If you feel like your head is spinning from the rapid-fire tariff announcements and changes over the last few weeks, you’re not alone.
New rules, rule suspensions, and even more new rules have left the international trade community scrambling to keep up – and have made it difficult for businesses to understand how they’ll be affected.
In a recent webinar, Freightos Head of Research Judah Levine and Clearit Customs Brokers President Adam Lewis sat down to explain the latest in Trump tariffs and their implications for importers and exporters. Read on to learn what’s been happening, what to expect, and how your business can adjust.
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Understanding Trump’s New Tariffs
Trump has announced a variety of new tariffs. Let’s break them down by category.
New Canada and Mexico Tariffs
On February 1st, President Trump announced a 25% tariff on all Canadian and Mexican imports, meant as a punitive measure against fentanyl smuggling and illegal immigration. Declaring these issues national emergencies, Trump used the International Emergency Economic Powers Act (IEEPA) to allow him to implement the tariffs on February 4th.
In addition, the administration also announced the cancellation of the de minimis exemption, which had allowed duty-free imports of low-value goods, for imports from Canada and Mexico.
These changes sent shockwaves through the shipping industry, but by February 3rd, Trump paused them, citing Canadian and Mexican steps to curb illegal activities at the border.
The status of these tariffs will be reassessed on March 4th.
If these rules are implemented, they will likely cause price increases and additional logistical hurdles for businesses importing from Canada or Mexico to the US and vice versa, since Mexico and Canada intend to impose retaliatory tariffs on US exports. The automotive and textile sectors would be particularly hard hit, as supply chains in the US, Canada, and Mexico are deeply interconnected.
New China Tariffs
Along with the Canada and Mexico tariff announcements on February 1st, Trump also announced a 10% increase on all imports from China – on top of any preexisting tariffs – and a cancellation of the de minimis exemption for goods from China.
The 10% increase was not delayed like the Canada and Mexico tariffs; it has gone into effect. However, the de minimis cancellation was suspended on February 5th in order to give US Customs and Border Protection time to implement processes to handle the sudden surge in imports that will suddenly be subject to customs fees and entries.
If and when the de minimis cancellation is implemented, it will have major ramifications:
- Many businesses, including both giants like Shein and Temu and smaller importers, have built their businesses on the ability to import goods quickly and at low cost, avoiding both customs duties charges and the logistical hurdle of clearing customs. Without de minimis, these businesses will need to rethink their supply chains in a serious way.
- The massive volume of imports below the de minimis threshold has taken up a lot of space in air freight in recent years, which has contributed to low capacity and high prices. A sudden decrease in air freight bookings could free up air freight space and lower prices.
In addition, Adam Lewis predicts that in the short term, the de minimis cancelation for China could cause immediate congestion at customs as agents adjust to enforcing new rules.
On top of all of this change, Trump has promised an eventual 60% tariff on all goods from China. This tariff jump could be announced soon after the April 1st deadline the president set for federal agencies to research and make recommendations on the overall state of American trade. So between the current 10% increase, the looming de minimis cancelation, and a potential 60% increase, importers from China face sweeping increases. As Lewis explained, this will likely mean that many businesses need to completely restructure their economic strategies.
New Steel and Aluminum Tariffs
On February 10th, Trump announced a 25% tariff on aluminum imports, up from a previous rate of 10%. This tariff applies to imports from all countries, and any exmptions on aluminum and steel were discontinued. It also applies to additional products derived from steel and aluminum.
These new tariffs are set to go into effect on March 12, 2025.
Other Potential Tariffs
Before taking office, Trump said he would implement a 10-20% global tariff on all imports to the US. However, at the moment it looks like he will apply reciprocal tariffs – on countries that have imposed tariffs on U.S. exports, potentially targeting India, Brazil, Vietnam, and EU countries – instead of a global tariff. Reciprocal tariffs could come soon after the April 1st reporting deadline as well.
The president also recently announced he would impose broader tariffs on goods like computer chips, pharmaceuticals, copper, and more.
Here’s a timeline summarizing the changes we’ve seen in the past few weeks:
The Effects of New Tariffs on SMBs
Currently, the only new tariff in effect is the 10% increase on Chinese goods. But other steep increases are likely coming. Here’s what that could mean for SMBs.
Increased Costs
For SMBs, the most immediate consequence of new tariffs and regulations will be higher total production and import costs. Lewis explained that tariffs will likely also lead to higher compliance costs – especially for goods previously using de minimis once the exemption is suspended for Chinese imports – and elevated ocean freight rates in the period before tariffs go into effect.
These higher costs, for many importers, will mean making decisions including whether to find alternate sourcing locations, whether to pass higher costs on to customers, and whether to invest in new warehousing solutions.
Logistical Challenges
Enforcing new tariffs could cause delays at the border, which means inventory levels and fulfillment schedules could be disrupted.
Additionally, many companies relying on de minimis from China will need to rethink their shipping mode, shifting to ocean freight to balance the new costs of tariffs.
And finally, businesses, especially those shifting from de minimis to formal customs entry, or importing from Canada or Mexico if those tariffs are reinstated, will need to add new processes to ensure they have all the correct documentation to clear customs.
Tariffs are not just a financial burden, they also introduce significant operational hurdles, requiring importers to rethink their documentation and compliance strategies.
– Adam Lewis, President, Clearit Customs Brokers
How SMBs can adapt to the new trade environment
Stay Informed
The first thing Lewis suggests for managing the new rules is to stay updated with government announcements and tariff timelines. Keep the March 4th date, when tariffs on Mexico and Canada might be reassessed, in mind as you plan your supply chain for the coming months.
Diversify Your Supply Chain
Lewis advises exploring different sourcing locations to avoid dependence on a single country for imports. Now is a great time to seek out emerging markets with competitive prices to cultivate a more flexible supply chain.
Enhance Customs and Compliance Preparedness
With new tariffs, customs inspections are expected to intensify. Now more than ever, it’s important to work with an experienced customs broker to make sure your customs paperwork and documentation is accurate and complete ahead of each shipment.
Consider front-loading
In anticipation of new tariffs, companies have been front-loading – that is, importing goods early – for months now. Now is a good time to consider front-loading your goods if your production schedule allows before prices skyrocket. But, as Lewis pointed out, remember to weigh logistical and storage costs against potential tariff spikes to make the best decision for your company.
Leverage Technology and Partnerships
Using digital platforms (we like this global freight marketplace, and we’re not biased) can enhance pricing transparency, optimize routing, and bolster communication with providers. And remember to reach out to your freight forwarder and customs broker to discuss the new changes, keep costs down where possible, and think creatively about the new tariff challenges.
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