As of midnight, a sweeping set of new tariffs is in effect. Many are country-specific or based on foreign policies targeting specific products from specific countries. Some of the tariffs going into effect are based on agreements reached with other countries and regions, such as the 15% tariffs on imports from the European Union. While others are based on the countries not reaching agreement with the Trump administration, such as 39% on Swiss imports. In addition, a new rate of 35% now applies to certain Canadian imports not subject to the United States-Mexico-Canada Agreement (USMCA) exemptions, while steeper tariffs on Mexico have been put on hold while negotiations continue. Most other countries have negotiated terms between 10-20% in the months since the country-specific tariffs were first announced.
The tariffs apply to goods loaded onto ships as of Aug. 7, meaning ships in transit with goods loaded before today will not be subject to these new tariffs so long as they reach the U.S. by early October.
The administration has also threatened more tariffs to come. Tariffs on imports from India could face a 50% tariff based on India’s use of Russian oil. Tariffs on semiconductors could be imposed soon at rates as high as 100%. These tariffs have not yet been formally announced but could come any day.
The administration also announced a new rate to cut down on “transshipments,” a tariff avoidance strategy that seeks to reduce or eliminate tariffs by shipping products through lower tariff-rate countries. If caught by U.S. Customs and Border Protection, transshipped products are now subject to an additional 40% tariff on top of the tariff applicable to the country of origin. This new penalty could result in significant tariffs for certain Chinese products that may be shipped through other South Asian countries.
Aside from these 40% rates that apply to transshipment violations, attempting to avoid tariffs in other ways could also lead to significant civil and criminal penalties. The Department of Justice has been tasked with cutting down on any such violations. And the False Claims Act could lead to competitors and others going after violations in civil court to seek a portion of the penalties imposed.
Since the Trump 2.0 tariffs were first announced in March of this year, we have seen many shifts in tariff rates, pauses in imposition, agreements with other countries and some limited exemptions. The uncertainty of the Trump 2.0 tariffs will likely continue for the near future. It is important for business affected by these tariffs to find certainty through what is in their own control — your supply chain and your contracts. Planning for uncertainty is no longer avoidable.
