Procurement and Payment Services has developed a Tariff FAQ to assist campus and explain how tariffs work, who is responsible for covering them, and strategies for negotiating with vendors, helping departments remain compliant while effectively managing costs.
Why This Matters
Tariffs can significantly affect the final price of products purchased internationally. At the University, the department making the purchase is responsible for paying any tariff-related costs, with no central fund available to offset these expenses. This makes understanding the process critical for budget planning and cost control.
Key Highlights
- Determining Responsibility: Vendors typically pass tariff costs to buyers. At UT, that means the purchasing department must budget for these expenses.
- Vendor Communication: Departments should confirm key details with vendors before agreeing to any tariff-related increases, including the country of origin, the specific tariff applied, and potential sourcing alternatives.
- Contract Protections: If a purchase order (PO) or contract is already in place, vendors are generally required to honor the agreed price. Any requested increases should be declined unless exceptional circumstances apply.
- Negotiation Strategies: In cases where a vendor refuses to perform without a price adjustment, departments are encouraged to explore alternatives—such as finding new suppliers or negotiating shared costs—before finalizing changes.
- Special Exemptions: Certain educational, scientific, and cultural imports may qualify for duty-free entry through the ITA-338P form process, potentially saving significant costs for eligible purchases.
Additional Resources
The FAQ also provides links to:
- The Harmonized Tariff Schedule of the United States (HTS) for up-to-date tariff rates.
- The World Trade Organization’s Tariff & Trade Data platform for global tariff information.
Departments are encouraged to review the complete FAQ and contact the Procurement Office at procurement@austin.utexas.edu for guidance on specific cases, especially for purchases over the $15,000 small purchase limit.
