Executive Summary
Since his return to the Oval Office, President Trump has implemented a series of customs, tariffs, and trade policies aimed at protecting American industries and addressing international trade imbalances. He is invoking authority under the International Emergency Economic Powers Act of 1977 (“IEEPA”) to address large and persistent trade deficits, currency manipulation, and value-added taxes (“VAT”) imposed by other countries.
This article summarizes the most recent U.S. and foreign trade policy decisions and provides a strategic action plan for businesses to navigate the evolving trade landscape.
U.S. Trade Policy Decisions
Key recent U.S. trade policy actions:
Tariffs on Canada, Mexico, and China: In February 2025, President Trump issued executive orders imposing:
25% tariffs on Canadian and Mexican products (10% for energy imports and potash)
An additional 10% tariff on Chinese imports (on top of existing tariffs)
Effective date: March 4, 2025
Section 232 Investigations: Investigations initiated into copper and wood imports, which may result in additional tariffs.
Universal Import Tariff: On April 5, 2025, a 10% universal tariff was imposed on most imports (except copper, semiconductors, computer chips, lumber, timber, and pharmaceuticals). A 90-day moratorium was later announced on country-specific tariffs, excluding those on China.
Ending De Minimis Treatment: Duty-free de minimis treatment for covered goods from China and Hong Kong ends May 2, 2025.
Foreign Trade Policy Decisions
In response to U.S. tariffs, other countries imposed retaliatory measures:
China: Implemented a baseline tariff of 125% on U.S. imports, along with additional company and product-specific regulations.
Canada:
25% tariff on all U.S. imports not covered under the United States-Mexico-Canada Agreement (USMCA).
25% tariff on non-Canadian/Mexican components of fully assembled cars.
Strategic Action Plan for Businesses
To proactively mitigate risks, businesses should take the following steps:
Corporate Planning
| Action | Plan | Impact |
|---|---|---|
| Assess Tariff Risks | Conduct self-assessments to identify high-impact products and supply chain vulnerabilities. | Quantifies revenue at risk and EBITDA margin erosion. |
| Segment and Stratify Customers/Channels | Analyze customer/channel sales history to understand trends and pricing sensitivity. | Identifies reactions to pricing and market events. |
| Competitive Analysis | Understand competitor and supplier positioning. | Models competitive responses. |
| Utilize Duty Minimization Programs | Leverage foreign trade zones, duty drawback programs, and “first sale for export” strategies. | Directly improves EBITDA margins and cash flow. |
| Restructure Supply Chain Strategy | Nearshoring, reshoring, or diversifying suppliers. | Quantifies cost-benefit for EBITDA and working capital. |
| Engineer Products for Lower Tariffs | Modify product designs for better tariff classifications. | Reduces COGS and improves margins. |
Supply Chain / Operations
| Action | Plan | Impact |
|---|---|---|
| Renegotiate Supplier Contracts | Collaborate on tariff cost-sharing and pricing terms. | Improves gross margins and working capital. |
| Renegotiate Customer Contracts | Adjust contracts to account for increased costs. | Balances customer retention and margin protection. |
| Optimize Inventory Management | Stockpile strategically or adjust inventory. | Mitigates risks and avoids future price hikes. |
| Diversify Suppliers | Source from multiple countries with favorable trade terms. | Reduces exposure to tariffs and supply chain risks. |
| Leverage Free Trade Agreements (FTAs) | Use agreements like USMCA to reduce tariffs. | Reduces costs and improves sourcing flexibility. |
| Implement Foreign Trade Zones (FTZs) | Defer or reduce tariff payments through FTZs. | Enhances cash flow and reduces landed costs. |
Other Financial Strategies
| Action | Plan | Impact |
|---|---|---|
| Implement Cost Reduction Initiatives | Streamline operations via efficiencies and automation. | Offsets tariff-related cost increases. |
| Adjust Pricing Strategies | Reflect higher costs strategically while managing customer expectations. | Maintains profitability while minimizing demand risks. |
Summary
The tariff and trade landscape continues to shift rapidly, requiring companies to stay agile and informed. Although regulations, tariffs, and trade barriers may change frequently, adopting a comprehensive strategic action plan allows businesses to protect profitability and adapt to new market conditions.
SingerLewak is ready to assist businesses in navigating these complex and evolving trade challenges.
