What Trump’s return could mean for trade, tariffs – and you

Donald Trump has been elected as the 47th President of the United States of America, setting the stage for significant policy changes.

Before the election, his campaign included proposals for sweeping tariffs, aiming to reshape the U.S. trade landscape and incentivise domestic production:

• a 60% tariff on all imports from China  
• a 10% tariff on imports from other countries

On 26 November 2024, these tariff proposals were updated, adding a 25% tariff on all goods from Mexico and Canada, and increasing tariffs on Chinese goods by an additional 10%. These developments underline the shifting dynamics of U.S. trade policy and its potential impact on global supply chains.

Why is Trump reintroducing tariffs on foreign goods?

Trump’s proposed 60% tariff on Chinese goods, and 10% tariff on imports from other countries, aim to reduce reliance on foreign suppliers. The focus is to incentivise American businesses to source materials domestically or from U.S.-friendly nations. During Trump’s previous presidency, tariffs largely targeting China disrupted international trade, affecting container shipping and spot freight rates.

While these measures might stimulate certain sectors of American manufacturing, they also carry risks. U.S. businesses heavily reliant on foreign suppliers could face higher costs, leading to increased consumer prices across categories such as electronics, automotive, and household goods. Foreign producers, particularly in China, risk losing U.S. market share.

Following his re-election, President Trump pledged a 25% tariff on all imports from Mexico and Canada, significantly escalating trade tensions with two of the U.S.’ largest trading partners. Additionally, the tariff on goods from China was raised by 10%, increasing the existing 7.5% tariff to 8.25% on the goods shown in our calculations. (Tariff percentages differ on types of goods, and Harmonised Tariff Schedule or HTS codes).

To better understand the impact, let’s look at the calculations comparing the costs of goods imported from China into the U.S., U.K., and EU across three product categories.

Cost comparisons across product categories

For these calculations, we assume a cost of goods of USD 10,000, which includes both the value of the products and shipping costs. Tariffs are typically calculated as a percentage of this total value.

These cost increases emphasise the need for U.S. importers to reconsider supply chain strategies, so they can mitigate higher expenses and operational disruptions.

Could there be a tariff-driven temporary increase in demand?

If Trump’s proposed policies come into action, tariffs on foreign goods could reach the highest levels since the 1940s. As seen during Trump’s earlier presidency, U.S. importers are likely to pull cargoes forward to beat tariff deadlines, as happened in 2018 when spot rates temporarily surged.

This dynamic could again lead to a short-term spike in rates in 2025 or 2026, followed by a decline once the initial rush stabilises. Importers must weigh the financial and logistical trade-offs of front-loading inventory under such conditions.

What are the potential labour and supply chain challenges?

Trump’s stricter immigration policies could exacerbate labour shortages in industries like agriculture, logistics, and manufacturing, which heavily rely on immigrant workers. Reduced workforce availability could delay operations, increase costs, and force businesses to find alternative sourcing.

Additionally, Trump’s emphasis on ‘Buy American’ policies could favour U.S.-based industries, but provoke retaliation from trading partners. For instance, during his earlier presidency, China shifted soybean and corn sourcing to Brazil in response to tariffs. A similar trend could emerge with the EU and Mexico reducing imports from the U.S.

Navigating the changing trade landscape

As U.S. businesses grapple with the impact of higher tariffs and increased sourcing costs, a shift towards expansion into the European market may present an appealing alternative. With lower shipping and duty costs compared to the heightened tariffs on Chinese goods and equal selling opportunities for certain product categories, Europe could become a more viable option for businesses looking to maintain profitability while avoiding punitive trade measures.

However, should Trump extend tariffs to additional countries, the repercussions could be far-reaching. Inflationary pressures are likely to increase as businesses face higher costs for sourcing Chinese-made products or alternative supplies from elsewhere. These rising costs will inevitably translate into higher retail prices for consumers, creating challenges across multiple sectors, including household goods, electronics, and automotive industries.

How can you adapt to these challenges?

In an evolving trade landscape, businesses must adapt swiftly to changing tariffs, rising costs, and shifting market dynamics. AVASK and KATA Global Logistics have joined forces to provide comprehensive support for e-commerce businesses seeking to diversify and expand their operations in the UK and EU markets.

AVASK specialises in helping businesses navigate complex expansion requirements, including:

• VAT registration
• Extended Producer Responsibility (EPR) compliance
• customs regulations

This expertise ensures a seamless entry into new markets, reducing administrative burdens and ensuring businesses remain fully compliant.

Meanwhile, KATA Global Logistics focuses on optimising logistics strategies by:

• identifying the best countries of access
• determining warehousing solutions
• creating cost-efficient shipping plans

By making use of this partnership, e-commerce businesses can develop resilient supply chain strategies. Maintain profitability and ensure your products reach customers efficiently, even in a challenging trade environment.

A one-stop solution for businesses to expand into the UK and EU

Whether you’re exploring new markets to mitigate tariff impacts, or seeking cost-effective supply chain solutions, our collaboration ensures your business is prepared to thrive in a dynamic global economy.