U.S. Tariffs: What’s happening, and what does it mean?

On Wednesday April 2^nd, President Trump announced a broad expansion of tariffs to apply to 185 countries and territories. Prior to this, new tariffs were announced to apply to China, Canada and Mexico, as well as sector-specific tariffs on aluminum, steel and automobiles. In this explainer, we’ll cover what has changed in U.S. trade policy and tariffs during 2025, how and when those changes are being applied, what’s covered, and what it means for businesses.

Timeline

February 1: President Trump signs executive orders enacting tariffs on goods from China, Canada and Mexico entering the United States, to be enforced from February 4. This order directs 10% tariffs on Chinese imports, 25% tariffs on Mexican imports, and 25% on all non-energy/oil imports from Canada. Canadian oil and energy imports are subject to 10% tariffs.

February 3: One-month delays are negotiated for these tariffs in the cases of Mexico and Canada.

February 4: The 10% tariff on Chinese imports comes into effect. 

February 10: President Trump modifies steel and aluminum tariffs to remove exceptions, raise the rate from 10% to 25%, and add more steel and aluminum products to be covered by the tariffs.

March 4: Tariffs on Mexican and Canadian imports come into effect. Tariffs on Chinese imports are increased from 10% to 20%.

March 6: Tariffs are delayed for goods compliant with the United States—Mexico—Canada Agreement (USMCA), initially for a month and now indefinitely.

March 12: Tariffs on steel and aluminum imports go into effect.

March 26: President Trump announces 25% tariffs on automotive imports, due to start collection on April 3 for fully imported cars and expanding over the following weeks to include more imported car parts, up until May 3.

April 2: President Trump announces ‘reciprocal’ tariffs on 185 nations and territories due to come into effect on April 9, alongside a baseline tariff of 10% on all imports coming into effect on April 5, with many countries being subject to much higher percentages. The tariffs are described as reciprocal, though they are not correlated to tariffs that each country levies on US imports. Instead, a White House official quoted by the BBC explains that they are based on a calculation of the trade deficit the US has with each nation/territory, divided by imports.

In a separate executive order, President Trump abolished the ‘de minimis’ exemption for goods from China and Hong Kong. This exemption, widely used by businesses like Temu, Shein and others, previously meant that imports under the value of $800 would not incur duties.

April 3: Automotive tariffs come into effect.

April 5: 10% baseline tariffs enacted.

April 9: Hours after reciprocal tariffs began, President Trump authorized a 10% tariff rate across the board, with the exception of China—essentially pausing the reciprocal tariffs for 90 days as negotiations with many countries continued. However, China is now the target of 125% tariffs.

What are the goals of the changes in trade policy?

Tariffs on Mexico and Canada were introduced with the aim of pressuring the United States’ neighbors to do more to tackle alleged fentanyl smuggling and illegal immigration, as well as to protect domestic industry. The stated aim of the reciprocal tariffs according to The Office of the United States Trade Representative is “to balance bilateral trade deficits between the U.S. and each of our trading partners.”

What it means for businesses

After several days of market reaction around the world with major indexes seeing drops across the globe, the White House said the reciprocal tariffs were due to be implemented on April 9 as planned. However, on the day, President Trump announced a 90-day pause while countries negotiated deals with the US.

Brands and manufacturers are still going to have to adapt to the 10% blanket tariff, but now have this 90-day period to evaluate likely impacts on their business of future higher tariffs, with common themes being increased cost of goods sold (COGS), reduced margins, already-committed orders and inventory becoming unprofitable, and fear that recession and price increases will drive consumer behavior change and reduced demand.

Manufacturers and suppliers are likely to push increased costs on to end-users, and retail brands are likely to also increase prices to protect margins.

How can you react?

Disruption at this scale and speed is challenging in the best of circumstances, but many supply chain organizations are still struggling with slow decision-making, manual scenario planning and limited insight into their trading partners.

The implications of the changing trade policies are potentially enormous and require supply chain leaders to be able to collaborate effectively across functions and with partners—something that’s not possible to do when data is siloed, slow to update and slow to communicate.

Intelligent supply chain planning and execution will be crucial benchmarks for businesses to adapt on the fly to changes in costs, consumer behaviors and regulations.