If we were to choose one person to symbolize the shift in the global economic order, it would certainly be US President Donald Trump.
Like him or not, Trump’s tariffs have become the new reality of global trade since he took office again. The world has thus officially moved past the era of low tariffs and globalization.
The Trump administration has used tariffs as a core diplomatic and economic weapon to drive manufacturing back to the United States. For companies, this will compress profit margins and erode cash flow step by step, an operational problem that is reflected in financial statements every day.
Under the impact of this geopolitical situation, many companies have begun to actively prepare for the battle and carefully consider what can be done when tariffs become a normal cost.
An overlooked fact: tariffs are not “irreversible” costs
It is worth noting that through conversations with many companies, I have found an interesting phenomenon. Many people discuss tariffs with the assumption that they are a “pay it and forget it” cost. But the fact is that tariffs have never been irreversible under the US system.
The United States actually has a system that has existed for more than two centuries, called the Duty Drawback, which was originally designed to encourage exports and processing trade. In short, if a company paid tariffs at the time of import, and the goods are ultimately not sold in the US market but instead exported or transshipped to other countries after further processing, the company may be eligible to apply for a refund of the tariffs paid under the law.
What is often overlooked is that the scope of this system extends far beyond “processing for re-export.” In practice, merchandise that is returned and not resold, or legally destroyed in the United States due to inventory adjustments or quality issues, may be eligible for a tariff refund as long as it meets the relevant requirements.
The system has been revised and expanded over its 200-year history, and as the supply chain has become more complex and the regulations and circumstances have become more granular, tariff refunds have become an area that “only the experts understand.”
Why is it so difficult to carry out “tariff refunds?”
In fact, if you look deeper, you will find that the information required to apply for tariff refunds is often scattered in a variety of different systems and formats, from ERP and Excel to PDF invoices, customs declarations, and logistics records. Such information was not designed for tariff refund purposes, and organizing and comparing it is extremely time-consuming.
As a result, it often takes more than half a year or even a year for a case to go from delivery to actual receipt of the tariff refund, and the relevant services are usually provided only to companies with sufficiently large tax refunds. In recent years, I have begun to observe a new shift. AI is beginning to be applied to highly regularized, data-intensive institutional problems. Tariff refunds are a clear example of this. Once dispersed, unstructured data can be converted into computable formats, and algorithms are then used to match rules with real-world contexts; processes that once required extensive human labor can be automated.
From Pax to Flexport, a trend toward AI-enabled tariff refunds is taking shape
In the United States, several companies have begun to emerge that are trying to use technology to solve a problem that was previously considered “too complex.” Take Pax, a company specializing in customs refunds for businesses, for example. It designs its own algorithms and works with experienced domain experts to use AI to automatically process raw documents provided by companies. These include customs declarations, invoices, logistics records, and internal system outputs, all of which are converted into computable, structured data. Based on this foundation, algorithms are used to evaluate different tariff refund scenarios and identify the most advantageous combinations, after which professionals complete the compliance review and filing.
Under this model, processes that once took half a year or even a year can now be completed in just a few weeks. More importantly, because the calculations no longer rely solely on manual experience, many businesses are discovering for the first time that they are actually eligible for more tariff refunds than they had previously thought, and are often able to get back more than they had originally expected.
If Pax represents an innovative entry point for “specialized problem solving,” then Flexport proves the feasibility of this direction from another angle.
Flexport is a global digital freight forwarding giant that has grown over the past decade since its establishment. Flexport integrates sea, air, and land transportation through cloud-based software to make the complicated cross-border logistics transparent and digital, helping customers realize real-time cargo tracking, customs clearance, warehousing, and supply chain optimization on a single platform.
Over the past two years, Flexport has rolled out a series of AI-focused tools and systematically introduced AI into the customs refund process, aiming to overcome the fundamental computing limitations of traditional approaches.
For example, in the past, most tariff refund software relied on simple amount-based matching. In real-world import and export data, however, the number of possible matching combinations grows exponentially. In a public statement, Flexport noted that the volume of global import and export data is immense. Simply matching imports and exports can generate more possible combinations than grains of sand on Earth, a scale far beyond what human labor or traditional systems can handle.
To achieve this, Flexport has developed an algorithm that evaluates different import/export linkages and refund scenarios simultaneously in all possible combinations and automatically finds the combination that yields the highest refund, instead of being limited to a single, intuitive manual judgment.
Practice results show that with this type of AI-driven analysis, companies can actually obtain tariff refunds that are about 400 percent higher than by using the traditional method, and for the first time, processes that were previously considered too complex have the potential to operate at scale.
I believe that tariffs have brought the world back to a new era, and in this environment, there may be an opportunity to rethink cost management and cash flow strategies; companies should make better use of the power of AI to find resources that are rightfully theirs in a complex system.
Matt Cheng is Founder and General Partner of Cherubic Ventures. Matt is a Taiwanese venture investor, serial entrepreneur, company advisor, and former junior tennis player. Prior to founding Cherubic, Matt co-founded Tian-Ge in China and 91APP in Taiwan, both went public at over $1B+ in market cap. Matt is also a company advisor to Wish and Atomic VC, as well as an early investor in Flexport, Calm, and Hims & Hers.
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Featured image: Irfan Syahmi on Unsplash