff-tracking system can put that money back on your side of the ledger with Flambeau Consulting's help. Contact us today.