Navigating Tariffs: Understanding and Adapting to Trade Changes
In today’s global economy, small businesses can find themselves impacted by tariffs. These taxes on imported goods can affect your costs, supply chains, and competitive edge. We’re here to help you understand and navigate these changes.
UPDATED MAY 6, 2025
Baseline Tariff
- 10% tariff on imports from all countries (except China, Hong Kong, and Macau, which are subject to higher rates). This is an additional tariff on top of the ones listed below. The 90-day pause on reciprocal tariffs, initially implemented around April 11, 2025, has influenced the total tariffs for some countries in the short term.
Separate Tariffs
- 25% tariffs on all steel and aluminum imports (expanded to include certain derivatives; 200% tariff on certain Russian aluminum articles)
- 25% tariffs on imported automobiles (effective April 3, 2025)
- 25% tariffs on imported auto parts (effective May 3, 2025; potential import adjustment offset for U.S. assemblers)
- 25% tariffs on imports from countries purchasing Venezuelan oil (specific countries TBD)
Total Tariffs (Including Baseline Tariff)
- Total Tariffs on imports from China: Baseline + 145% additional tariff
- Total Tariffs on imports from Japan: Approximately 24% on automobiles and machinery; 10% for many other goods (impacted by new reciprocal tariffs and the 90-day pause)
- Total Tariffs on imports from Vietnam: Baseline + 46% countervailing tariff on many goods
- Total Tariffs on imports from the European Union: 10% for many goods during the 90-day pause (potential for EU retaliatory tariffs on specific U.S. products)
- Total Tariffs on imports from Mexico: 25% on non-USMCA qualifying goods; 10% on USMCA qualifying goods
- Total Tariffs on imports from Canada: 25% on non-USMCA qualifying goods; 10% on USMCA qualifying goods (Canada also has a 10% tariff on certain non-USMCA qualifying energy and potash)
Note: Tariff information is highly volatile and subject to further change. The “Total Tariffs” listed above include the current baseline tariff and any additional tariffs as of May 6, 2025. The reciprocal tariffs for some countries are currently paused for 90 days from around April 11, 2025. For the most current and specific tariff rates, please consult official sources such as the U.S. Customs and Border Protection (CBP) and the U.S. Trade Representative (USTR). Specific goods may be subject to different tariff rates or exemptions. It is crucial to check the Harmonized Tariff Schedule (HTS) codes for accurate tariff information on specific products.
Frequently Asked Questions
What are tariffs?
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.
How do tariffs work?
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.
What steps should I take as a small business?
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- Stay Informed:
- Monitor changes in trade policies and tariff rates that may affect your business.
- Subscribe to industry publications and government updates on trade.
Why are there tariffs against Mexico and Canada?
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.
What goods are impacted by the tariffs in Mexico and Canada?
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.