The United States’ trade policy has undergone significant shifts under the current administration, which is emphasizing the use of tariffs as a strategic tool. Recent developments, including the imposition of new and expanded tariffs on key trading partners such as China, Canada, Mexico, and the European Union, have generated widespread uncertainty. This LawFlash examines the latest US tariff policies, international responses, and practical considerations for businesses operating in this shifting global trade environment
A key driver of these policy shifts is the America First Trade Policy Memorandum, which outlines the administration’s strategy for leveraging tariffs to strengthen domestic industries, reduce reliance on foreign manufacturing, and address perceived national security threats. This memo sets forth a roadmap for future enforcement and regulatory actions.
The unpredictability of US trade measures has led to heightened concerns across industries, prompting companies to rethink long-term investment strategies and seek alternative trade routes. As noted in recent industry discussions, businesses are increasingly engaging compliance teams and trade advisors to assess the legal, financial, and operational risks associated with increased and targeted tariffs. Businesses navigating this evolving landscape must assess their exposure, reconsider supply chain strategies, and prepare for potential retaliatory measures from affected nations.
US TRADE POLICY AND TARIFF STRATEGY
Under the renewed "America First" trade agenda, the US government has employed tariffs as a primary instrument of trade policy. The administration has asserted that tariffs serve to protect domestic industries, address trade imbalances, and ensure national security. These measures have also led to heightened trade tensions and could eventually result in increased costs for US businesses and consumers.
TARIFFS ON CHINA
A central focus of the administration’s trade policy has been China. Tariffs have been imposed on many Chinese-origin imports since 2018 pursuant to Section 301 of the Trade Act of 1974 (19 USC § 2411). Additional Section 301 investigations were initiated in 2024 concerning the Chinese semiconductor industry and the maritime, logistics, and shipbuilding sectors.
Donald Trump is the first president to use the authority of the International Emergency Economic Powers Act (IEEPA) (50 USC § 1701) to impose a 10% tariff on imports from China, citing national security concerns tied to unlawful migration and drug flows. These tariffs apply broadly, with only limited exemptions. Further, the tariffs apply to goods from Hong Kong as well, signaling a continuation of the prior administration’s approach to treating Hong Kong as an extension of mainland China for trade purposes. These tariffs were increased by an additional 10% on March 4, for a total 20% additional IEEPA tariff on Chinese-origin imports.
One notable impact of these tariffs is on ecommerce platforms, which rely heavily on de minimis entry exemptions for small-value packages shipped from China. Following the tariff announcement, shipping companies temporarily suspended small parcel shipments. While the restriction on the availability of de minimis entries has been paused, new compliance mechanisms are being developed to address these challenges. We can expect elimination of the de minimis exception for Chinese-origin imports, which would subject all goods from China to this additional 10% as well as traditional import duties, although that specific date has not yet been announced.
TARIFFS ON CANADA AND MEXICO
The administration has also targeted its North American trading partners for tariffs using IEEPA authority with the same national security justifications of migration and drug flows for tariffs imposed on China.
The US imposed tariffs of 25% on all imports of Mexican and Canadian-origin merchandise, other than Canadian energy and energy resources, which are subject to a 10% tariff. These tariffs were paused for 30 days pending negotiations between the parties, although they took effect on March 4.
On March 7, the administration announced that goods afforded preferential treatment under the United States-Canada-Mexico Agreement (USMCA) were exempt from the tariffs. There is no retroactive reprieve for USMCA-qualifying goods.
Although originally indicating that such exemption would last until April 2, neither the executive orders nor the implementing Federal Register Notices contain an end date.
TARIFFS ON THE EUROPEAN UNION
The European Union has also been a focus for the administration’s tariffs. After the EU raised tariffs on US beef, poultry, bourbon and whiskey, motorcycles, peanut butter, and denim in retaliation for the US steel and aluminum tariffs (see below), the president announced that he plans to impose a 200% tariff on EU wine, champagne, and spirits, exacerbating long-standing trade frictions between the US and Europe.
Further trade measures targeting the EU’s technology regulations are also under discussion. The US administration has expressed concern over EU digital policies that disproportionately affect US-based technology firms, hinting at potential retaliatory tariffs should the EU proceed with stricter regulatory actions.
TARIFFS ON KEY INDUSTRIES
President Trump announced expansion of existing tariffs on steel, aluminum, and derivative articles under Section 232 of the Trade Expansion Act of 1962 (19 USC § 1862), which altered the existing Section 232 tariff framework for those actions. Effective March 12, all existing exemptions and exclusions ended, and identified steel, aluminum, and derivatives became subject to an additional 25% tariff.
The administration also announced a new Section 232 investigation into imports of copper in all forms. The US Department of Commerce should issue a report by November 22, after which measures may be taken to counter any identified threats that copper imports pose to US national security.
Another area of focus has been critical industries such as automobiles, semiconductors, and pharmaceuticals. Tariffs of 25% on automobiles and certain automobile parts were announced March 26, becoming effective April 3, using a Section 232 report prepared during the first Trump administration. The administration has indicated that additional tariffs may be imposed on these sectors as early as April 2, 2025. These tariffs could significantly disrupt global supply chains, given the interdependent nature of these industries. The proposed tariffs on Taiwanese semiconductors in particular have drawn industry alarm, with some speculating they could be raised as high as 100%—potentially leading to significant cost increases for US technology manufacturers.
Companies in these sectors should be exploring ways to mitigate the impact of these tariffs, including diversifying their supply chain, considering tariff engineering options, and specifying risk allocation in purchase and sale agreements.
ON THE HORIZON
Looking ahead, key dates and policy shifts loom large in the evolving trade landscape. By April 1, 2025, reports called for under the America First Trade Policy Memorandum are to be submitted to the president, which may further influence trade policies and retaliatory actions. The administration has also signaled the possibility of expanding tariffs on identified sectors depending on these findings. Businesses should prepare for continued volatility and remain alert for potential shifts in US trade policy based on these dates.
INTERNATIONAL RESPONSES AND RETALIATORY MEASURES
Several countries have responded swiftly to the US tariff measures by implementing countermeasures to protect their economic interests. These retaliatory actions have escalated trade tensions and further complicated an already volatile global economic environment.
China has taken an aggressive stance in response to the US tariffs. The Chinese government has imposed tariffs on US coal, liquefied natural gas, crude oil, and agricultural machinery under Article 3 of China’s Foreign Trade Law. These tariffs, ranging from 10% to 15%, target key US export industries. Additionally, China has introduced export controls on critical minerals such as tungsten, tellurium, molybdenum, bismuth, and indium—materials essential for high-tech industries.
In a further sign of escalating tensions, China has added several US companies to its Unreliable Entity List, restricting their ability to do business in the country. Beijing has also filed a request for consultations with the World Trade Organization (WTO) Dispute Settlement Body, although the effectiveness of such an approach remains uncertain given the United States’ stance on national security exemptions.
Canada has announced a CAD $30 billion (approximately USD $21 billion) tranche of retaliatory tariffs under Canada’s Customs Tariff Act (RSC, 1985, c. 41 (3rd Supp.)), targeting politically significant US exports. Canadian officials have explicitly stated that these tariffs will focus on goods from key Republican congressional districts, including Ohio, Michigan, and Florida. Canada has also implemented several security measures, including a CAD $1.3 billion (approximately USD $909 million) investment in border security, a “24/7 Eyes” surveillance program at the border, and a joint US-Canada task force to combat organized crime. Additionally, Canada has followed the US approach by designating drug cartels as terrorist organizations and appointing a “Fentanyl Czar” to address opioid-related concerns.
Mexico has introduced a more flexible approach to its retaliation. Rather than imposing a blanket tariff, Mexico has opted for a “carousel” system under its Foreign Trade Law, cycling different products on and off the tariff list at regular intervals. This approach makes it harder for US businesses to adapt, as they cannot rely on stable tariff schedules. Additionally, Mexico has warned that it may impose non-tariff barriers, further complicating trade relations.
At the same time, Mexico has made strategic concessions, agreeing to deploy 10,000 additional security forces along its northern border in an attempt to ease US concerns over illegal immigration and drug trafficking.
Meanwhile, the European Union has warned that it may invoke the Anti-Coercion Instrument (ACI), a powerful trade policy tool allowing the EU to counter foreign economic pressure with retaliatory measures, including tariffs and investment restrictions on US firms. European policymakers are also leveraging ongoing negotiations to push for increased US imports of liquefied natural gas and tariff reductions on industrial goods. The European Union also vows to put in place a tariff tool to safeguard steel from overcapacity as a result of more aluminum imports deviated to the EU to escape US tariffs.
PRACTICAL CONSIDERATIONS FOR BUSINESSES
Given the evolving trade landscape, businesses should take the following proactive steps to mitigate their risk exposure associated with this new tariff regime:
Supply Chain Diversification: Assess alternative sources of supply, review HTS classifications, and determine the country of origin for all inputs and finished goods.
Contractual Adjustments: Renegotiate agreements to account for tariff-related cost increases and ensure pricing structures allow flexibility for sudden trade policy shifts.
Internal Preparedness: Develop contingency plans to respond to tariff changes, including internal policy adjustments and coordination with external trade advisors.
Trade Compliance Strategies: Evaluate the availability of duty-saving strategies, such as first sale valuation, tariff engineering, and use of foreign trade zones to reduce exposure.
Risk Management: Implement a risk assessment framework to quantify the financial and operational impact of new tariffs and adjust sourcing and investment strategies accordingly.
Consumer Communication: Prepare to inform customers about price increases and potential disruptions, ensuring transparency in supply chain-related cost adjustments.
Regulatory Monitoring: Track legislative and judicial developments that could affect the validity of tariff measures, including possible WTO rulings and domestic legal challenges.
CONCLUSION
The US tariff strategy is reshaping global trade dynamics worldwide. The US administration’s increasing reliance on executive authority to impose tariffs under national security justifications has led to greater uncertainty, with businesses and trade partners closely monitoring potential legal challenges. As courts weigh in on the scope of executive trade authority, businesses should prepare for an unpredictable regulatory environment. Firms that stay informed, diversify supply chains, and proactively adjust to policy shifts will be best positioned to navigate the complexities of this evolving trade environment.
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