Step-by-Step Guide

This tutorial shows how to use the new Percentage-Based and Rate attributes in SC Navigator to model tariffs on imported goods.

Step 1: Define ‘Tariffs’ as a Custom Objective

• Click on ‘Download Template’ from the input data dialog.

• Define ‘Tariffs’ as a custom objective.

• Mark the box that says ‘Percentage Based’.

Navigate to the Custom Objectives sheet in your SC Navigator model. It should look like this.

Step 2: Define Tariff Rates and Value in the Transport Cost Sheet

1. Open the Transport Cost sheet.

2. For each relevant lane (e.g., from country of origin to the US entry point), locate the Rate field.

3. Enter the tariff percentage as a decimal.

Example:

• China → US = 0.4 (40%)

• Thailand → US = 0.25 (25%)

• Mexico → US = 0.0 (0%)

Step 3: Ensure Product Value is Defined

On the Transport Cost sheet (or relevant input sheet), confirm that Value per unit of product is defined.
This is the declared customs value of goods, which tariffs are applied against.

Result:
Tariffs will now be calculated as:

Custom Objective Cost = Volume × Value × Rate

Note:
If you have a tariff cost depending on your unit of measure (not included in the rate), you can capture that in the attribute “Tariffs - Cost per UOM”. 

In that case, the calculation is:

Custom Objective Cost = Volume × Value × Rate + Volume × Tariffs Cost per UOM

Step 4: Run the Optimization

1. Save your updates and run the Network Optimization.

2. Review results in the Cost Breakdown output.

Result:
Tariff costs will now be included as part of the total transport and landed cost.
The model provides a more realistic view of total costs, including tariffs, and highlights opportunities for sourcing optimization.

Step 5: Compare Scenarios Across Countries

• Create scenarios with different sourcing mixes (e.g., shifting volume from China to Mexico).

• Re-run the optimization to compare total landed cost under different tariff structures.

Result:
You can clearly see how tariffs impact sourcing decisions and identify the most cost-effective country mix.

Step 6: Apply Best Practices

• Update tariff rates regularly to reflect changes in trade policy.

• Use Scenario Navigator to test what-if cases (e.g., tariffs increasing or decreasing).