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Wipfli combines our CPA foundation and decades of serving manufacturers to help you thrive in a challenging tax environment.
We don’t just manage compliance — we help you build resilient tax strategies that align with your business goals and drive long-term value. We also closely monitor tax policy changes so that we can deliver comprehensive strategies to help minimize your tax burden and turn complexity into opportunity.
Our tax services for manufacturing businesses include:
Wipfli can help you mitigate risks with real-time, ongoing support for navigating tariff strategy and trade regulation shifts. We provide strategic insights into the growing complexity of global trade, including tariff forecasting, scenario planning and financial modeling, supply chain strategy and USMCA compliance.
Optimize tax strategies with proactive planning, compliance and accounting solutions tailored to your complex business needs. Wipfli’s specialty tax services team applies decades of tax preparation experience to turn your regulatory challenges into opportunities for operational and financial efficiency.
Wipfli helps you navigate evolving tax regulations across jurisdictions to minimize exposure while enhancing compliance. Our solutions, ranging from sales and use tax to property and unclaimed property tax, are designed to reduce liabilities while aligning with strategic business goals.
Seize growth opportunities in international markets with Wipfli. We leverage our industry experience and global network to help you scale with support for international tax compliance, supply chain management, cross-border operations and other critical areas. We’re ready to help you streamline logistics and mitigate risk as you expand your footprint.
Wipfli’s credits and incentives services help manufacturing leaders uncover and capitalize on tax opportunities — including the manufacturing R&D tax credit, hiring incentives, energy credits and capital investment incentives. We help streamline the qualification and application process so that you can maximize your applicable savings.
Manage the challenges of global tax compliance, planning and reporting with Wipfli’s international tax services. We provide strategic services, including transfer pricing, entity structuring and tax efficiency, to help you stay compliant and competitive in international markets.
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9 top tariff mitigation strategies for manufacturing CFOs
For many manufacturers, the Trump administration’s tariff policies have created new costs and supply chain complications. Active tariffs under Section 232, Section 301 and Section 338 are raising the cost of many imports by 10-50% . How should your business adapt to succeed in this environment? Keep reading to learn key tariff mitigation strategies that CFOs and COOs can use to protect profitability even in the face of tariff pressures. 9 top tariff mitigation strategies manufacturers should know While there is no silver bullet, manufacturing CFOs and COOs do have options to offset tariff costs. If you understand your tariff exposure and supply chain, you can consider mitigation strategies like alternative sourcing, pricing pass-throughs, optimized inventory management, operational efficiency improvements and tax incentives. Deploying a combination of these strategies will help protect your overall profitability even after accounting for tariff expenses: 1. Map your supply chain Start by mapping out your current supply chain. Identify the sources of your raw materials, components and finished goods, while also reviewing HTS codes for all imports. Understanding where your products originate will help you evaluate potential tariff impacts. 2. Diversify your supplier base Based on your supply chain mapping, consider if you could reduce tariff exposure by diversifying your materials suppliers. Nearly all U.S. trading partners remain covered by tariffs, but not all countries are subject to the same tariff rate. Section 301 tariffs, for example, range from 10% to 12.5% depending on the country. In this example, switching from a supplier tariffed at 12.5% to one tariffed at 10% would reduce your tariff payments by 20%. 3. Evaluate domestic or near-shore sourcing In certain cases, tariff costs may mean that domestic sourcing is now a more viable option. Materials or goods sourced domestically aren’t tariffed, so you may be able to find more competitive pricing than in years past. Companies that have moved production overseas may also want to explore whether reshoring could make sense, although this approach typically only works when combined with heavy automation to offset high domestic labor costs. 4. Reassess your costing and quoting strategies For much of 2025, manufacturers simply ate tariff costs rather than risk angering consumers by passing those costs along. But that’s not a viable long-term solution. If you haven’t yet, explore changing your prices to reflect your higher costs, as well as how to implement those increases over time to soften the impact on consumers. 5. Optimize inventory and purchasing strategies Adopting a more agile, flexible approach to inventory management can help you avoid unnecessary costs. Taking this approach involves understanding exactly what your customers want, focusing on jobs that boost profitability (typically those that are either high volume or high value) and exploring more flexible contracts with suppliers to avoid over-purchasing materials you don’t need. 6. Review your supplier and customer agreements Tariffs are affecting both your suppliers and businesses that buy your products. You may be stuck with your existing contracts, but when negotiating a new one, explore how you can share the burden of tariff costs rather than leaving your business to eat most of them on its own. 7. Improve operational efficiency Improving operational efficiency can lower operating costs or increase production to offset tariff expenses. Manufacturers are increasingly leaning on technology like AI to deliver operational gains, with packaging automation, machine monitoring systems and process control technologies all delivering notable ROI in this area. This does involve making a meaningful upfront investment. However, certain tax incentives can notably lower that burden. 8. Use tax incentives to offset tariff costs A smart tax strategy can help significantly offset your overall tariff burden. CFOs should dig into the details on how to handle accounting for tariffs from a tax perspective , as well as consider how specific manufacturing tax incentives could reduce your non-tariff tax exposure or help cover the cost of investments in efficiency, molds, dies and automation. Key tax incentives to explore include: Bonus depreciation and qualified production property to immediately deduct the full cost of certain qualified real property investments. Section 179D expensing to deduct the cost of certain energy efficiency facility upgrades. R&D tax benefits to deduct or receive tax credits for research, experimentation and development costs. Tariffs can also increase your credit eligibility here. 9. Pursue tariff refunds when applicable In early 2026, the Supreme Court overturned the administration’s IEEPA tariffs and ordered that roughly $166 billion in tariff collections be refunded. If your business paid IEEPA tariffs, you may be eligible to have that money returned . The process can be complex, but if you were burdened by significant IEEPA tariff costs, you stand to gain a significant reimbursement. Why tariff management matters for manufacturers today Manufacturers face a host of pressures on profitability, including high costs for raw materials and labor, competition from emerging markets, economic uncertainty and a technological revolution that is shaking up traditional business models. Tariffs only add to that pressure, which makes managing them essential to surviving (and thriving) in today’s business environment. This is doubly the case because tariff policy continues to be volatile, which means you’ll get burned if you don’t have a process in place to help you adapt to those policy shifts. Also consider that successful tariff management means learning to run your business more efficiently and effectively. By acting now, you’re investing in long-term performance gains that will stick around even if the current tariffs are eventually phased out. In other words, implementing an effective tariff management strategy will bolster your profit margins both now and in the future. How tariff mitigation helps CFOs improve profit margins No single tariff mitigation strategy will likely offset all your tariff costs. However, by employing a combination of supply chain adjustments, efficiencies, tax incentives and pricing pass-throughs, you can significantly reduce the hit to your profit margins. Consider that tariff mitigation strategies help you to: Counterbalance tariff costs by finding new cost savings or opportunities to do more profitable jobs. Operate more efficiently, with tariffs serving as the necessary push to adopt automation or more efficient processes. Better understand your supply chain and customers so you can adapt to meet today’s business demands. Avoid wasting valuable tax opportunities by claiming deductions or credits you may already be entitled to, or that apply to necessary expenses. Protect your margins by helping negate rising costs in areas like healthcare, labor and materials to set you up for a strong balance sheet five years from now. Tariffs are frustrating. But they are also an opportunity to rethink your business and make structural changes to put it on more solid, sustainable ground. Read more Tariff update: New Section 301 tariffs, Section 232 and more Tariff refunds for manufacturers: What to do next How do tariffs affect taxes for manufacturing businesses?
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The impact of Canada retaliatory tariffs on U.S. manufacturing | Wipfli
Learn how the new Canada retaliatory tariffs on U.S. imports could impact supply chains and costs for your manufacturing business, and how you can respond.
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Tax treatment for tariffs: How U.S. manufacturing companies should treat tariff costs and IEEPA refund uncertainty under U.S. tax rules
Tariffs are now a seemingly permanent cost consideration for U.S. manufacturing companies sourcing capital equipment and raw materials globally. This means business leaders need to better understand the rules, especially as certain tariff refunds have created additional complications. Misclassification when accounting for tariffs can affect taxable income, timing of deductions and missed opportunities. Keep reading to learn more about how tariffs affect your business from a tax perspective. Tariff costs depend on the nature of the goods From a federal income tax perspective, the proper treatment for tariff costs largely depends upon the nature of the goods on which the tariffs are being charged. That is, in most cases, the treatment of the tariff will follow the tax treatment of the underlying asset or good that is being imported into the United States. Tariffs on capital equipment, raw materials and R&D supplies all have different tax treatments. How tariffs affect capital equipment When a tariff is incurred related to the import of machinery and equipment, the tariff is generally treated as part of the asset’s acquisition costs. The tariff is capitalized into the tax basis of the asset, along with purchase price, freight and installation costs. Once capitalized, the tariff cost would be recovered through the same depreciation methodology as the underlying asset. Most machinery and equipment is depreciated via MACRS over five or seven years. In addition, taxpayers can accelerate the depreciation and cost recovery with tools like 100% bonus depreciation and Section 179 expensing, subject to current law limitations and phase-down schedules. How tariffs affect raw materials and inventory Tariffs assessed on imported raw materials are generally treated as inventoriable costs. That is, the tariff is capitalized into the cost of inventory, along with the purchase price of the raw materials and related inbound freight. The tariff is part of the cost of goods sold and is deducted when the underlying inventory is sold. Some manufacturers expecting tariffs to be levied on their raw materials for the foreseeable future may want to consider the last-in-first-out (LIFO) method of accounting for their inventories: LIFO accounting can be advantageous when costs are rising. But other requirements exist with LIFO, such as book-tax conformity and a requirement to stay on LIFO for at least five tax years. Companies considering LIFO should examine their internal cost accounting systems, for both book and tax purposes, to make sure that the system appropriately captures tariffs. If not, a change in accounting method should be considered prior to adopting LIFO. How tariffs affect R&D supplies Like capital equipment and raw materials, the cost of tariffs on R&D supplies follows the treatment of the cost of the underlying asset or good. As such, if the underlying supplies are materials used in the conduct of research, the tariffs would follow the same treatment. The Tax Cuts and Jobs Act of 2017 (TCJA) differentiated the treatment of domestic and foreign research expenditures for tax years beginning after December 31, 2017. Effective for tax years 2018 and thereafter, the TCJA required research costs to be capitalized and recovered over the applicable period. The recovery period for domestic research expenses was set at five years, with foreign research expenses to be amortized over 15 years. The One Big Beautiful Bill Act (OBBB) gave manufacturers relief for the tax treatment of their domestic research expenditures : For tax years beginning after December 31, 2024, domestic research expenditures are once again deductible as they are paid or incurred. Moreover, a transition rule exists whereby taxpayers can ‘catch up’ their unamortized research expenditures from tax years 2022 through 2024; and small taxpayers are allowed to amend prior years’ returns to deduct the research expenditures otherwise capitalized on the originally filed tax return. For manufacturers using imported supplies in the conduct of research, such as prototype materials, molds or dies and automation supplies, the tariffs will follow the treatment of research supplies or materials. For tax years 2025 and beyond, most manufacturers will choose to deduct their research expenditures, and thereby the related tariff levied on those supplies and materials, as they are paid or incurred. Tariffs may offer a hidden tax benefit for R&D activities Given that the tariff amount follows the treatment of the underlying property, a manufacturer’s inquiry might turn to whether those costs can also qualify for the R&D tax credit . If a manufacturer imports chemicals, prototype materials, or other non-depreciable property that qualify as supplies under Section 41, the tariff embedded in their acquisition cost should generally be included in the amount paid or incurred for those supplies. The tax code focuses on the “amount paid or incurred” for supplies used in the conduct of research. Because the tariff is part of the acquisition cost of the imported supply, the tariff should generally be included in that “amount paid or incurred,” assuming the underlying item is a qualifying research credit supply and is used in the conduct of qualified research. For expensive prototype materials or molds/dies used in the conduct of domestic research, the tariffs levied on those supplies can significantly increase the amount of qualified research expenditures and thereby the tax credit. This rewards companies more when they are increasing their R&D costs. Supreme Court ruling creates ambiguity on accounting for tariff refunds On February 20, 2026, the U.S. Supreme Court ruled in a 6-3 decision that the International Emergency Economic Powers Act (IEEPA) does not give authority to the President to impose tariffs . The majority opinion did not address tariff refunds and the dissenting opinion noted the process is likely to be a “mess.” Significant uncertainty exists, independent of the proper tax treatment of any potential refunds. Only the importer of record is eligible for the refund, but many suppliers passed those costs onto their customers. As a result, many manufacturers will need to look into whether the ruling affects their rights and obligations under contracts with vendors and customers. That is, even if a manufacturer isn’t the importer of record, they may still seek or be legally obligated to a refund from their vendor. It is also important to note that the Supreme Court ruling was limited to tariffs assessed under IEEPA, not section 232 or 301 tariffs . Established tax principles provide a framework for tariff refund scenarios Although some uncertainty remains regarding refund administration and timing, established tax principles provide a framework for addressing several common tariff-refund scenarios. The appropriate treatment generally depends on how the original tariff was treated, whether the related property remains on hand, and when the taxpayer’s right to the refund becomes fixed under its accounting method. Raw materials already sold: A refunded tariff is generally included in taxable income under the tax benefit rule to the extent the earlier inventory or cost-of-goods-sold treatment reduced tax. The inclusion generally occurs when the right to the refund becomes fixed under the taxpayer’s accounting method. Self-employment tax: Some tariff refunds may be taxable for federal income tax purposes without being included in net earnings from self-employment. Raw materials still in inventory: If the goods that generated the refund remain on hand when the refund right becomes fixed, the refund generally reduces the cost or value of inventory rather than creating current taxable income, provided the adjustment is properly treated as an inventory cost adjustment. Capital equipment: A tariff refund tied to capital equipment is generally treated as a basis adjustment under IRC Section 1016 and Treasury Regulation Section 1.1016-3, rather than as a simple tax-benefit-rule recovery. If the asset remains owned and has a remaining adjusted basis, the taxpayer generally reduces the basis and adjusts depreciation prospectively over the remaining recovery period. If bonus depreciation or Section 179 expensing was claimed, the basis decrease may reduce otherwise allowable depreciation in the year the decrease is taken into account. If the asset is fully recovered or was disposed of before the refund right became fixed, the recovery generally is reflected through basis and gain-or-loss mechanics. Taxpayers should coordinate the implementation with their fixed asset specialists. R&D tax credit supplies: If a refunded tariff was included in the cost of supplies used in qualified research, the taxpayer may need to revisit its Section 41 qualified research expense calculation. If the original credit year remains open, the taxpayer generally should recompute the credit by reducing qualified research expenses for the refunded tariff. If the year is closed, the issue is better analyzed under the general credit-recovery rule of IRC Section 111(b), which may increase tax in the refund year to the extent the earlier research credit reduced tax. This approach is similar to the treatment the IRS has applied to Employee Retention Tax Credit recoveries. Read more Tariff refunds for manufacturers: What to do next R&D tax credits can lower your tax bill. Do you qualify? Tariff update: New Section 301 tariffs, Section 232 and more
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