11/26/2024
Navigating Trade Uncertainty in 2025: Impact of Tariffs and Trade Policies
Check out this week's Customs Corner to read the current tariff landscape, changes to Chinese trade, vehicles to implement tariffs, and more.
Looking ahead to 2025, trade uncertainty continues to pose challenges for businesses and global markets. Ongoing geopolitical tensions, evolving trade policies, and potential shifts in international agreements have created a complex environment for cross-border commerce. Supply chain disruptions, the potential for additional tariffs, and regulatory changes are forcing companies to reassess strategies and adopt more flexible approaches to mitigate risks.
The rhetoric from President-elect Trump throughout the election process was centered around implementing additional tariffs upon re-election. This is both in addition to and replacing current tariffs with higher, more aggressive duty rates and restrictions.
Although the future is unknown, the lessons of the past serve as invaluable guides. By reflecting on past experiences, we can identify what we might expect come the new administration, how to prepare, things to look out for, what strategies worked, understand what didn’t, and use those insights to create more informed decisions moving forward.
Current Tariff Landscape
The retaliatory tariffs, initiated under the Trump administration in 2018 and largely maintained by the Biden administration, have imposed significant tariffs on imports, affecting trade and increasing costs for businesses and consumers.
Overall Impact
- Tariffs have affected over $380 billion in trade and amount to $79 billion based on original trade values.
- Revenue generated is less than estimated due to reduced import volumes, avoidance, and lower real income.
Major Sections of Tariff Policy:
Section 232: Steel and Aluminum Tariffs
- 2018: 25% on steel and 10% on aluminum ($9 billion and $1.8 billion based on 2018 values).
- Exemptions and quotas were granted to countries like Australia, Canada, Mexico, and Japan.
- Tariffs expanded to derivative products and briefly reimposed on Canadian aluminum but later lifted.
- Biden administration replaced some tariffs with Tariff-Rate Quotas (TRQs), lowering costs but maintaining price increases.
- Current Impact: $2.7 billion in tariffs, with retaliation targeting $6 billion in U.S. goods.
Section 301: Tariffs on Chinese Products
- Initiated in 2018 to counter China’s unfair trade practices.
- Incremental tariffs imposed on hundreds of billions in goods, peaking at 25% on $250 billion and 15% on $112 billion of imports.
- Phase One trade deal in 2019 reduced some tariffs but retained most.
- 2024: Biden administration imposed higher rates (25-100%) on $18 billion of goods, targeting semiconductors, EV batteries, medical goods, and more.
- Current Impact: $77 billion in tariffs, with China retaliating with taxes on $106 billion of U.S. goods.
Section 201: Solar Panels and Washing Machines
- Imposed in 2018 for 3-4 years. Washing machine tariffs expired in 2023, while solar panel tariffs were extended with exemptions.
- 2024: Biden administration removed some solar exemptions and is investigating further tariffs.
- Minimal impact due to exemptions, contributing only $0.6 billion in taxes initially.
WTO Dispute: European Union
- In 2019, tariffs imposed on $7.5 billion of EU goods following a WTO ruling.
- 2021: Biden administration suspended these tariffs for five years.
Recent Developments
- Biden administration’s 2024 review of tariffs on China retains existing duties while adding $3.6 billion in taxes on targeted goods.
- Adjustments and TRQs for steel and aluminum from the EU, UK, and Japan reduce costs for some businesses but continue to impact overall trade prices.
Economic Implications
- U.S. tariffs have led to higher costs, lower import volumes, and reduced consumer income.
- Retaliation by trading partners has amplified negative effects on U.S. exports, especially in agriculture and industrial goods.
Source: https://taxfoundation.org/research/all/federal/tariffs/
Changes to Chinese Trade
Throughout the election, 60% duties were threatened against Chinese imports.
On November 25, 2025 President-elect Trump posted on social media that he would impose an additional 10% tariff on top of existing tariffs come. The President-elect advised that on Jan. 20, he would sign all necessary documents to impose the import taxes through executive orders.
The additional 10% tariff would increase existing tariffs under list 1, list 2 and list 3 from 25% to 35% and list 4a from 7.5% to 17.5%. The current 232 and 301 duties, applicable to China, apply to specific products identified throughout the Harmonized Tariff Schedule.
Additional Legislation:
While the additional retaliatory tariffs under the new administration are the focus of discussion, there has also been numerous legislations presented by Congress aimed at “leveling the playing field.” These Legislations takes aim at China by revoking China’s Most Favored Nation Status. The most recent legislation is The Restore Trade Fairness Act (H.R. 10127) introduced on November 14, 2024 by the Chairman of the Select Committee on the Chinese Communist Party (“CCP”), John Moolenaar (R-MI).
That proposed legislation introduces a "column 3" in the Harmonized Tariff Schedule (HTS) to apply specific duties to imports from the People's Republic of China (PRC). Key aspects include:
Duty Structure and Adjustments:
- For ad valorem rates (percentage-based tariffs), column 3 rates will revert to inflation-adjusted column 2 rates unless column 2 rates are below 35%, in which case they will be set at 35%.
- For specific/compound rates (unit-based tariffs), column 3 rates will also revert to inflation-adjusted column 2 rates unless the effective ad valorem rate is below 35%, in which case a 35% equivalent rate applies.
- Certain items will have column 3 rates increased to 100%.
Inflation Adjustments:
- The President will annually adjust specific and compound rates for inflation using the Consumer Price Index (CPI), with the first adjustment referencing the 1930 CPI.
Phase-In Schedule for Duty Increases:
- 180 days post-enactment: 10% of the increase.
- 2 years: 25%.
- 4 years: 50%.
- 5 years: 100%.
Tariff-Rate Quota (TRQ):
- For goods sourced exclusively from China, TRQs will limit imports at lower column 1 rates up to domestic production shortfalls.
- Excess imports will face 100% ad valorem duty.
- The TRQ will last for three years, after which phased column 3 duties will apply.
Presidential Authority:
- The President may further increase duties and impose quotas on Chinese imports.
Valuation and Duty Collection:
- Imports from China will be valued based on "United States value" (domestic market price), verified by Customs and Border Protection (CBP) and USITC.
- The de minimis duty exemption (for imports valued under $800) will no longer apply to Chinese imports, impacting e-commerce shipments.
Revenue Redistribution:
- A trust fund mechanism will allocate tariff revenue to industries affected by Chinese retaliation.
- Funds will support farmers, ranchers, and specified industries (e.g., semiconductors, electronics, and aircraft).
- Remaining funds will go to the Department of Defense for munitions purchases.
Changes with Other Trading Partners
The threat of additional tariffs are not isolated to imports from China. During the election President-elect Trump also threatened additional tariffs against other trading partners to the United States.
Tariffs on Mexican Imports:
President-elect Trump had threatened a minimum of an additional 25% duties against Mexico over migration. On November 25, 2025, President-elect Trump confirmed over social media post that the U.S. would impose a 25% additional tariff on all imports from Mexico and Canada in response to illegal immigration and drug trafficking across the borders. Executive orders will be signed on January 20, 2025 to enact these additional tariffs.
This is not the first-time additional tariffs have been threatened against Mexico in relation to immigration concerns. In 2019 President Trump announced his intention to use the International Emergency Economic Powers Act (IEEPA) (50 U.S.C. §§1701 et seq.) to impose a 5% tariff on all goods imported from Mexico.
Tariffs on “Other” Countries:
President Elect Trump has threatened a 10% to 20% on foreign countries that have been “ripping us off for years.” Who those countries are has yet to be clarified.
As noted above, the intention has now been confirmed and all Canada imports will be subject to an additional 10% duties under an Executive order singed on January 25, 2025.
To date, no other countries have been specified.
Vehicles to Implement These Tariffs
As noted above, retaliatory tariffs currently exist under Section 232, Section 301 and Section 201, all initiated under the first Trump administration. These, in addition to other mechanisms could be leveraged to administer tariffs in 2025 and beyond.
Section 232 (Trade Expansion Act of 1962)
Allows the president to adjust imports if the Department of Commerce finds they threaten U.S. national security. Used by President Trump in 2018 to impose tariffs of 25% on steel and 10% on aluminum, with exemptions and quota arrangements for certain countries. Legal challenges to Section 232 tariffs have largely failed, with courts deferring to presidential authority on trade and national security matters.
Section 301 (Trade Act of 1974)
Grants authority to address foreign practices deemed unfair or harmful to U.S. commerce. Trump used it to impose tariffs on $370 billion in Chinese imports (up to 25%) and $7.5 billion in EU goods (15–25%) over issues like intellectual property and aircraft subsidies. Section 301 could theoretically support broad new tariffs, such as 10–20% on all imports or higher rates on Chinese goods.
Section 201 (Trade Act of 1974)
Section 201 or “Safeguard Actions” provide temporary measures, such as tariffs or quotas, to help U.S. industries adjust to competition from imports. The goal is to enable the industry to either compete effectively post-relief or transition resources and workers to other productive areas. In 2018, President Trump proclaimed a four year safeguard measure on imports of certain crystalline silicon photovoltaic cells (CSPV) cells and modules, and a three-year safeguard on large residential washing machines.
International Emergency Economic Powers Act (IEEPA)
Authorizes the president to address extraordinary international threats after declaring a national emergency.
As noted above, President Trump nearly invoked it in 2019 to impose tariffs on Mexican goods. Derived from the Trading with the Enemy Act, which Nixon used in 1971 to impose a 10% tariff during a monetary crisis, upheld by courts.
The "Prevent Tariff Abuse Act," introduced by Democratic Representatives Suzan DelBene (WA) and Don Beyer (VA), seeks to restrict the executive branch from using the International Emergency Economic Powers Act to impose tariffs or import quotas. Endorsed by 10 Democrats on the House Ways & Means Committee, the bill is aimed at curbing potential tariff actions by the incoming Trump administration. The initiative reflects concerns about rising costs, a key issue for many Americans.
Section 122 (Trade Act of 1974)
Permits a 15% tariff for up to 150 days to address balance-of-payments crises or prevent currency depreciation. Similar to Nixon’s use of the Trading with the Enemy Act to address trade deficits in the 1970s.
Section 338 (Tariff Act of 1930)
Allows additional tariffs (up to 50%) or outright bans on imports from countries discriminating against U.S. goods. Has not been used in over 70 years.
Implementation of New Import Duties and Taxes: Date of Entry
We are unsure of how the tariffs will be implemented but taking note and consideration of key points like “date of entry” will be incredibly important should history repeat itself.
When looking back at the implementation of the retaliatory tariffs in 2018 and beyond they were commonly implemented (with few exceptions) based on when the ”goods were entered for consumption, or withdrawn from warehouse for consumption.”
Just to note, the date of export and entry were used in May of 2019 when list 3 tariffs were increased from 10% to 25%.
Time of entry is dictated by 19 CFR 141.68. It is important to highlight 19 CFR 141.68e that states “merchandise will not be authorized for release, nor will an entry or an entry summary which serves as both the entry and entry summary be considered filed or presented, until the merchandise has arrived within the port limits with the intent to unlade.” This is especially important in a time where pre-filing days to weeks in advance is a common practice.
Arrival dates must be properly managed to ensure entries are filed with the expectation of them arriving prior to any given implementation date.
Released dates must also be properly managed to ensure you are paying duties correctly. In the past and as an example, we have seen Carriers arrive vessels multiple times, triggering multiple releases in ACE. These multiple releases can lead to discrepant information in ACE. That information is then used by US Customs and Border Protection (CBP) to identify shipments “entered” after the implementation and believed to be “subject” to the additional duties. This can happen when the proper programming is not available in ACE on, or, close to the date of implementation and entries are successfully processed without the trade remedies attached or, where a vessel is set to arrive prior to implementation but is delayed and crosses within port limits after the implementation date.
This was more common as the time between notification of the tariff changes and the implementation date grew shorter. CBP like any program requires time to implement changes to the Harmonized Tariff.
Foreign Trade Zone (FTZ) Admissions and Withdrawals
The regulations currently state that any duty liability is based on the duty at the time Privilege Foreign status (PF) is applied. We have had a lot of concern from Importers regarding current inventory held within the zone in PF status and whether their inventory could be subject to higher duties upon consumption. At this time, the general guidance stands that if there is nothing in the proclamation regarding the retaliatory tariffs to override current regulations, then CBP will allow FTZ users to withdraw PF status goods at the rate applicable at time of admission. As noted, any impact to current FTZ inventory in PF status will have to be specified in the proclamation.
To provide additional context around that guidance - In May of 2019 it was announced through proclamation 9894 that Section 232 duties were removed against steel products of Mexico and Canada. Within the notice it stated that "steel articles from Canada and Mexico that were admitted into a U.S. foreign trade zone under “privileged foreign status” as defined in 19 CFR 146.41, prior to 12:01 a.m. eastern daylight time on May 20, 2019, shall not be subject upon entry for consumption made after 12:01 a.m. eastern daylight time on May 20, 2019, to the additional 25 percent ad valorem rate of duty as imposed by Proclamation 9705, as amended.”
The proclamation allowed for goods entered in PF status during the time the additional duties were in place, to be entered for consumption without consideration of the additional duties.
Exclusions
As it stands today, there is an available and ongoing exclusion process under Section 232. The Bureau of Industry and Security within the Department of Commerce has administered the 232 exclusion process since the imposition of duties back in 2018. The 232 exclusions are importer specific and are provided for a specific time period and quantity.
For Section 301 a smaller grouping of exclusions is still available after having been chipped away at and extended throughout the years. Unlike 232 exclusion, 301 exclusion are available for all importers to utilize. These exclusions cover full tariffs, where any product correctly classified under the specified tariff can be entered without the imposition of the retaliatory tariffs. The exclusions also cover partial tariffs, where a product must not only be classified under the specified tariff within the exclusion, it must also meet a product description to qualify.
The most recent news in relation to Section 301 exclusions was in October where the Office of the United States Trade Representative (USTR) announced the opening of a process for interested parties to request certain machinery be temporarily excluded from Section 301 duties. The exclusion process covers particular machinery used in domestic manufacturing classified within a subheading under chapters 84 and 85 of the Harmonized Tariff Schedule of the United States. The exclusion process opened on October 15, 2024 with a deadline of March 31, 2025.
Looking ahead to the new Trump administration, the exclusions and how they will be utilized or even considered is another unknown.
Conclusion
While uncertainty persists, it also offers opportunities for collaboration. As we navigate these familiar, yet uncharted waters please know that GEODIS is here to support. Please reach out to your main GEODIS contact, the Broker Product Team ([email protected]) or Trade Services Department ([email protected]) for further discussion.
We will continue to keep our Importers updated as we hear new details related to the tariffs and beyond. Please also join GEODIS for a robust conversation on January 7, 2025 at 2:00 PM EST where we will discuss Trade and Transportation Outlook for 2025- What We Know Now, the Unknown and How to Prepare. Link to register.
As the holiday season approaches, we want to take a moment to express our heartfelt gratitude for your trust, loyalty, and partnership. Your support is invaluable to us, and it’s thanks to customers like you that we can keep doing what we’re passionate about. Wishing you and your families a Happy Thanksgiving.
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