Crash Course: Tariffs & Duty Drawbacks

Justin Sherlock is the co-founder and CEO of Caspian, an AI-native duty drawback platform designed to help brands navigate complex global trade and tariff environments. Prior to Caspian, Justin gained deep experience in finance and logistics at Flexport, where he led Flexport Capital, and previously had several years experience in private equity.

In this episode, Justin breaks down the rapidly changing landscape of tariffs, duties, and global supply chains—especially relevant amid recent policy moves and volatile trade relations.

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What you’ll learn:

• What’s actually happening with tariffs, duties, and global trade policy in 2025—and why this matters for every consumer brand.

• The three key terms every founder needs to know: customs brokerage, tariff, and duty drawback—and why most brands are leaving money on the table.

• How supply chain chaos, geopolitical shifts, and the U.S. tariff “trade war” are transforming margins, pricing, and inventory strategy across DTC.

• The reason 90%+ of eligible businesses don’t claim duty drawbacks and how Caspian leverages AI to make sophisticated refund strategies accessible to brands of all sizes.

• What recent tariffs imposed by the Trump and Biden administrations mean for e-commerce, and why trade policy will remain a DTC headline regardless of who is in the White House.

• The strategic levers brands are pulling (from pricing surcharges to renegotiated supplier terms and inventory playbooks) to weather new costs—and where the biggest opportunities and landmines are.

• A clear, actionable explanation of how duty drawbacks work, who qualifies, and how brands can use them to offset tariff pain, especially when expanding internationally.

Some takeaways:

• Most DTC brands—even those with significant import/export operations—are not taking advantage of duty drawbacks simply because the process has been complex, manual, and typically reserved for Fortune 500s. Caspian is on a mission to change this, democratizing access through automation and AI.

• The U.S. tariff landscape has shifted dramatically: what began as “Section 301” tariffs on China has escalated into widespread hikes across the board, affecting everything from Gatorade bottles to apparel and electronics, and causing uncertainty for brands and suppliers worldwide.

• Tariff rates can be 100%+ on key SKUs, instantly doubling or tripling your cost of goods—often with little warning, leaving brands scrambling to adjust.

• Typical brand responses include: passing costs to customers via surcharges, writing founder letters, delaying shipments for clarity, or seeking alternative supplier relationships—but every approach has risks and tradeoffs.

• Tariffs, duties, and classification codes are a specialized language; understanding the role of customs brokers, the Harmonized Tariff Schedule, and country-of-origin rules is critical for any brand with cross-border operations.

• “Friendly fraud”—shipping through Mexico or Southeast Asia after the first wave of China tariffs—has become the next global trade battleground, with new rules clamping down on de minimis imports and demanding stricter supply chain traceability.

• For brands selling internationally, there’s latent opportunity: duty drawbacks allow you to recover significant refunds for goods exported from U.S. stock. Even if only a fraction of your inventory ships overseas, the refunds can be substantial—unlocking new margin and pricing power.

• Caspian’s AI platform automates the previously manual work of collecting import and export records, matching documentation, and preparing claims—turning what was a specialist, high-touch service into a scalable benefit for fast-growing ecommerce brands.

• As supply chain data gets more fragmented, AI’s ability to ingest and reconcile unstructured records (from PDFs, spreadsheets, multiple freight forwarders, etc.) becomes a key unlock for modern trade compliance.

• Looking ahead, duty refunds are just the beginning: by auditing and centralizing all trade data, Caspian aims to automate tariff optimization, free trade agreement utilization, and landed cost calculations—giving DTC operators the tools once reserved for multinational giants.

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Where to find Justin Sherlock & Caspian:

LinkedIn: https://www.linkedin.com/in/justin-sherlock/

Caspian Waitlist & Info: https://www.meetcaspian.com/

In this episode, we cover:

03:59 From Flexport to Caspian

09:31 Customs Compliance

11:11 Understanding Tariff and Duty Classification

15:54 Trump's Tariff Strategy: A Provocative Move

18:26 Debate Over Section 321 Provision

22:46 "Supply Chain Opportunities and Challenges"

25:03 Reshoring Critical Industries Strategy

28:04 10% Tariff Impact on US Businesses

32:53 Optimizing Supply Chain and Vendor Management

36:22 Trade Predictions: Japan, Taiwan, India, Vietnam

37:52 Geopolitical Isolationism and China's Rise

41:41 "Navigating Duty Drawback Challenges"

45:07 International Pricing and Tax Strategies

48:07 Future of Supply Chain Optimization

Referenced:

Caspian: https://meetcaspian.com/

Flexport: https://www.flexport.com/

North American Free Trade Agreement (NAFTA): https://www.cbp.gov/trade/north-american-free-trade-agreement

Harmonized Tariff Schedule: https://hts.usitc.gov/

Key quotes:

• “Over 90% of eligible businesses don’t take advantage of drawback. They’re either unaware of it or they can’t actually get a provider to pay attention to them. They’re seen as too small.”

• “The average company out there doesn't have access to the expertise or the tooling to take advantage of all of the different tax strategies related to your supply chain. And so what we're doing is productizing this expertise to bring it out to everyone else.”

• “Duty drawback is inherently an audit of your supply chain data. We're gathering your electronic records of imports and exports, inventory receipts and fulfillments and then we're gathering the documents from your logistics vendors and we're making sure that they tie and we're using AI to parse and match the documents against the rows of electronic data and that audit uncovers so many different things that could be improved about how your supply chain is set up.”