Key Issues Affecting Procurement

Procurement Services is monitoring how federal policies, regulations, and legislative changes affect procurement practices at the University of Michigan. The details of these measures are evolving at a rapid rate, and many of the implications remain unclear at this time. Procurement Services will post information and resources to this page as more information is confirmed. Faculty and staff should check back often for the latest updates.

External Resources

 

Tariffs

A tariff is a tax or duty charged by a government on goods imported from another country. Governments may use tariffs to raise revenue, protect domestic industries, regulate trade, or influence trade negotiations. Each country determines which goods are subject to tariffs and the amount charged. These rules and rates can change with little notice.

Although the university may be exempt from certain sales taxes, that exemption does not apply to tariffs. Sales tax exemptions are separate from customs duties and import tariffs. In addition, sales tax exemptions are not automatic in every state and do not eliminate charges assessed when goods enter the United States.

Recent changes in federal trade policies have affected many university operations, especially the purchase of imported goods. These changes can increase the total cost of items purchased by the university. Tariffs may apply to imported goods whether or not they are purchased directly by the university, and they may also apply to materials or components used to manufacture an item.

This guidance focuses primarily on goods imported into the United States. Commodities that may be significantly affected include lab and research equipment, medical equipment, IT hardware, construction materials, and related equipment. However, tariffs can apply to many types of products, depending on the country of origin, product classification, and current trade rules.  Procurement Services and U-M Health Contracts & Procurement are closely monitoring these developments to understand the impact on the University of Michigan.

Frequently Asked Questions
Is the University of Michigan exempt from paying tariffs?

While the university is tax-exempt in many U.S. States, in many cases and as a general rule, we are not exempt from federal tariffs.

What is a tariff code?

A tariff code, also known as an HS or HTS (Harmonized Tariff Code) code, is a standardized numerical code used to classify traded products for customs and trade purposes. It’s a globally recognized system developed by the World Customs Organization (WCO) to facilitate international trade by ensuring consistent product classification worldwide. These codes are crucial for determining import duties, taxes, exemptions, and other trade regulations. The Harmonized Tariff Schedule is posted here.

When and how are tariffs assessed?

Tariffs are assessed and applied at the time the shipment is cleared through customs – NOT at the time the order is placed, nor at the time it arrives at the port. The amount of duty/tax is usually determined by the tariff code and the value assigned to the item(s).  In some cases, a flat tariff percentage is applied to a specific material or to goods originating from a specific country.

De Minimis Exemption Suspended: Effective August 29, 2025, an Executive Order signed by President Trump suspends the de minimis exemption for all low-value commercial shipments, effectively ending the duty-free entry of goods valued at or below $800, excluding those sent through the international postal network. This means that, with some exceptions, most packages arriving from outside the U.S. will now be subject to applicable duties, taxes, and fees.

Prior to the Executive Order, goods valued at or below $800 could enter the U.S. duty-free (per person, per day), without requiring detailed customs paperwork. This de minimis exemption was widely used, particularly by e-commerce companies shipping from China and other countries. 

Note: The status of the de minimis exemption, threshold, and amounts can change at any time, without notice.

Who pays tariffs?

In most cases, if the shipping terms, otherwise known as Incoterms®, are not Delivered Duty Paid (DDP), the Importer of Record (“IOR”) is ultimately responsible for paying duty/tax levied by the U.S. Customs and Border Patrol (“CBP”). The IOR is also the party legally responsible for ensuring imported goods comply with all customs and legal requirements of the destination country. This is typically the university as the purchaser, or a designated customs broker of the goods being imported. The IOR is also responsible for accurate documentation, payment of duties and taxes, and adherence to all import regulations.

Note: To expedite the customs clearance process, customs brokers usually pay the duty/tax on behalf of the university.  The university is then obligated to reimburse the customs broker, usually after the shipment has been cleared and released for delivery.

What are shipping terms?

International shipping terms, also known as Incoterms® (International Commercial Terms), are a standardized set of rules that define the responsibilities of buyers and sellers in international transactions. These terms clarify who is responsible for transportation, insurance, and other costs associated with shipping goods from the seller’s location to the buyer’s destination.

For additional details, see Knowledge Base Article International Shipping Terms – Incoterms 2020.

What is a customs broker?

A customs broker is a licensed professional or company authorized to act as an intermediary between importers/exporters and customs authorities, e.g., U.S. Customs and Border Protection (CBP). They help navigate the complex process of importing and exporting goods by handling necessary paperwork, electronic filing, ensuring compliance with regulations, facilitating the clearance of shipments through customs, and act as a freight forwarder.  In some cases, they can help arrange shipping.

When U-M is the IOR, customs brokers must have a Power of Attorney (POA) in place to act on behalf of the university.  Many shipping companies also have a brokerage arm that can process customs clearance.  The following companies have a POA in place with the University of Michigan:

Customs Brokers:

Shipping Companies:

What is a Carnet?

An ATA Carnet, often called a “passport for goods” or a “temporary import bond,” is an international customs document that simplifies the temporary import and export of goods to and from various countries. It allows for duty-free and tax-free entry of items like commercial samples, professional equipment, and goods for exhibitions and fairs, for a period of up to one year. Essentially, it streamlines customs procedures, acting as a temporary passport for goods traveling across borders. The Carnet must be in place prior to export. Procurement Services can facilitate obtaining a Carnet.

What should I do if a supplier asks to change the freight term (Incoterms®) on a purchase order that has already been submitted?

Once a purchase order has been submitted, freight terms can only be changed by a buyer.  Submit a Req/PO Request form to request freight term changes. M-Pathways now allows for domestic and international freight terms.

Note: When receiving a quote that states DDP (Delivered Duty Paid) Incoterms®, the requester should ask the supplier to reflect the tariff charges as a line item within the quotation.

What is the process to refund IEEPA tariffs?

As of April 20, 2026, U.S. Customs and Border Protection (CBP) launched the first phase of the Consolidated Administration and Processing of Entries (CAPE) program in the ACE Secure Data Portal to refund invalid IEEPA tariffs following the recent Supreme Court decision.

Procurement Services is partnering with Baker Logistics on a coordinated approach to identify potentially eligible transactions, validate supporting documentation, and submit refund requests as appropriate.

To ensure submissions are accurate, consistent, and aligned with CBP requirements, departments should not submit refund requests independently at this time. Procurement Services will provide additional updates as the review progresses and next steps are confirmed.

Strategies for Mitigating Tariffs

The best way to mitigate the cost of imposed tariffs is to purchase from university-wide contracts negotiated by Procurement Services. The benefit of buying from these contracts is that pricing, as well as delivery and payment terms, have already been negotiated on behalf of the university. Procurement Services carries the most leverage with contracted suppliers, ensuring that pricing and other terms cannot be changed without notice. While most agreements are silent on tariffs, departments should be vigilant and question supplier quotes or invoices that include tariff-related fees or alternative tariff-related pricing. Procurement Services can often work with the supplier to reduce or eliminate the surcharge.

Visit the Procurement Services website to find products and services, and Marketsite+ to search supplier catalogs for contracted goods and products.

Purchase domestic goods whenever possible. Goods manufactured domestically are not subject to tariffs. By definition, tariffs are taxes on imported goods, not on products produced within a country.

Consider suppliers from countries with lower-tariff rates or utilize domestic sources.

The Florence Agreement aims to reduce barriers to the international exchange of materials by eliminating customs duties and other import charges. The agreement covers a wide range of items, including books, publications, audiovisual materials, and scientific instruments.

See Knowledge Base Article for details: Duty-Free Entry of Scientific Instruments or Apparatus (Florence Agreement)

Contact one of U-M’s contracted customs brokers before a purchase order for imported goods is issued. The customs broker can help ensure any applicable duty exemption is processed correctly, consult on the selection of tariff codes, and help ensure regulatory requirements are met to ensure a smooth transition into the United States.

  • Important: If the shipping terms of the import are not DDP, the supplier’s quote and/or invoice for the goods should NOT include tariff-related charges, as the university will be responsible for paying duty/tax levied by customs – NOT the supplier.
  • Ask for alternative solutions from the supplier to minimize tariff impact, such as accurate tariff codes, countries of origin, comparable items with lower prices, or tariff amounts.
  • Request a breakdown of components for large equipment.  Assemblies and individual components within those assemblies can be categorized differently, i.e., separate classification or HTS codes for individual components.
  • Require explanations of how tariffs affect pricing.
  • Negotiate sharing of tariff costs, especially for sole-source goods.
  • Lock in pricing or document terms for long-term relationships.
  • Avoid one-off international orders that could incur unexpected tariffs, especially for items that can be procured domestically
  • Avoid blanket acceptance of supplier terms – do not automatically agree to supplier requests for tariff-related price increases.
  • Review and Adjust Budgets: Assess tariff impact on purchases and adjust timelines to avoid higher costs, based on changes to tariff rates.
  • Plan Ahead: Anticipate longer lead times and potential price shifts, especially for international purchases or for foreign-manufactured products, and adjust purchase volumes to match fluctuating import costs.  Timing of imports with announcements of tariff changes can have drastic effects on the amount of duty/tax levied by CBP.
  • Review Your Contract: If there is an agreement with the supplier, check for terms related to price changes that may impact the purchase.
  • Engage Procurement Services Early in the Process: Involve Procurement Services early for major or sensitive international purchases, especially for purchases over $10,000.
  • Use a Carnet: For shipments that will be exported from the U.S. and returned within 1 year, consider using a Carnet.
  • Stay Informed: Monitor updates from Procurement Services. You can view and sign up to receive our newsletters here: Sign up for the Procurement Services Newsletter.
  • Report Concerns: Notify Procurement Services of suspected unfair price increases.
Resources
External Suppliers
  • Baker Logistics Consulting Services is a Customs Broker that offers consulting services for inbound international shipments and customs clearance, including clearance of duty-free shipments and shipments with ATA Carnets.
    • Procurement Services has created [email protected] for inquiries and direct assistance from Baker.
    • Baker may charge a consulting fee depending on the extent of the request. Always request a quote from Baker for the work you are requesting and consult Procurement Services as needed. 
  • Perimeter Global Logistics (PGL) is a global transportation company contracted for freight cartage (over 150 pounds or packages that exceed the size limits accepted by small-parcel suppliers) and customs clearance, including clearance of shipments with duty-free exemptions and shipments with ATA Carnets.
  • eShipGlobal is a shipping platform for creating university shipments with UPS, FedEx, USPS, and other carriers. eShipGlobal can also facilitate freight shipments.

Note: If eShipGlobal arranges an inbound international shipment, their customs brokers will clear the shipment. Keep in mind, this option does not allow for duty-free exemptions, shipments processed with a Carnet (temporary import bond), or purchases over $10,000.

Instructions for using eShipGlobal can be found in the TeamDynamix KnowledgeBase:

    Internal Suppliers

    DOJ Bulk Data Regulations

    In December 2024, the U.S. Department of Justice issued a Final Rule to implement Executive Order 14117 Preventing Access to Americans’ Bulk Sensitive Personal Data and United States Government-Related Data by Countries of Concern, which was issued on February 28, 2024. The regulations become effective on April 8, 2025.

    In general, the new regulations impose requirements on U.S. individuals and entities that provide access to bulk U.S. sensitive personal data or U.S. government-related data to “covered persons” that are affiliated with six “countries of concern”: China (including Hong Kong and Macau), Russia, Iran, North Korea, Venezuela, and Cuba.

    Suppliers Contacted

    Procurement Services has contacted 500+ suppliers with active data protection agreements (DPAs) in place to inform them of their obligation to comply with this regulation. The list of suppliers contacted can be found here. Please contact [email protected] if you are aware of a supplier with bulk data access that does not appear on the list.

    Confirming U-M Compliance

    If a supplier or organization contacts you for confirmation of U-M’s compliance with this regulation, please complete this form. Procurement Services will coordinate with the appropriate signature authority.

    Relevant Links