The tariff situation continues to evolve rapidly, with the Trump administration's policies creating significant ripple effects across global supply chains. While last week we examined how reciprocal tariffs are calculated, this week we're seeing the real-world impacts unfold. Even with the current pause in effect, the baseline 10% tariff will "take the average tariff rate still to highs that we haven't seen since the 1940s," according to Ericka York, vice president of federal tax policy at the Tax Foundation's Center for Federal Tax Policy. As Paul Brashier of ITS Logistics aptly puts it, "The new normal for the supply chain is uncertainty."
Now, onto this week's Trade Compliance Snapshot.
Freight orders surge on Trump tariffs trade whipsaw: 'The ships are filling up'
The tariff back-and-forth has caused chaos up and down the global supply chain, including first the cancellation of many freight orders followed closely by the re-upping of those same orders. A quote from Paul Brashier, vice president of global supply chain for ITS Logistics sums up the current situation with global freight, "It's status quo right now and the new normal for the supply chain is uncertainty."
A 'wobbly' moment in business: Manufacturers face life under Trump's tariffs
The U.S. manufacturing industry is similarly reeling from the ups and downs of the past few weeks, and even the current baseline 10% tariff is leading many to try to understand what the impact on supply costs and consumer demand might be. Industry groups have been split in their reactions, with some agreeing with the measures Trump is putting in place and others vocally opposing them. All of this has led Dan Brumlik, co-founder and co-chairman at The Partner Companies to sum it up thusly, "It's just a very wobbly moment in business."
Past as prologue: Packaging industry fears repeat of 2018-19 tariffs' impact
This uncertainty isn't constrained to one sector of the U.S. economy. According to Evergreen, a packaging supply company, "Domestic suppliers, who often rely on imported raw materials like aluminum and steel, are also affected." The packaging industry relies heavily on imported raw materials such as steel, aluminum, and wood pulp to produce the packaging products used by U.S. manufacturers to ship their products around the world. They're taking a lesson from the previous rounds of Trump tariffs and adjusting their business practices as best they can while waiting for the next announcement.
Trump's triple-digit tariff essentially cuts off most trade with China, says economist
"It depends on how narrowly the tariff is applied or how broadly it's applied, but generally if you get north of a triple-digit tariff, you are cutting off most trade." This is according to the vice president of federal tax policy at the Tax Foundation's Center for Federal Tax Policy, Ericka York. Even with the current pause in effect, the remaining baseline 10% tariff will "...take the average tariff rate still to highs that we haven't seen since the 1940s, so this is major."
Small businesses may take the brunt of tariffs, even when they're based in the US
Smaller brands and retailers have less bargaining power with suppliers and less overall capital on hand to weather uncertainties like the current tariff situation. Citing the fact that for many, shifting to U.S. production options would cost up to 25% more and add up to 6 months to their already lengthy wait times, others simply have no U.S.-based options. "If they need to lower prices, if they need to raise prices, if their customers are delayed in paying, if they lose a few customers — none of this is going to affect Walmart. For a small business, this could be catastrophic," says Greg Stoller, master lecturer at the Boston University Questrom School of Business.
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