Understanding Tariffs: What Businesses Need to Know
April 21, 2025
As global markets continue to shift and geopolitical tensions influence trade policy, the issue of tariffs remains front and center for many businesses. Whether you're an importer, manufacturer, or retailer, understanding how tariffs work—and how they impact your bottom line—is more important than ever.
What Is a Tariff?
At its core, a tariff is a tax imposed by a government on goods imported from other countries. The primary purpose of tariffs is to protect domestic industries from foreign competition by making imported goods more expensive. However, they are also used as a tool in international trade negotiations.
For example, if Country A imposes a 25% tariff on steel from Country B, importers in Country A must pay that additional tax when bringing in steel. This can lead to higher prices for manufacturers and, ultimately, for consumers.
Recent Developments in U.S. Tariff Policy
As of April 2025, U.S. tariff policy has undergone significant changes under President Donald Trump's administration, reflecting a more aggressive stance on trade. Key developments include:
- Escalation of Tariffs on Chinese Imports - The United States has increased tariffs on Chinese goods to 145%, intensifying trade tensions between the two nations. In response, China has raised its retaliatory tariffs on U.S. imports to 125% and has suspended exports of certain critical minerals and magnets.
- Implementation of Reciprocal Tariffs - President Trump has introduced a policy of individualized reciprocal tariffs, imposing higher duties on countries with which the U.S. has significant trade deficits. This policy includes a baseline 10% tariff on all U.S. imports, effective April 5, 2025, with higher rates for specific countries starting April 9, 2025.
- Congressional Efforts to Reassert Trade Authority - In response to the executive branch's expansive use of tariff powers, bipartisan legislation known as the Trade Review Act of 2025 has been introduced. This bill seeks to require Congressional approval for new tariffs to remain in effect beyond 60 days, aiming to restore legislative oversight over trade policy
How Tariffs Affect Your Business
Tariffs can impact your business in a number of ways:
- Cost of Goods Sold: Importers often face increased costs, which can squeeze profit margins or be passed on to consumers.
- Supply Chain Disruptions: Companies may need to find alternative suppliers or rework logistics to minimize tariff exposure.
- Legal Compliance: Misclassifying goods or failing to adhere to proper customs procedures can result in penalties and delays.
It’s important to regularly review your supply chain and import practices to ensure compliance with current tariff regulations.
What You Can Do
There are several proactive steps businesses can take to manage the impact of tariffs:
- Review Tariff Classifications: Ensure your goods are properly classified under the Harmonized Tariff Schedule (HTS). Misclassification can result in overpayment or penalties.
- Consider Country of Origin Rules: Some goods assembled in multiple countries may qualify for preferential treatment under trade agreements such as USMCA.
- Explore Exclusion Requests: In some cases, businesses can petition for a temporary exclusion from tariffs if no viable domestic alternatives exist.
- Consult with Trade Counsel: An experienced attorney can help you navigate complex regulations, file exclusions, and develop compliant strategies to mitigate risk.
Looking Ahead
Tariff policy remains a dynamic and often politically driven issue. While tariffs can serve as leverage in international negotiations, they also have tangible impacts on businesses of all sizes. Staying informed—and prepared—is essential.
If your business is dealing with the effects of tariffs, the attorneys at Gross Shuman P.C. are here to help. Our team has experience in international trade and customs law, and we work closely with clients to develop practical, cost-effective solutions.
Steven Arias is an Associate Attorney who focuses his practice in the areas of business and corporate law. He can be reached at 716-854-4300 ext. 202 or [email protected].
