The “T” Word: How tariffs shook global trade

We couldn’t address impactful regulatory shifts of 2025 without discussing tariffs. Hands down, the subject of tariffs was one of the most exhausting of the year. They were implemented, then rescinded or reduced. They stacked, or they didn’t. They applied to some products, but not others. They were reciprocal, IEEPA, Section 232 or Section 301.

Trade teams were forced to learn new vocabulary, such as smelt, melt and pour. Companies whose products had always been duty-free scrambled to learn what Free Trade Agreements are and how they work. Supply chain mapping to calculate landed costs was all the rage. Free Trade Zones (FTZ) were explored. Product classifications had to be revalidated—and the list goes on and on. 

And it’s only been 6 months since the reciprocal tariffs were first announced. Indeed, the learning curve has been steep.

The tariffs have increased supply chain costs, impacted inventory management and lead times, and companies have had to make hard decisions about shifting sourcing, diversifying suppliers, and increasing compliance budgets to meet the demands of new import rules and regulations associated with their new and diverse supply chains. 

Tariffs are so impactful because they affect all three pillars of import compliance: Valuation, Country of Origin, and Classification. Even a single inaccuracy in any of these areas can cause companies to overpay or underpay duties—both outcomes are undesirable.

The real dilemma has been investing in and implementing programs to ensure the tariffs are paid while not knowing if they’ll be rescinded. With the Supreme Court due to hear the case for and against the tariffs in early November, companies should be aware that if the tariffs are struck down, refunds will not be issued automatically. 

Compliance teams should talk to their customs brokers now to discuss how refund requests can be made, and for which entries they can be made. Nevertheless, that might not be the end of it.

Even without the IEEPA tariffs, the government may simply turn their gaze to other tariff authorities. They’ve already dipped their feet in the waters by establishing additional Section 232 tariffs for autos and auto parts, softwood lumber, and kitchen cabinets and vanities. Settle in—it’s a long game.

The Affiliates Rule

On September 29, the U.S. Department of Commerce, Bureau of Industry and Security (BIS) published the long-anticipated 50% Rule (aka the Affiliates Rule) with immediate effect.

The Affiliates Rule expands U.S. export controls to subject entities to the same restrictions as listed parties if 50% or more of their ownership (directly or indirectly, individually or in aggregate) is held by one or more parties on the government’s Entity List, Military End User List, and OFAC’s Specially Designated Nationals and Blocked Person’s List, deeming them “Unlisted Entities.”

Due diligence is not as simple as it sounds—even BIS admits that. They affirm that the online Consolidated Screening List that smaller companies have depended on for years is no longer sufficient for due diligence. They expect companies to implement risk-based compliance programs to comply with the Affiliates Rule. 

There are complexities to screening, mainly in scouring the web for the ownership structure of companies when that information is not readily available. Research requires knowing where to look, and what to look for. Even if companies can get their hands on ownership details by asking customers to sign certifications, can they identify the vague “other indicia of control” the government has asked companies to be on the lookout for? 

For these reasons, the big question at the end of September was: To ship or not to ship? All the while, companies scrambled to vet, or re-vet, their customers and vendors. Another blip in the year’s starts and stops.

Government delays and shutdowns

For our next stop, BIS has had stockpiling issues of their own this year. Export licenses and classification requests have been stacked up on their desks, and companies are clamoring for help, but with hardly anyone to turn to. 

What was once a deep bench of officials and licensing officers with collective years of experience between them has dwindled. Companies manufacturing highly sensitive products, especially those with worldwide licensing requirements, either have had to halt shipments or agree to share their wealth with the government to get their licenses released. 

Also, in late August, BIS revoked the Validated End User authorizations that previously allowed a handful of companies to ship certain semiconductor manufacturing equipment to China without the need to obtain licenses—more licenses to add to their pile. If your supply chain depends on licenses to keep the freight moving, evaluate any licenses that are set to expire in the next six to 12 months and submit those renewal applications as early as possible. 

What to do?

Yes, 2025 has been taxing—pun intended. But there’s one thing we know: Professionals in the trade industry are resilient. If you haven’t heard about it, the Great Lock In is the latest trend on social media in which people commit to focusing on goals for personal improvement in the Fall months rather than to wait for the New Year.

Likewise, companies seeking to minimize the impact of regulatory change on their supply chains in 2026 can get a head start now by focusing on the future needs of their people, processes, and technology that will serve to enhance organizational performance and mitigate risk.

People: Do team members responsible for trade operations have the skills they need to effectively, and quickly, implement change? Are they familiar enough with the products they’re shipping to identify a misclassified product, or an under-valued one? Can they quickly navigate systems to stop a shipment or to release a hold?

Are they empowered to ask questions if something doesn’t look or feel right? How much budget is allotted for compliance training? Is it worthwhile to invest in people now to head off any future violations caused by unfamiliarity with the regulations or unawareness of the internal processes designed to prevent them?

Processes: BIS is clear that they expect companies to establish a risk-based compliance program consisting of policies, procedures, and processes to identify and address the risks of engaging with entities that may be subject to the controls triggered by the Affiliates Rule.

At minimum, the program should include a prioritized review of higher risk regions, how to conduct ownership and control mapping to assess corporate structures and aggregate ownership by restricted parties, identification and escalation of red flags, steps to stop and start shipments as needed, training in all key processes, and last but not least, recordkeeping. This is one area that cannot be kept on the backburner until “things slow down.” The rapid pace of change in 2025 is a great indicator that they probably won’t.

Technology: Despite increasingly complex regulations, many companies still manage trade compliance using spreadsheets, e-mails, and manual checks. This must change to stay ahead of the curve. What can be automated? Having the right systems, knowing where data is stored in the systems, and knowing how to effectively use the systems, is critical. Global trade management systems will help store classification data, license information—when you get them—and run screening at the same time. 

Speaking of which, don’t set and forget your systems. New restricted parties are added on a regular basis. Section 232 derivative product lists continue to expand as well. Tariff rates will change as agreements are reached with other countries. Therefore, test your systems often.

It’s a challenge, but just a few shifts can get you from stop to start more quickly in 2026. We must embrace ongoing education, robust technology, and strategic risk management to transform our compliance challenges into competitive advantages.

With vigilance and intention, we can avoid costly setbacks and steadily advance toward seamless and compliant global trade as we keep our supply chains moving.