US Tariffs and Global Trade
Responding expertly to a new reality
With new US policies around trade, tariffs and industrial supply chains, many businesses are having to react quickly. Praxity Alliance member firm Plante Moran in North America has developed a programme of resources for their clients and for fellow professionals. This seeks to address questions about tariff implementation, smooth transitions and advises how businesses can protect themselves from sudden shifts in operation.
Alejandro Rodriguez, Plante Moran Partner in Monterrey, Mexico, leads us through an overview of how it might affect their clients:
As of April 5, 2025, companies need to assess their bills of material (BOMs) for specific materials and countries of origin to manage their tariff liability. Generally, all goods from all countries are assessed at a 10% tariff except the products in Annex II. Generally, Annex II products are inputs to industrial production and the construction trade that may not be readily available from U.S. sources. However, companies need to validate their BOMs against the Harmonised Tariff Schedule, the countries of origin, and, where applicable, USMCA provisions to calculate the additional tariffs laid out in the executive order.
Domestic manufacturers in the US with domestic supply chains will be impacted less, but the cost impacts will ripple throughout their supply chain creating the potential for financial distress. This financial distress will show up either through reduced revenues or compressed margins due to the increased costs of tariffs. For many, it will come down to an issue of timing — how quickly the market can absorb price increases — and commercial leverage — what power a manufacturer has to pass along cost increases versus absorbing this shock.
These tariffs create the potential for greater production schedule volatility in the short term and reduced demand in the longer term. There’s potential for greater commercial tension between buyers and sellers at every level concerning cost recovery strategies.
Additionally, it’s important to understand the potential impact of tariffs compounding on your cost structure. Manufacturers must know where the reciprocal tariffs are additive on imported products and how previous steel, aluminium, Canadian, Mexican, and Chinese tariffs are coordinated to determine tariff exposure. Manufacturers must also monitor the retaliatory actions by other countries, or potentially import restrictions, that may increase costs and prices and stay current on the effect those actions may have on demand and revenue projections.
There will be greater demands to understand and document the country of origin and accurately apply trade terms such as “substantially transformed.” It’s clear in this proclamation and previous executive orders that there will be an increased level of enforcement associated with this administration.
In the first Trump administration, there was a comprehensive and public disclosure and public opinion structure. It’s not known how public the second Trump administration will be. Companies should keep in close contact with their customs brokers and lawyers, and trade associations for this type of intelligence.
Also authored by Mr. Rodriguez, the firm has produced a guide titled The International Trade Roadmap, which outlines how the firm can help businesses understand and respond to the new legislation. The document is based on three objectives:
- Stay Competitive
- Maintain Continuity
- Remain Compliant
The guide contains a walkthrough of what aspects may be material to a client’s business, a guide to self-assessment, and a possible journey where Plante Moran can help. The full guide can be found HERE.
The firm has also put together more detailed guides as to what the tariffs might mean, more detail about which countries and industries are affected and to what degree, and the after-effects of these changes to the largest market in the world.
While the US administration’s stance is mercurial and likely to change, it’s clear that legal advisors, accountancy firms and their clients will need to expect the unexpected. There is an emphasis on the need for action, not simply waiting for the problem to go away. Plante Moran is providing a shining example of how Praxity members can respond to this shifting field with agility and authority.
Plante Moran have put together a pack of resources, including articles, guides and a webinar featuring experts from fields including transfer pricing, financial law and more. Register at their website for access to the full reports HERE.
