Companies brace for the return of reciprocal tariffs

President Trump’s mercurial tariff policies have businesses everywhere rethinking their supply chain strategies

3 key takeaways from this article: 

• America’s reciprocal tariffs have been delayed until August 1st, prolonging uncertainty and leaving businesses bracing for a byzantine set of new rules on global trade.
• Foreign countries are scrambling to agree to new trade deals. Those deals typically feature exceptions and carve-outs, making the tariff situation even more complex. 
• Companies need to adjust to the new normal in global trade by making their supply chains more resilient and their operations more nimble.

Great read for: Supply chain managers, financial executives, business planners and strategists

What will be the fate of U.S. President Donald Trump’s reciprocal tariffs, and what could it mean for the U.S. economy? 

Three months ago, at exactly 12:01 am on April 9, President Trump’s reciprocal tariffs took effect against America’s global trading partners — a dizzying and seemingly arbitrary array of tariff levels unique to each country, from a high of 50% on the small African country of Lesotho to a low of 10% on countries ranging from Australia to Qatar. 

Later that same day, in a surprising reversal, President Trump paused the reciprocal tariffs for 90 days. In their place, he instituted a blanket 10% tariff rate on imports from all countries (with exceptions for China, Mexico and Canada — more on that later). 

But President Trump also warned that, unless countries signed new trade deals with the United States, the reciprocal tariff rates would come back into effect on July 9. Those tariffs have been postponed yet again, until August 1st, but they continue to hover over the economy like a storm cloud. Repeated postponements, however, raise the question of how firm this new deadline will prove to be.

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“For the last three months, businesses were given a temporary reprieve for their global supply chains,” says ImportGenius President Christopher Schafer. “With a stable tariff rate of 10% on most countries, businesses have been able to adjust and Monday’s delay extends the grace period. But if they do not use this time to plan for the return of higher tariffs, they will likely find themselves hustling yet again to diversify their supply chains and find new sources from a broader array of countries.”

Reciprocal tariffs scramble the math on global trade

Under reciprocal tariffs, a wide array of differential tariff rates will apply to countries around the world. In some cases, the impact will be negligible: for instance, there is a 41% reciprocal tariff rate on the Falkland Islands, but U.S. seaport records in the ImportGenius database show no shipments from the Falklands in the last 20 years. 

In other cases, however, the impact will be substantial. Below are the reciprocal tariff rates for all of America’s trading partners that account for more than 1% of total American imports.

The reciprocal tariff régime

Reciprocal tariffs on America’s largest trading partners

Source: BBC. 

*China’s tariff rate is made up of a 10% baseline reciprocal tariff, a 20% fentayl tariff, and the 25% tariff on most Chinese goods in place since President Trump’s first term in office. Source: Dezan Shira and Associates. 

It’s important to recognize that the tariff situation is now a fast-changing one. Some countries on this list — the United Kingdom, and Vietnam — have recently struck preliminary trade deals with the United States. Their updated tariff rates appear in the table, though each deal features exemptions and exceptions that could make them even more difficult to navigate. More trade deals are expected in the days and weeks ahead, which in the short term merely adds further complexity to the global trade picture.

Meanwhile, the two major trading partners missing from this list — Mexico and Canada — are not subject to reciprocal tariff rates. But goods from those two countries are subject to a 25% tariff rate for anything that does not meet the requirements under the United States Mexico Canada Agreement, which President Trump negotiated in his first term. Note that Canadian exports of potash and energy are subject to only a 10% tariff rate. 

Finally, regardless of the status of any trade deals, there are additional tariffs that apply to specific categories of goods from all of the countries listed above on top of their reciprocal rate. The most notable example is the 50% tariff on steel and aluminum imports, and on the steel and aluminum content of most home appliances, no matter their country of origin. 

How to protect your business against reciprocal tariffs 

Reciprocal tariffs have the potential to create major headaches for American importers, particularly those that source goods, raw materials or other inputs from overseas. A shipment of goods from Vietnam incurs nearly double the tariff rate as the exact same shipment coming from India. There are also ripple effects that flow from these tariffs, notably for shipping costs, as US ports and logistics providers intensify their competitiveness to maintain or increase market share. 

Many companies have resorted to short-term strategies to mitigate tariff exposure, such as stockpiling and warehousing goods on American shores now to avoid higher tariffs later. But that approach may have run its course: once stocks run out, new shipments will be subject to the reciprocal tariffs in effect. Business leaders need a longer-term approach that can protect their businesses from higher and ever-changing tariff levels, which is quickly becoming the new normal in the U.S. economy. 

“U.S.-based businesses need to re-think their approach to multiple aspects of their business with reciprocal tariffs in effect,” says Schafer. “Should they be relying heavily on specific suppliers when lower tariff rates are available through other countries? How quickly can they set up alternative supply routes? Can their logistics providers manage the changes?”

Answering these questions requires the kind of up-to-date data and insight that allows companies to find, assess, and vet potential new suppliers in different parts of the world. ImportGenius updates shipping data from all U.S. seaports daily at the manifest level. Users can search for the specific products they need and receive a list of specific suppliers by country of origin. And the new ImportGenius AI feature can generate instant company profiles that details suppliers’ customers, competitors, financials and key contacts. 

“Companies can’t afford to just sit back and let tariffs happen to them — they need actionable information to protect their business and reduce their tariff exposure,” says Schafer. “Any business that isn’t operating with this kind of information is now behind the market.”