By Jill Hurley
Back in November, on the heels of the most recent election, I penned a piece title “Don’t Make Any Sudden Moves: U.S. Trade Policy 2025.” The core message of the piece was the businesses shouldn’t act in haste when making supply chain decisions in response to U.S. trade policy, because trade policies happen gradually through a defined congressional process. Businesses, I opined, would have the time to consider how changes would impact them and make calculated decisions accordingly.
In May of 2025, I can now say how wrong I was … and how right. Looking back on that piece, there’s much that’s still relevant even in the context of an ever-evolving trade and tariff policy.
Whiplash policy changes
With the exception of a few U.S. administration insiders, few could have predicted the extent to which the president would make use of the International Emergency Economic Powers Act (IEEPA) to push through trade policies in a matter of hours, rather than usual months-long congressional process. Indeed, tariffs imposed against Canada, Mexico, China and the world at large took effect within days of announcement.
In some cases, the official guidance customs officials provide to the customs brokerage community on processing shipments under new tariff regimes was provided only a few short hours before the tariffs took effect.
But as quickly as the tariffs were imposed, they were also scaled back. Take, for example, the 25% tariffs imposed against all Canada-origin and Mexico-origin goods entering the U.S., which took effect March 4, 2025. By March 7, 2025, those tariffs were subject to exemption where goods qualified for duty elimination under the United States-Mexico-Canada Agreement (USMCA).
A similar situation occurred with respect to the 10% “reciprocal” tariff imposed on all imports into the U.S., irrespective of origin (except Canada and Mexico), along with higher tariff rates for a targeted list of about 60 countries. The latter group of higher tariffs took effect April 9, 2025. Before the day was over, the administration had announced those higher tariffs would be put on pause for 90 days (except for China). Only the 10% tariff would remain.
More recently, the escalating tariffs against China, which soared as high as 145% (not including the tariffs imposed during the first Trump administration), were later lowered to 30% for a 90-day period.
Businesses engaged in trade were not only left breathless in their attempts to keep pace with all the changes but were also left with a sense of helplessness at the unpredictability of the trade environment. Should they shift suppliers? Should they increase prices? Should they stockpile? Was it safe to shift from a supplier in China to one in Vietnam, or would Vietnam get targeted, as well, given that Vietnam was one of the countries the White House had targeted with a 46% tariff that was then put on pause?
These are all fair and reasonable questions for business decision makers to ask. Sadly, there are no concrete answers. Which brings me to how right I was.
Fluidity and elasticity are key
Let’s be clear. There is no panacea in the current trade environment. Even the most experienced trade-policy wonks and political observers have conceded that any crystal ball they may have previously employed is now effectively out of order. Without reasoned predictions and forecasts, planning becomes impossible.
The key to navigating this storm is having the ability to pivot quickly—to frontload, or shift suppliers, or change prices—without operational disruption. That’s a tall order. But it’s not impossible. The key is redundancy. Importers who have multiple suppliers in different countries can scale orders up and down as necessary in response to policy changes.
Equally as critical is maintaining a degree of elasticity within your pricing structure to account for shifts in trade policies. The crucial thing with pricing will be to decide on a strategy in advance through scenario planning. How much can your margins withstand? Will a partial transfer of the tariff burden suffice to allow you to maintain a competitive edge, or will the full impact of the tariffs have to be passed down?
Settling these matters in advance allows you pivot quickly in the event a new trade action is taken.
Keep one eye on Washington; the other on everywhere else
The trade conflict now upon us was certainly precipitated by the U.S. government, but it’s not the only actor to watch. Canada’s government imposed surtaxes almost immediately in response to Washington’s 25% tariff on Canadian imports. Similarly, China has met every action taken by the U.S. with a response of its own. These retaliatory measures don’t just impact exporters for whom Canada and China are end markets; they also matter to those businesses with globally integrated supply chains that include Canada and China. How exposed is your business to Canadian surtaxes and Chinese tariffs? Are there other markets where retaliatory measures might impact your total landed cost (e.g., the EU, Mexico, etc.)? Including these in your scenario planning can put you a step ahead in the event sabre rattling eventually manifests into concrete action.
Get certified
In “Four pillars to mitigating duty pain amidst escalating trade wars,” published in early April, I referenced the importance of not writing off the importance of trade deals just yet. I can’t emphasize this enough. The USMCA in particular has become a lone refuge for those impacted by Washington’s tariffs. Yet less than half of goods traded across North America leverage the benefits of the trade deal.
Those who haven’t yet attained USMCA certification are putting themselves at financial disadvantage. To be clear, this is just about saving money on tariffs; it’s about remaining price competitive. If your competitors are taking advantage of duty savings in the face of escalating tariffs and you’re not, they’ll have more pricing flexibility than you and have the potential to price you out of the market. Recent survey data that shows 54% of American companies intend to raise prices to make up for the cost of tariffs. It’s precisely for that reason that USMCA certification is no longer a matter reserved for the compliance officer or the VP of logistics, but a critical consideration for the C-suite.
Long-loading over front-loading
In March of 2024, America’s international monthly trade deficit was $92.7 billion. In March 2025? $163.2 billion. If the goal of the current trade war is to correct the country’s trade imbalance, it’s having the opposite effect. What fuelled the deficit is the massive surge in imports as U.S. importers began stockpiling goods from overseas trading partners—and particularly from China—in anticipation of tariffs.
With China’s tariffs now reduced dramatically to 30%, there’s a good chance there will be more frontloading in response to fears the 145% tariff on China-origin goods might return in August. Frontloading is a understandable short-term, band-aid solution. But it’s not sustainable and comes with its own set complications, not least of which is the heavy cost of having to warehouse those goods.
If the pandemic taught U.S. businesses anything, it’s that having a reserve of in-demand inventory is never a bad idea. But everything has a tipping point.
Rather than stocking up every time there’s an unpredictable and never-guaranteed period of détente in the trade war, businesses would be wiser to incorporate Foreign Trade Zones into their supply chain, allowing them to preserve cash flow and regulate inventory levels based on demand, rather than the tariff regime of the day. FTZs are warehouses and manufacturing hubs where goods intended for re-export can be brought into a country for storage or production without duty obligation. There are about 200 of them are in the U.S.
In the current environment, there is little telling what each new day might bring. A complete overhaul of a supply chain is a monumental and costly act that could take years to execute, and may be for naught should trade tensions subside.
A far better approach would be to identify supply chain vulnerabilities through careful analysis and use scenario planning to create redundancies that make pivoting quickly viable and easily executable.
Jill Hurley is Senior Director, Global Trade Consulting at Livingston. As the practice leader, she spearheads U.S. import and export projects, offering comprehensive reviews of clients’ business models for risk assessment, crafting, and implementing import/export compliance programs, conducting audits, navigating export licensing requirements, and providing support in U.S. trade remedy matters.