Tariff turmoil looms as White House trade pause nears deadline

While it is likely true that not many people thought the soon-to-be-ending three-month pause on the White House’s “Liberation Day, ” or reciprocal, tariffs would be a low-key affair, with just more than a week to go to the July 8 deadline, the global supply chain, once again, is preparing—and very likely about to deal with more—for a hefty amount of uncertainty, coupled with what could be viewed as a continued lack of clarity, relating to next step in regards to tariffs and trade policy.

To be sure, the stakes are high, given the various media reports and industry scuttlebutt ostensibly indicating that should deals not be reached between the U.S. and its many trading partners (there have only been a few so far), tariffs will shoot above the current 10% universal tariff level to higher percentage levels, much higher, in some cases. Remember, too, that this does not involve tariffs related to China, the nation’s third-largest trading partner, which remains in a separate pause with the U.S., set to expire in early August.  

This is a confusing situation, to say the least, for supply chain stakeholders. It has played out already, as we saw when tariffs on United States-bound imports from China climbed to 145%, effectively shuttering supply chains for various sectors and shippers for a period, following the early April pause through July, soon after the reciprocal tariffs were announced.

A New York Times report presented a new wrinkle to the current situation, stating that even if trade deals are in place by July 9, President Trump “has threatened to impose more tariffs even if those deals are in place.” To add to the confusion this could create, the article added that some White House officials indicated that the pause could be extended, with the president prepared to implement tariffs on countries being uncooperative.  

At last week’s SMC3 Connections Conference in Salt Lake City, Elizabeth Lowe, a partner at Washington, D.C.-based Venable LLP, that with trade policies and tariff structures accelerating a shift, or structural re-set, in global trade, the subsequent changes are not likely to be irreversible but instead will be changes that are permitted to a certain extent.

One reason for that, she explained, was that in the case of China, section 301 tariffs placed on China have been in effect since 2018, during Trump’s first term, and were not removed by the Biden administration.

“I think tariffs, in particular against China, are likely to remain [intact] for a long time,” she said. “The broader tarrifs against our major trading partners—in particular Canada, Mexico, and the EU—whether those will last in the long term, I think, is more of a question. We'll also see what happens on July 9, which will obviously impact pretty much all trade. I think starting in 2018 there was some movement away from China, in particular, some movement back to the States. I think we will see more movement in reshoring and near shoring from this. I think the extent of that, I think, is yet to be known. It takes a long time. I mean, you can't just up and move an entire production supply chain from one country to another. So, I think there will be some lasting effects, I think, to that extent, in terms of near shoring and reshoring.”

Lowe’s points hit the mark, especially the part about tariffs not likely to be irreversible. Either way, it is not difficult to see the impact of shifting trade policies, tariff levels, and uncertainty, when viewing it through the lens of U.S.-bound imports in May, which fell by around 35% annually.  And that impact was not understated by Port of Los Angeles (POLA) Executive Director Gene Seroka in the port’s recent monthly media call.

“Unless long-term, comprehensive trade agreements are reached soon, we’ll likely see higher prices and less selection during the year-end holiday season,” he said. “The uncertainty created by fast-changing tariff policies has caused hardships for consumers, businesses and labor.”

What happens next remains to be seen, of course, but given the sample size of trade and tariff activity, going back to the beginning of the year, it is fair to say that similar challenges and issues resultant of these changes will continue to prominently figure into how industry stakeholders map out their supply chain playbooks moving forward.