Challenges for Businesses Importing Goods to the U.S.
-Businesses in the U.S. and other countries might face challenges because Donald Trump plans to add new taxes (called tariffs) on products made in other countries. These tariffs are meant to help U.S. businesses by making foreign goods more expensive. Companies are now trying to figure out how to handle these extra costs.
Trump’s second term as president would start on January 20, 2025. After that, shipping goods (known as supply chains) could become more expensive. Trump has talked about adding a 10-20% tax on goods from many countries and a 60% tax on goods from China. This could make things more expensive for U.S. stores, manufacturers, and wholesalers.
Presidents can use several laws to create tariffs. Here are some of the key ones Trump might use:
- IEEPA (International Emergency Economic Powers Act): Lets the President add tariffs during emergencies, like trade problems.
- Section 232 of the Trade Expansion Act: Allows tariffs if imports hurt national security.
- Section 301 of the Trade Act: Allows tariffs if other countries trade unfairly. Trump used this law during his first term to tax products from China.
- Section 338 of the Tariff Act: Allows up to a 50% tax on countries that treat U.S. goods unfairly.
- Section 122 of the Trade Act: Allows a temporary 15% tax if the U.S. has money issues with other countries.
What Can Companies Do?
Companies can take steps now to prepare for these changes:
- Check where products come from:
- Businesses should confirm a product’s origin. For example, if something is labeled as made in Europe but was mostly assembled there, it might still face tariffs.
- Review agreements with suppliers:
- Companies should check their contracts to see who is responsible for paying tariffs. When creating new agreements, they can add rules to make suppliers handle extra costs.
- Use strategies to save money:
- Companies might use “first sale” rules to pay taxes on a lower price. For example, if a product is made in China, sold to a middleman in Hong Kong, and then sold to the U.S., companies could base taxes on the lower price in China instead of the higher price in Hong Kong. Other strategies include adjusting shipping costs or reporting lower product values legally.
What’s Next?
New tariffs are likely, but the details are still unclear. For now, companies should start tracking their supply chains more closely and look for ways to save money to get ready for these changes.