The scope of new import tariffs and regulations portends significant operational risks and disruptions.  It is easy to imagine numerous companies that depend on imports for production purposes are facing a new set of challenges.  This is when companies are at risk of significant disruptions.  However, let us hope that many companies are prepared — the disruption caused from the 2020 Pandemic challenged companies to develop alternative supply chain options and may come to the rescue in this fast changing situation. 

We have seen the potential for disruption came up when President Trump threatened to impose 25 percent tariffs on imports from Canada and Mexico, only to back down after securing concessions from both countries. Recently, the Trump Administration has embraced the idea of reciprocal tariffs — whatever is imposed on US exports, we will impose on imports.

As an initial step, the Trump Administration issued two orders adjusting imports of steel and aluminum into the United States.  The new action expands Section 232 tariffs by ending all country exemptions, phasing out the specific product exclusion process and terminating all General Approved Exclusions (GAEs).  In addition, the Administration actions raised the aluminum tariffs from 10 to  25 percent, added downstream products to tariff coverage; and created an exemption process for imported derivative articles made from steel and aluminum in the United States.

With these and more expected tariffs, United States Customs and Border Patrol (CPB) will be aggressively pursuing importers that attempt to manipulate country-of-origin regulations to circumvent higher tariffs. In this area, companies may seek to avoid Chinese import fees by designing routine assembly operations to avoid imposition of Section 301 duties.  Imports from China, Southeast Asia, Mexico and Canada will be targeted for enforcement.  In the past year, Customs has heightened enforcement of the Uyghur Forced Labor Prevention Act (UFLPA), and this will continue to be used for leverage against the Chinese. Supply chain mapping and assessments should be on every trade compliance officer’s to-do list.

Global companies are facing a fast-evolving set of import risks, some of which have been noted already above.

Companies should expect rising tariffs on imports from China, Canada, Mexico, Southeast Asia and other key areas, depending on your specific industries. The amount of these tariffs could be significant. 

In addition, the Trump Administration is likely to impose significant duties against imports from China and Vietnam based on anti-dumping and countervailing duty orders.  U.S. businesses should be pursuing and planning to initiate proceedings where they can establish unfair pricing or subsidized imports. These filings should be monitored for potential impact.

Further, companies have to prepare for renegotiation of the U.S.-Mexico-Canada Agreement (USMCA) before the 2026 date.  The Trump Administration may push for concessions in 2025. Already, CPB has been enforcing complex regulations for origin and content requirements, and this level of scrutiny will increase, especially with respect to items that originate in China and then incorporated into other items that are then imported from Mexico.

Customs enforcement is a growing risk and companies need to invest in their import operations, including Automated Commercial Environment (ACE) data accuracy and audits, and other customs compliance areas, particularly review of import documentation, country of origin determinations, tariff classifications, valuation methods, tracking and correct payment of duties.

Companies need to leverage opportunities to reduce costs and gain competitive advantages while minimizing enforcement risks. In a high-tariff environment, companies needs to look for opportunities to avoid duties through free-trade zones, proper classifications, bonded warehouses, and other strategies to increase savings. Additionally, alternative suppliers from lower tariffed areas should be considered as tariff rates from well-established suppliers in higher cost countries increase.