Tariffs are taxes imposed by a government on imported goods. They are designed to:

• Protect domestic industries: By making imported goods more expensive, tariffs can encourage consumers to buy locally produced products.
• Generate revenue: Tariffs can be a source of income for the government.
• Influence trade policies: Governments may use tariffs to negotiate trade agreements or address trade imbalances.

When a product is imported, the importer is required to pay the tariff to customs authorities. The cost of the tariff is often passed on to consumers in the form of higher prices.

Tariffs can be specific (a fixed amount per unit) or ad valorem (a percentage of the product’s value). Tariffs are subject to change based on international trade agreements, and domestic trade policies.

1. Identify Affected Products:
   • Determine which of your products or raw materials are imported.
   • Research the Harmonized System (HS) codes for these products to identify applicable tariffs.
2. Assess the Impact:
   • Calculate the potential increase in your costs due to tariffs.
   • Evaluate how these increased costs will affect your pricing strategy and profit margins.
   • Consider the impact on your supply chain and potential delays in receiving goods.
3. Explore Alternative Sourcing:
   • Investigate domestic suppliers or suppliers in countries with favorable trade agreements.
   • Diversify your supply chain to reduce reliance on a single source.
4. Negotiate with Suppliers:
   • Discuss potential cost-sharing or alternative pricing arrangements with your existing suppliers.
   • Explore long-term contracts to lock in prices and reduce uncertainty.
5. Adjust Your Pricing and Marketing:
   • If necessary, adjust your prices to reflect increased costs.
   • Communicate with your customers about potential price changes and the reasons behind them.
6. Seek Expert Advice:
   • Consult with a customs broker or trade attorney to ensure compliance with tariff regulations.
   • Contact your local Michigan SBDC office for personalized guidance and resources.
7. Stay Informed:
   • Monitor changes in trade policies and tariff rates that may affect your business.
   • Subscribe to industry publications and government updates on trade.

The tariffs against Mexico and Canada are implemented to address concerns related to border security, illegal immigration, and the flow of illicit drugs. There is also the motivation of reducing the U.S. trade deficit.

These tariffs are implemented under the International Emergency Economic Powers Act (IEEPA). IEEPA is a U.S. federal law grants the president the authority to regulate commerce in response to a national emergency that threatens the United States.

Retaliatory tariffs have been put in place by both Canada and Mexico.

Tariffs are placed on all goods that do not satisfy U.S.-Mexico-Canada Agreement (USMCA) rules of origin.

To be considered “originating,” a good must generally be wholly obtained or produced entirely in the USMCA region, or if produced using non-originating materials, must undergo sufficient production in the region to meet specific rules of origin.

Goods that qualify under the may be exempt from these tariffs.