Updated March 6, 2025:

After speaking with Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau today, President Trump has paused tariffs on Mexican and Canadian goods that fall under the United States-Mexico-Canada Agreement (USMCA). This reprieve will expire on April 2.

According to White House estimates, about 62% of Canadian imports—primarily energy products tariffed at 10%—and about 50% of Mexican imports will still be subject to the IEEPA tariffs implemented on Tuesday.

Earlier, Trudeau had stated that his government was in “discussions” about potentially delaying a second round of retaliatory tariffs on the United States. But “we will not suspend Canadian tariffs because the American made a change yesterday,” Trudeau added. “Our goal remains to get these tariffs, all tariffs removed.”

Updated March 5, 2025:

Today, the Trump administration announced a one-month tariff exemption for automobile imports that comply with the United States-Mexico-Canada Agreement (USMCA), a trade deal negotiated by President Trump during his first term. It is unclear whether the exemption applies to vehicles alone, or both vehicles and auto parts.

President Trump’s exemption announcement followed a phone call with the Big Three automobile manufacturers—General Motors, Ford, and Stellantis (formerly Chrysler). These automakers’ supply chains cross North American borders several times, with major operations in the U.S., Mexico, and Canada.

President Trump advised exempted automakers to use the one-month reprieve to “start investing, start moving, shift production here to the United States of America, where they will pay no tariff. That’s the ultimate goal,” White House Press Secretary Karoline Leavitt said.

Leavitt also signaled that the administration will move forward with reciprocal tariffs on April 2.

Updated March 4, 2025:

At 12:01 a.m. ET today, new tariffs went into effect. Details are as follows:

• 25% IEEPA tariff on goods from Mexico, excluding humanitarian shipments and informational materials
• 25% IEEPA tariff on goods from Canada or one of the 13 province/territory codes reported on entries, excluding humanitarian shipments and informational materials
  • 10% IEEPA tariff on Canadian energy and mineral products (instead of the 25% tariff)
• 20% IEEPA tariff on goods from China/Hong Kong
  • No changes to exemptions under 9903.01.21, 9903.01.22, and 9903.01.23. These exemptions include humanitarian shipments; informational materials; and goods loaded onto a vessel at the port of loading or in transit on their final mode of transport before February 1, and entered for consumption or withdrawn from warehouse for consumption between February 4 and March 7.

These tariffs are not eligible for duty drawback. Additionally, the de minimis exemption will remain in effect for Canada, Mexico, and China/Hong Kong until “adequate systems are in place to fully and expeditiously process and collect tariff revenue.”

Retaliatory measures: Canada announced a 25% tariff on C$30 billion in U.S. goods, effective immediately; tariffs on another C$125 billion in U.S. goods will be implemented in 21 days. Mexico intends to announce its own retaliatory measures on Sunday. And China’s finance ministry announced a 15% tariff on U.S. chicken, wheat, corn, and cotton, along with a 10% tariff on U.S. sorghum, soybeans, pork, beef, aquatic products, fruits, vegetables and dairy products.

Flexport’s trade advisory experts are closely monitoring new developments, and will continue to keep clients updated with the latest news and guidance. Please reach out to your account manager or advisory@flexport.com if you have any specific questions.

Updated March 3, 2025:

Today, President Trump signed an executive order that will raise the 10% universal tariff on China and Hong Kong to 20%. Additionally, 25% tariffs on Canada and Mexico and a 10% tariff on Canadian oil are expected to be implemented tomorrow, now that the 30-day exclusion period has ended. However, we have not seen an official CSMS from Customs indicating whether they will be able to turn these on overnight.

Yesterday, President Trump also amended his February 1 Canadian and Mexican tariff executive orders. Per these amendments, Canadian and Mexican goods will continue to be eligible for de minimis treatment until “adequate systems are in place to fully and expeditiously process and collect tariff revenue.” This amendment is already in effect for China/Hong Kong goods.

Updated February 27, 2025:

Today, President Trump stated that 25% tariffs on Canada and Mexico will take effect on March 4, 2025. The duties were initially set to be implemented earlier this month, but were postponed for 30 days after President Trump agreed to terms with both countries.

President Trump added that he intends to impose an additional 10% tariff on China, also on March 4. The proposed duty, on top of the existing 10% tariff on China, would mean additional tariffs of 20% on all Chinese imports.

Finally, President Trump said he would also impose a 25% tariff on imports from the EU—on cars and other goods—“very soon.”

Flexport’s trade advisory experts are closely monitoring new developments. We will update clients on the proposed tariffs as soon as an executive order or a notice in the Federal Register is published.

Updated February 24, 2025:

On Friday, the Office of the United States Trade Representative (USTR) published a proposal in the Federal Register that would impose lofty fees on Chinese shipping companies and all Chinese-built ships entering U.S. ports.

The proposal, which contains a number of potential fee structure options, largely targets:

• All China-based vessel operators
  • Up to $1 million per U.S. port call, or up to $1,000 per net ton of vessel capacity
• Any vessel operator with a Chinese-built ship in their fleet
  • Up to $1.5 million per U.S. port call, or fees ranging from $500,000-$1 million (depending on the percentage of Chinese-built vessels in the fleet)
• Any vessel operator with newbuild vessel orders in Chinese shipyards
  • $500,000-$1 million per U.S. port call, depending on the operator’s percentage of vessel orders ordered in or delivered by Chinese shipyards over the next 24 months

According to the proposal, operators with a U.S.-built vessel may obtain a refund of up to $1 million per U.S. port call. Currently, there are 18 U.S.-built vessels, with an additional 3 on order.

The potential cost impact: Container ships typically make around 2-3 U.S. port calls per loop, meaning fees could add more than $3 million to each trip. For context, this is significant relative to the typical revenue of $10-15 million per journey. Some carriers and operators (for example, those with operations in Canadian ports) may find opportunities to avoid these fees through network redesign. For now, it will be difficult to predict how this will impact individual companies, as it depends on the carrier mix behind the supply chain and the strings they ship on.

Additionally, the proposal lays out a schedule for expanding the transport of U.S. exports on U.S.-flagged vessels:

• ≥ 1% of U.S. exports per year, effective on the date of action
• ≥ 3% of U.S. exports per year, effective two years after the date of action
• ≥ 5% of U.S. exports per year, effective three years after the date of action
• ≥ 15% of U.S. exports per year, effective seven years after the date of action

It is currently unclear whether these volumes would be measured in tonnages or in monetary value.

At this point in time, we also have no commentary from China or carriers.

USTR is currently seeking public comments on the above proposal; all comments are due on March 24, 2025. USTR is also seeking comments on the America First Trade Policy Presidential Memorandum and Reciprocal Trade and Tariffs Presidential Memorandum until March 11.

If your business is interested in submitting comments on either of these proposals, Flexport’s trade advisory experts are here to help—reach out to advisory@flexport.com.

Watch CEO Ryan Petersen break down the proposal on NewsNation:

Updated February 13, 2025:

Today, President Trump signed a memorandum directing his trade advisors to determine reciprocal tariff levels for all countries that impose tariffs and taxes on U.S. exports, as well as any other barriers to trade with the United States. Trump’s advisors will complete their assessment by April 1.

Afterwards, reciprocal tariffs are expected to be levied on a “country-by-country” basis, beginning with those the U.S. has the largest trade deficits with. The tariffs will be implemented in “Trump time, which is to say very rapidly,” a senior White House official said.

The proposal also targets the EU’s value-added tax (VAT), which the Trump administration will view "as a tariff." Peter Navarro, Trump’s senior counselor for trade and manufacturing, singled out the VAT system as the “poster child” for unfair trade practices—one that “almost triples the EU’s tariff rate on American exports.”

Reciprocal tariffs would also particularly impact India and Japan. According to data from the U.S. Trade Representative (USTR), India currently charges a 60% tariff on automobiles and flowers, and a 50% tariff on apples, corn, and motorcycles. And Japan, despite charging minimal tariffs on U.S. exports, enforces “high structural barriers” to trade.

President Trump also intends to levy tariffs on automobiles, semiconductors, and pharmaceuticals. These duties will be “over and above” reciprocal tariffs, and will be imposed later on.

Updated February 11, 2025:

Yesterday evening, President Trump announced a 25% tariff on all steel and aluminum imports, set to take effect on March 12. Tariffs on these metals “may go higher,” he added, and will not be eligible for duty drawback. The complete product list subject to the upcoming tariff is pending, and will be published in the Federal Register.

“Essentially, we’re putting on a 25% tariff, without exception, on all aluminum and all steel, and it’s going to mean a lot of businesses are going to be opening in the United States,” Trump said yesterday.

Despite initially stating there would be no exceptions to the upcoming tariff, Trump has agreed to “give consideration” to an exemption for Australia.

“We have a surplus with Australia, one of the few. They buy a lot of airplanes,” Trump said. “That’s something that we will give great consideration to.”

Trump had initially imposed tariffs on steel and aluminum during his first administration. Yesterday’s announcement eliminates exemptions he’d previously granted to major suppliers like Canada and Mexico, along with product exclusions and duty-free quotas. It also raises the tariff on foreign aluminum from 10% to 25%.

Canada is the U.S.’s biggest supplier of these metals, comprising about 23% of U.S. steel imports and nearly 60% of U.S. aluminum imports in 2024. Mexico, another major supplier of steel to the U.S., accounted for about 12% of U.S. steel imports in 2024.

The upcoming tariff also largely targets China, the world’s biggest supplier of steel and aluminum. Though China exports very little steel directly to the United States, some Chinese steel does enter the U.S. indirectly via countries that buy the metal from China and re-export it to other markets. And according to the Trump administration, China—the U.S.’s fifth-largest supplier of aluminum—has circumvented existing tariffs on aluminum by moving some degree of manufacturing elsewhere.

“Foreign producers have shifted assembly or manufacturing operations to third countries, such as Mexico,” the executive order reads. “For example, Chinese producers are using Mexico's general exclusion from the tariff to funnel Chinese aluminum [into] the United States through Mexico while avoiding the tariff.”

CBP will prioritize reviews of imported steel and aluminum, and will impose maximum penalties for any misclassification found to be circumventing duties.

Lastly, Trump stated that he’d likely make a formal announcement today or tomorrow concerning reciprocal tariffs. These reciprocal tariffs would take effect “almost immediately,” though he added that some trading partners might not be impacted—only “the ones that are taking advantage of the United States.”

Updated February 7, 2025:

Today, President Trump signed an executive order that will delay the elimination of de minimis on imports of Chinese-origin products until the Secretary of Commerce confirms that “adequate systems are in place to fully and expediently process and collect tariff revenue.” The executive order does not indicate how long the delay will last. Flexport will monitor the situation and CBP's progress in implementing such systems and update you as more becomes available.

Updated February 5, 2025:

Last night, Flexport CEO Ryan Petersen appeared on NewsNation to break down the latest on the Trump administration's tariff and trade policy changes. Watch the full clip below for insight into the 10% tariff on Chinese imports, the suspended de minimis exemption for Chinese imports, potential tariffs on the EU, and the Panama Canal:

Updated February 4, 2025:

Last night, China announced counter-tariffs on U.S. goods, including a 15% tariff on coal and liquified natural gas and a 10% tariff on crude oil, farm machinery, pickup trucks, and large-engine cars. These tariffs are set to take effect on February 10.

Additionally, China announced an anti-monopoly investigation into Google, placed export controls on 25 kinds of rare metal products, and added PVH Corp (the holding company for Calvin Klein, Tommy Hilfiger, and other brands) and biotechnology company Illumina, Inc. to its “unreliable entity” list. The list allows China to take punitive action against foreign entities.

Meanwhile, U.S. Customs and Border Protection (CBP) programmed special HTS codes to assign the additional 10% tariff to Chinese-origin goods last night. With regard to suspending the de minimis rule for Chinese-origin goods, CBP stated, “Requests for de minimis entry and clearance for ineligible shipments will be rejected. The filer/importer has the option of filing an appropriate formal or other informal entry and paying all applicable duties, taxes and fees.”

CBP added that if the manifest was submitted or an Entry Type 86 was created before 12:01 a.m. ET on February 4, but the shipment arrived after that time, the merchandise would no longer be eligible for de minimis exemption. The agency said any pre-arrival clearance for these shipments will be cancelled after 12:01 a.m. ET.

Given these process changes, the Flexport team is working closely with customers shipping in impacted trade lanes or who were utilizing the de minimis exemption to ensure compliance, minimize disruption, and mitigate costs.

Finally, if you missed Flexport CEO Ryan Petersen’s tariff breakdown on CNBC’s Mad Money with Jim Cramer yesterday, check out the full conversation below:

Updated February 3, 2025:

The U.S. and Canada have agreed to delay the 25% tariff on Canadian imports for at least one month, with Canadian Prime Minister Justin Trudeau announcing plans to reinforce the U.S.-Canada border and ramp up efforts to stop the flow of fentanyl.

“Canada is making new commitments to appoint a Fentanyl Czar, [and] we will list cartels as terrorists, ensure 24/7 eyes on the border, [and] launch a Canada-U.S. Joint Strike Force to combat organized crime, fentanyl, and money laundering,” Trudeau wrote on X.

The announcement comes just hours after the U.S. and Mexico also reached a deal to delay a 25% tariff on Mexican imports for one month, following an agreement on border security.

“[Mexican President Claudia Sheinbaum] agreed to immediately supply 10,000 Mexican Soldiers on the Border separating Mexico and the United States,” President Trump wrote on Truth Social this morning. “These soldiers will be specifically designated to stop the flow of fentanyl, and illegal migrants into our Country.”

Prior to today’s agreements, both Mexico and Canada had threatened to levy retaliatory tariffs on the United States. Trudeau in particular had threatened a retaliatory 25% tariff on $107 billion of U.S. goods.

The remaining tariff announced on Saturday—a 10% tariff on Chinese goods—will still take effect on Tuesday, February 4. Trump imposed Saturday’s executive order via the International Emergency Economic Powers Act (IEEPA), which enables the president to regulate international commerce during a declared national emergency.

Note that only goods whose country of origin is affected by the tariffs will be impacted—not goods that only transit through affected countries. Additionally, there won’t be any retroactive tariffs before February 4, but anything after that date may be subject to retroactive tariffs if the systems aren’t in place to implement immediately.

As part of the executive orders, Trump has also suspended the de minimis exemption for imports from China (Mexico and Canada deferred), citing concerns that the exemption has been exploited to smuggle fentanyl and its precursor chemicals into the United States. As of now, we are not aware of any exemptions or products excluded—meaning both businesses and citizens will be impacted.

Finally, the executive order also suspends duty drawback on these additional duties for goods originating from China (Mexico and Canada deferred). The duty drawback suspension is limited to new tariffs introduced by the executive order. Regarding these tariffs specifically, companies will not be able to claim refunds on the additional duties paid for imported goods that are later exported or destroyed; however, they may still recover the standard duties, including Section 201 or Section 301 duties. Flexport can conduct a full ACE analysis to determine which companies might be entitled to receive refunds from CBP through duty drawback.

Updated on February 1, 2025:

President Donald Trump appears to have followed through with his promise by imposing a 25% tariff on imports from Mexico and Canada, along with an additional 10% tariff on imports from China, through an executive order signed on Saturday. Under the executive order, White House officials announced that Canada’s "de minimis" exemption, which previously allowed shipments valued under $800 to enter the U.S. duty- and tax-free, will no longer apply.

“I made a promise on my Campaign to stop the flood of illegal aliens and drugs from pouring across our Borders,” said President Trump on X. “We need to protect Americans, and it is my duty as President to ensure the safety of all.”

However, Canadian energy imports, including oil, natural gas, and electricity, will face a lower 10% tariff to “minimize any disruptive effects on gasoline and home heating oil prices,” according to a senior administration official.

The Canadian tariffs will take effect on Tuesday, while the start dates for the Mexico and China tariffs remain unclear. However, the exact details may still change before the Tuesday deadline, and nothing will be official until it is in the Federal Register.

Meanwhile, the tariffs signed on Saturday also include a clause allowing the U.S. to raise tariffs further if any country retaliates, which in any case, could potentially escalate into a trade war. As the U.S.'s largest trading partner, Canada is expected to push back.

“This decision will harm Canadians and Americans alike, and strain the important relationship and alliance between our two nations,” Alberta Premier Danielle Smith wrote on X following the tariff announcement on Saturday, adding that Alberta will continue to persuade the U.S. to “lift all tariffs on Canadian goods as soon as possible.”

Updated January 31, 2025:

Today, White House Press Secretary Karoline Leavitt denied a Reuters report that stated the 25% tariff on Canada and Mexico would take effect on March 1.

“I saw that [Reuters] report, and it is false,” Leavitt told reporters. “Tomorrow, the president will be implementing a 25% tariff on Mexico, a 25% tariff on Canada, and a 10% tariff on China. These are promises made and promises kept by the president.”

It remains to be seen whether the 25% tariff will apply to oil imports.

“I don’t have an update or readout on the [tariff] exemptions,” Leavitt said. “But the tariffs will be out for public consumption in about 24 hours, so you can read [about] them then.”

Updated January 30, 2025:

Earlier today, President Trump told reporters he intends to follow through on his plans to impose a 25% tariff on Canadian and Mexican goods on February 1. These tariffs “may or may not rise with time,” he said.

Additionally, President Trump will decide by tonight whether the 25% tariff will also apply to oil imports.

“We don’t need the products that they have. We have all the oil that you need. We have all the trees you need,” he told reporters.

Crude petroleum and lumber are among Canada’s top exports to the United States. In 2023, Canada and Mexico supplied more than 71% of U.S. crude oil imports, with nearly 60% of U.S. crude oil imports from Canada alone.

As for the potential 10% tariff on Chinese goods, Trump has yet to establish a clear timeline for implementation. Still, he reiterated his intent to impose the punitive duty, citing the “fentanyl they’re sending into our country.”

“With China, I’m also thinking about [tariffs],” he said today. “China is going to end up paying a tariff for [fentanyl], and we’re in the process of doing that.”

Updated January 28, 2025:

President Trump told reporters he intends to impose universal tariffs “much bigger” than 2.5%—just hours after he vowed to levy tariffs on semiconductors, steel, aluminum, pharmaceuticals, and copper.

Recently, the Trump administration has also discussed potential tariffs on Danish goods in light of Trump’s quest to purchase Greenland, as well as new tariffs and sanctions on Russia if the country fails to end the conflict in Ukraine.

Additionally, over the weekend, President Trump threatened Colombia with emergency tariffs after Colombia refused to accept deported immigrants on U.S. military planes. Following a quick standoff, the Colombian government agreed to the Trump administration’s terms.

Finally, the Senate Committee on Commerce, Science, and Transportation convened this morning to discuss the Panama Canal’s role in U.S. trade and security. At last week’s inauguration, Trump reiterated his intention to “take the Panama Canal back,” citing China’s excessive influence on the key waterway and lofty fees faced by U.S. ships.

For expert insight into new potential tariffs and trade policy changes, join us at our webinar next Thursday (February 6), where we’ll cover Trump’s proposed tariff schedule, impacts on NAFTA and USMCA, and strategies for managing costs and supply chain disruptions. Register here.

Updated January 22, 2025:

President Trump stated he plans to impose a 10% tariff on Chinese goods as soon as February 1, and also intends to levy tariffs on the European Union.

“We’re talking about a tariff of 10% on China, based on the fact that they’re sending fentanyl to Mexico and Canada,” he said. “Other countries are big abusers also. We have a $350 billion deficit with the European Union. They treat us very badly, so they’re going to be in for tariffs.”

Additionally, federal agencies will have until April 1 to complete their review of existing tariff and trade policies. That gives China, Canada, Mexico, and others more than two months to prepare for any changes and potentially negotiate with the Trump administration.

Updated January 21, 2025:

Yesterday, on the first full day of President Trump’s second term, there were no official announcements on tariffs. However, at a press conference last night, Trump stated that he may levy tariffs on both Canadian and Mexican goods on February 1, 2025, and that he may still impose universal tariffs.

“We’re thinking … 25% [tariffs] on Mexico and Canada, because they’re allowing vast numbers of people to come in, and fentanyl to come in,” President Trump said during yesterday’s press conference.

Additionally, Trump plans to issue an executive order instructing federal agencies to study a wide range of tariff and trade policies. U.S. trade with China, Canada, and Mexico is a key focus area for these studies, the Wall Street Journal reported—namely, compliance with the U.S.-Mexico-Canada Agreement and the U.S.-China Phase One trade deal President Trump signed during his first term. Federal agencies have also been instructed to study counterfeit goods policies and the use of the de minimis exemption in general.

This order could lay the groundwork for a number of potential new tariffs and other trade policy changes in the months to come.

As an aside, President Trump ordered a 60-day regulatory freeze on new rulemaking for all federal agencies, which would impact the two notices of rulemaking on de minimis shipments announced last week.

Updated January 14, 2025:

Incoming President Trump’s economic team is considering gradually introducing tariffs via the International Emergency Economic Powers Act, Bloomberg reported yesterday. According to those familiar with the proposal—which is still in its early stages—one possibility “involves a schedule of graduated tariffs increasing by about 2% to 5% a month.”

Additionally, Trump stated today that he will create a new federal agency—the External Revenue Service—to collect tariffs and other foreign revenue. Trump intends to launch the new agency on January 20, his Inauguration Day.

“We will begin charging those that make money off of us with Trade, and they will start paying, FINALLY, their fair share,” the President-Elect wrote on Truth Social.

Updated January 6, 2025:

President-Elect Trump has denied a Washington Post report this morning that stated his team was considering paring back his tariff plan—namely, applying universal tariffs to only “critical imports,” or those in “certain sectors deemed critical to national or economic security.”

“The story in the Washington Post, quoting so-called anonymous sources, which don't exist, incorrectly states that my tariff policy will be pared back,” Trump wrote on Truth Social. “That is wrong. The Washington Post knows it's wrong. It's just another example of Fake News.”

Following the publication of the Washington Post article, the Bloomberg Dollar Spot Index initially fell more than 1%, and later pared the loss after President-Elect Trump countered the article’s claims on Truth Social.

Meanwhile, many businesses are continuing to front-load imports ahead of the incoming administration, a potential ILA strike on January 16, and an early Lunar New Year.

Updated on November 25, 2024:

President-elect Donald Trump is preparing to deliver on his tough rhetoric on tariffs. Less than two months before officially taking office on January 20, 2025, Trump announced on his Truth Social platform on Monday (November 25) that he plans to impose 25% tariffs on all products from Mexico and Canada, along with an additional 10% tariff on products from China.

“As everyone is aware, thousands of people are pouring through Mexico and Canada, bringing Crime and Drugs at levels never seen before,” he wrote on the social platform. “Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem. We hereby demand that they use this power, and until such time that they do, it is time for them to pay a very big price!”

However, the proposed tariffs could potentially violate the terms of the U.S.-Mexico-Canada Agreement (USMCA), which Trump signed into law in 2020. This agreement, which replaced the North American Free Trade Agreement (NAFTA), ensures that trade among the three countries remains largely duty-free for certain goods.

Published on November 6, 2024:

On Wednesday, November 6, President Donald Trump was elected the 47th president of the United States and will return to the White House in January 2025, signaling a new era for U.S. trade policy. A second Trump presidency is widely expected to emphasize assertive, often unilateral trade measures, which could introduce sweeping changes to tariffs and trade negotiations, and add uncertainty and new complexities for companies dependent on global trade.

Read on for Flexport’s breakdown—what to expect under the new U.S. administration in 2025, what’s at stake for U.S. trade policies, and our advice for Flexport customers.

What to Expect: The Return of U.S. Tariffs as a Central Policy Tool

Trade is expected to take center stage under President Trump’s administration, with unilateral tariffs likely to become a primary lever in U.S. economic strategy. President Trump has consistently signaled his preference for tariffs, proposing measures that include a universal 10% or 20% tariff on all imports, and a substantial 60% tariff on goods from China. These measures could add onto existing tariffs on steel, aluminum, and other products that were already introduced earlier this year under the Biden administration; alternatively, the Trump administration could replace the existing proposals with completely different tariffs.

President Trump has also hinted at additional, situational tariffs, including a 200% tariff on imports from vehicle makers that relocate manufacturing outside the U.S., and a potential 100-200% tariff on Chinese automobiles made in Mexico. These heightened tariffs underscore President Trump’s focus on reshoring U.S. manufacturing jobs, reinforcing domestic supply chains, and maintaining a trade balance favorable to the United States.

Another tool used in the past—by the Reagan administration in the 1980s, for example—is an import quota system, which limits the quantity of a certain product that can be imported in a given time period, and is typically the result of a trade negotiation between countries. President Trump used import quotas in a limited fashion during his first term; he may leverage them again to incentivize domestic production in certain industries, and could give higher quota allocations to countries that give more to the U.S. in exchange.

While these measures may encounter legal challenges in Congress and the courts—and those legal challenges could happen long after the impact of the tariffs—they indicate a strong commitment from the Trump administration to use trade policy as a mechanism to reshape the global market. If implemented, these tariffs could dramatically increase costs—particularly for import-dependent sectors like electronics, automotive, and consumer goods.

“America First” Policy: Escalating Tensions with U.S. Trade Partners and Potential International Retaliation

The Trump administration is expected to take a strong stance against China, positioning tariffs as a means to balance trade deficits and counter perceived economic and strategic threats. President Trump has proposed tariffs as high as 60% on all Chinese imports, as well as elevated tariffs on goods manufactured by Chinese companies—even if those goods originate from other countries, such as Mexico.

Such measures represent a departure from traditional country-of-origin rules, suggesting a significant shift in U.S. customs policy. This approach reflects Trump’s view of the U.S.-China trade deficit as a key economic measure, and a second term is likely to see intensified trade actions aimed at addressing this imbalance. Moreover, Trump’s administration may leverage tariffs as a geopolitical tool, proposing tariffs of up to 200% in scenarios where China pursues military actions that are contrary to U.S. interests.

The proposed tariff increases are also expected to provoke responses from other U.S. trade partners, such as the European Union (EU). The EU has already signaled its intent to prepare retaliatory tariffs should the U.S. enact broad tariff measures, developing a list of U.S. exports to target in case of escalation. EU nations, along with other U.S. allies like Japan and South Korea, may coordinate a joint response to amplify economic pressure on the U.S. to reconsider these measures.

As for the impact in North America, the U.S.-Mexico-Canada Agreement (USMCA), a free trade agreement between the U.S., Mexico, and Canada that took effect on July 1, 2020, is due for review in 2026. The Trump administration may seek significant changes, particularly in addressing trade imbalances with Mexico and Canada. In particular, automotive products are expected to be a key focus, with concerns surrounding Chinese investment in Mexican manufacturing.

The Trump administration may also use the USMCA review to revisit the U.S. goods trade deficit with Canada and Mexico, both of which have substantially increased trade with the U.S. since 2020. Trump’s emphasis on reshoring jobs and reducing the U.S. trade deficit may drive a more aggressive approach to renegotiating terms, with potential changes that could reshape North American supply chains.

Lastly, Trump’s administration may also diverge from current U.S. commitments to multilateral trade organizations and initiatives. As in Trump’s first term, there is also potential for renewed U.S. pressure to reform or even withdraw from the World Trade Organization (WTO), though this would require congressional approval. While the U.S. has historically relied on partnerships and multilateral agreements, President Trump has emphasized a preference for bilateral deals and may continue to deprioritize or renegotiate multilateral initiatives, such as the Indo-Pacific Economic Framework (IPEF) and the Trade and Technology Council (TTC) with the EU.

Key Areas to Watch: Short-Term Demand Surges and Long-Term Trade Pattern Shifts

In the short term, we could see U.S. import demand surge, says Lars Jensen, CEO of Vespucci Maritime, with many shippers rushing to bring in non-time-sensitive goods before potential new tariffs are implemented. According to a recent poll at Flexport’s Freight Market Update webinar, nearly 10% of survey respondents said they were shipping more to get ahead of potential new tariffs. However, shippers need to account for a variety of factors in their decisions, such as the additional storage costs of accumulating too much inventory, especially given that new, additional tariffs wouldn’t be implemented until the end of 2025 Q1 at the earliest.

Additionally, the potential January 15th port strike on the U.S. East and Gulf Coasts now faces additional uncertainty—namely, whether President-Elect Trump would break the strike or intervene in ILA-USMX negotiations, even though he had previously expressed his support for union workers.

With an emphasis on domestic manufacturing and reduced reliance on imports, potential tariff proposals under President Trump’s second term will likely increase operational costs and complex regulatory compliance requirements. Over the long term, as a U.S. trade war looms yet again, we should expect more structural supply chain shifts: changes to sourcing patterns for U.S. imports, and further diversification of companies’ manufacturing bases in countries like Vietnam, India, and Mexico. And with potential retaliatory tariffs, it’s possible we’ll see a decline in U.S. exports—along with a greater mismatch between full and empty container flows.

Companies should conduct comprehensive scenario planning, assessing both upstream and downstream impacts to supply chains in preparation for potential tariff increases and regulatory shifts. This is especially important for companies reliant on imports from countries like China, and those operating in sectors sensitive to trade policy changes, such as technology, automotive, and consumer goods. Given the possibility of escalating trade tensions and retaliatory measures, companies with significant exports may need to prepare for market volatility and reduced demand in key regions.

Regardless of which administration is in charge, supply chain tracing and transparency will remain critical. Compliance with U.S. laws, such as the Uyghur Forced Labor Prevention Act (UFLPA), will continue to be enforced under Trump’s administration, and new compliance requirements for critical mineral and battery sourcing are expected to increase under the Inflation Reduction Act. Additionally, businesses in sectors like automotive and electronics should prepare for enhanced scrutiny around import compliance, particularly regarding components originating from regions under U.S. trade restrictions. Proactive customs compliance planning and investment in supply chain tracing technology will be essential for managing these ongoing demands.

We’ll continue to update this blog with news and updates. As new tariffs and non-tariff barriers will be front and center under President Trump’s administration, our expert team of trade advisors is here to help you understand potential risks and provide guidance—such as reevaluating drawback as a strategy—on how to mitigate some of the impacts of current and new tariffs.