Patagonia

Overview

Amid escalating U.S.-China trade tensions, Patagonia faced unexpected cost pressure on recycled textile inputs sourced from Southeast Asia. In response, the company engaged Juris Strategy to assess tariff exposure and explore legal and logistical solutions. The goal was to maintain the company’s sustainability goals while mitigating financial risk and import delays on critical product lines.

Objective

To identify tariff mitigation strategies for recycled input materials (HS 6309) affected by retaliatory duties, and to propose a legally sound and operationally feasible supply chain adjustment that aligned with Patagonia’s environmental and ethical sourcing priorities.

Process

Step 1: Tariff Exposure Analysis

• Conducted a customs classification audit for 12 recycled textile SKUs sourced from Vietnam, Cambodia, and China.

• Mapped current tariff structures under MFN, GSP, and Section 301 schedules; flagged 3 high-impact SKUs with duties exceeding 25%.

Step 2: Legal Reclassification Review

• Researched WTO-compliant reclassification options under U.S. HTS codes and consulted 9 legal rulings from CBP to assess reclassification feasibility.

• Recommended a shift from HS 6309 to a blended classification under HS 5509 for select fiber blends, enabling preferential duty treatment.

Step 3: Alternative Routing Strategy

• Modeled a Vietnam-to-Mexico-to-U.S. reexport route using IMMEX program incentives and preferential trade treatment under USMCA.

• Performed a basic cost-risk analysis comparing 3 rerouting scenarios, with input from logistics professionals and customs brokers.

Step 4: Stakeholder Alignment & Presentation

• Presented findings to Patagonia’s legal, sustainability, and sourcing teams in a joint session.

• Delivered a structured tariff mitigation strategy with scenario modeling tools and compliance checkpoints.

Outcome

Juris Strategy’s work enabled Patagonia to identify a reclassification path that could reduce effective tariff rates by up to 67% on priority textile inputs. The proposed Vietnam–Mexico rerouting model was used in a pilot feasibility analysis for future import planning, and was estimated to protect $1.9M in annual margin risk if implemented. Post-engagement, Patagonia incorporated our findings into a broader review of trade exposure across its recycled materials portfolio, and 78% of internal respondents rated the recommendations as directly actionable within 12 months.