The Recent US Tariffs and How to Navigate Them

The recent US tariffs have caused waves in international trade, with global uncertainty as businesses navigate reciprocal tariffs, contingency suppliers, and the nuances of customs regulations with every new option.

In this article, we provide an overview of the US tariffs, their impact on key trade regions, and what you should do to thrive as the landscape shifts.

Contents:

• An overview of the US tariffs
• Exceptions
• The risks to supply chains
• How to navigate the US tariffs

The US’ New Tariffs – an Overview

On the 20^{th of} January, the US Administration announced its America-First Trade Policy, indicating their intention to review all trade agreements and their effect on the economy and national security.

Outlined in this were a few areas of consideration, which we can broadly simplify into:

• National dependence on foreign suppliers and the associated risks.
• Unbalanced trade value with third countries and the economic impact of these deficits.
• Unfair trade practices or restrictions on US goods.

There is also a section outlining a review of the 2020 Economic and Trade Agreement Between the Government of the United States of America and the Government of the People’s Republic of China, which is also called the PRC-US Economic and Trade Agreement or the “Phase One” deal.

The aim of the policy is to incentivise US companies to reshore manufacturing, and to improve resiliency and security by reducing dependency on other countries.

As a result, America announced on the 2^nd of April – dubbed Liberation Day – that there would be a 10% tariff imposed on all US imports, with specific countries also incurring an additional tariff rate.

Following an initial market response, President Trump announced a 90-day pause for many of the additional tariffs – maintaining the 10% and some of the country-specific tariffs.

Exceptions

To reduce the impact of the US tariffs do not hinder domestic welfare, the Administration has excluded many commodities. These include, but are not limited to:

• Essential foodstuffs and pharmaceuticals
• Section 232* goods, such as aluminium and steel
• High-priority raw materials and minerals, such as copper and those used in semiconductors
• Precious metals and bullion

*Section 232 refers to the Trade Expansion Act 1962, which allows presidents to impose trade tariffs on goods in the interest of national security.

There are also exceptions for so-called “column two” duty-applicable goods, which are already covered by regulations relating to countries with which the US does not have regular trade relations. For example, Belarus, Russia, and North Korea. This is why you will not see these countries listed for reciprocal tariffs.

The risks these US tariffs expose supply chains to

Changes to tariffs and other trade regulations are always a risk for traders. However, amendments on this scale present a domino effect across the globe – where entire industries and trade lanes can shift in response to opportunity or threat.

For example, China and Hong Kong to US airfreight volumes were down 19% Year-on-Year in week 23, following a pattern of reduced volumes YoY since the announcement of tariffs and the removal of the de minimis threshold. Other regions agreed a 90-day break on higher reciprocal tariffs, keeping the 10% minimum rate, and are taking advantage of the grace period by restocking.

As the situation unfolds, here are some of the risks that the US tariffs create for traders:

• Reduced/eliminated profits: An obvious one with the import duty rate going up, but it’s not only the importer who could lose out. If the shipment has been sent using the Delivered Duty Paid (DDP) Incoterm, then the seller will be the one left with the bill.
• Storage or redirection fees: If you have been unable to cancel an order, then you might have placed goods in storage at origin to prevent shipping goods. Alternatively, you may be leveraging a customs warehouse in the US whilst awaiting re-export to a viable country.
• Flooding of the market: As sellers seek to prevent overstocking or avoid a drop in sales, they may opt to reduce prices to other countries to keep profits moving. This could also result in additional anti-dumping measures in the short term as countries react.
• Supply chain costs and stagnation: As your suppliers react to their price increases, components and manufactured goods could become more expensive – assuming that production is able to continue without interruption.

Although the effects will mostly be felt by traders within the US and those trading with them, there will be a wider impact as contingency suppliers are sought, shipping capacity adjusts to new demands, and supply chains work to understand the financial and logistical implications of these changes.

Navigate the US tariffs in confidence with the Customs Support Group

Helping you adapt to tariffs and other changes to the trading landscape is what we do at CSG. Here are our recommendations for moving forward as this situation with the US tariffs develops:

• Check your classifications: By starting with your goods classification, you can understand how the US tariffs impact your goods, and how pivoting to trading with another country will affect your margins – as well as how it will affect your import or export declaration.

Related: How CSG helped turn a tariff error into an opportunity.

• Check how your competitors are affected: If you know that your commodity is also imported to the US from another country, or that your competitors import from the US, find out how the market will be impacted. Their price increase could be bigger than yours.
• Develop your data visibility: If you haven’t been able to get a quick snapshot of the numbers for your calculations, then now is the time to create that resource moving forward – preventing costly delays and long-term inefficiency in your supply chain.
• Get a customs quick scan: Assess your customs flows and identify areas where you can reduce risk, streamline processes, and reduce costs so that your operation can adjust to your business’ needs with minimal impact on efficiency.
• Check your bonded goods: If you are using customs bonded warehousing and are currently holding US-originating goods, assess whether these can be released into free circulation to lower your tax bill. Check when tariffs will be implemented so you can plan for deadlines.

International customs and trade can throw unexpected challenges our way, but the Customs Support Group is here to help you safeguard and strengthen your supply chain. Our experts across Europe provide local and global expertise in customs regulations, supply chain visibility, and logistical efficiency – creating value beyond your border movements

If you want to find the opportunity at the eye of this US tariff storm, prepare your supply chain for the next challenge, or simply unlock the everyday value hidden within your customs operation – contact us for a specialist consultation.