Tariff Trends 2025: Expert Insights on the New U.S. Customs Landscape

The below transcript has been generated by an AI system and may contain inaccuracies, errors, or omissions. While efforts have been made to ensure the accuracy of the content, the AI-generated transcript should not be considered fully reliable or definitive record.

Angela Lewis

00:30 - 02:41 Hello, everyone, and thank you for attending today's webinar, tariff trends 2025, expert insights on the new US customs landscape. My name is Angela Lewis. I am the global head of customs here at Flexport. And before we begin, I'd like to start off with a few housekeeping items for everyone. So on your screen, you will see a sidebar to the right of the main stage where you can submit questions. At the end of the presentation, we will host a q and a and we will answer a few audience questions, so please be sure to get your questions in early. In the same sidebar, you will see a tab labeled docs. This is where you can download a copy of today's slides and find other helpful resources, so be sure to do that before logging off today. Above your screen, you have a button to request an ACE analysis from Flexport. We will review in further detail later in the presentation, but please feel free to click that button if you would like Flexport to reach out and discuss an ACE analysis for you and your business. Okay. Now on to a brief legal note. Please keep in mind that all information provided in this session is based on the situation at this current time and may not be customized to your specific business requirements. We always recommend reaching out to a Flexport expert to discuss your particular situation. Now joining me today is my colleague and friend, John Stamper, who is a senior customs manager here at Flexport. We're excited to have him. And today's agenda, we are doing about a thirty to forty five minute session depending on how many questions we have and how much time, but we are kicking things off with reviewing the latest on reciprocal tariffs and additional deals that will likely be made in the recent weeks, a lot of speculation, followed by an update on February and a quick overview of the big beautiful bill. As always, we will close out with the q and a's, and hopefully get to all of your questions. So with that, I would like to pass it on to John to provide an update on the reciprocal tariffs. Welcome, John.

John Stampfer

02:41 - 19:22 Thank you, Angela, and welcome to everyone joining us today. I'd like to, we can move on to the next slide. I'd like to start with an overview of what's taken place over the past week or so in regards to the reciprocal tariffs, and also highlight some of the changes that we're seeing from the reciprocal tariff rates that were first shared back on April 2. April 2 was dubbed as Liberation Day. I think we all remember the press conference, that took place on Wednesday, April 2, with Trump holding up large cards, with specific rates on them. Days later, we saw a pause on the reciprocal tariffs with that ninety day pause set to end on July 9. And then last week happened. So what did what did we see happen last week? I'll touch on the executive order first. So we actually started to see president Trump post, post letters on truth social that mentioned an August 1 date. A few hours after that, an executive order was issued, extending the modification of the reciprocal tariff rates. This executive order confirmed that the July 9 deadline had been moved to August 1, and this is for non China countries. It also specifically called out, that the deadline for the China reciprocal rate of 34% would remain in place until August 12. So the letters. What did we what did we see? So on July 7, Trump began, posting letters on truth social. We saw 25 letters posted between last Monday, July 7, and last Saturday, July 12. The majority of those, 22 of the 25, were posted early last week between the seventh and the ninth, with the letter from Canada following a day later on July 10, and then the last two, letters from Mexico and the EU, last Saturday, July 12. The majority the majority of the letters went up or down within within 10 percentage points, but there are a few countries on here that I would like to call out. Cambodia and Sri Lanka saw a 1314% reduction, respectively. There were only two countries with a reduced rate greater than 10%. On the other side, there were four letters where we saw an increased rate of 10% or greater, all of which are significant trading partners with The US. So Brazil, at the top of the list, a 40% increase, and we will talk a little bit more in-depth on Brazil later on in the presentation. Canada, a 35% increase, Mexico, 30%, and the EU, a 10% increase, from what what was shown on Liberation Day. And again, these rates are all set to go into effect on August 1. But one thing that we do know is that these letters are not final. Countries are still in active negotiations with The US in hopes of coming to what the administration is referring to as an acceptable trade agreement with The US. And one thing I wanna call out while it's purposely not reflected here, yesterday, via post on Truth Social, president Trump stated that he made a deal with Indonesia, for a 19% reciprocal rate down from the posted amount here of 32%. Just kind of a side a side note, to that and and something that I actually find interesting, is that Indonesia is one of the BRICS, member countries. So it's really interesting to me that that that was one of the first countries post the letters being published, where where we saw that, that an agreement had been made. As far as the other countries, what what about what about the other countries that did not receive a letter? There have been reports that the reciprocal rate is going to remain at 10%. But in a phone interview with NBC News last week on July 9, I believe it was, Trump stated that he plans to impose blanket tariffs of 15 or 20% on most countries. So, again, we don't have anything official on this. So on August 1, we could see 10% for countries that don't have a specific rate called out, or we could potentially see the 10% baseline reciprocal rate increase to 15 or 20%. Moving on to the next slide. Alright. So digging in a little bit more, on the letters that were issued last week. So I wanna talk about a couple of important points, specific to the letters, and then also spend a little bit a little bit more time on a few of the actual letters that were shared, by president Trump. So one thing that we know about the letters is they're not final. All of the letters have this statement in there. If for any reason you decide to to raise your tariffs, then whatever that number is will be added to the percent that we charge. So Trump is effectively creating a baseline, for for these countries. We also know that these letters are not all inclusive. They all have a statement in there that says that they are separate from all sectoral tariffs. Right? So the sectoral tariffs are going to be your section two thirty for example, you're going your section two thirty two on auto auto parts, steel and aluminum, and potentially future, goods that are subject to, to February, which may currently be under investigation. Moving on to Brazil. I I specifically put Brazil on here, because it was the first it was the first letter that we saw that deviated from the standard template that was used with the other countries. Right? So between July 7 and July 9, 22 letters were issued. Brazil's being one of them. Brazil is the only one, that deviated from that that standard template that that Trump had used. And and the reason for that is because within the letter, he's actually making references to Brazil's domestic politics and policies. So it's going to be interesting in the coming weeks to see how the comments made in that letter to the president of Brazil, actually tie into US national security. I also think Brazil is gonna be a be a good country to follow here because, the president has Brazil's president has also stated that they will be implementing retaliatory tariffs against The US. So, again, really going to be interesting to see how this plays out. Additionally, Brazil, as I mentioned on the mentioned a little bit earlier, is the largest, the largest change, from the Liberation Day rates, an increase of 40%. Also too, like I mentioned with Indonesia, right, Brazil is also a member country of bricks, which we'll touch on a little bit later, but that could mean an additional 10% on top of the 50% reciprocal rate. Canada, Mexico, and the EU. Start with the we'll we'll start with the EU. I wanna spend most of the time here on Canada and Mexico, but I included the European Union for a couple of reasons. One is because of the significance here that while it is a single letter, we have to remember that we are talking about 27 member countries, that are going to see a 30% reciprocal tariff. And then the second reason is because of all the conversations that have the negotiations that have taken place. A lot of the conversations have been around the digital, the digital services tax. You know, I think this is why I think this is interesting here, and I I I believe there was an article last week that said that the interesting here, and I I I believe there was an article last week that said that the EU may have tabled, the digital services tax, as as part of their negotiation tactics. But why I think it's interesting is, the digital services tax is one thing that seems to have been a sticking point, with President Trump across multiple negotiations. Right? We saw a digital services tax regarding Brazil, and I think we all know that, that it was also a pretty significant point of contention in trade negotiations about two two to three weeks ago between between Canada and The US as well. So Canada and Mexico. Canada and Mexico did not receive a reciprocal tariff rate on Liberation Day. If you remember from the from the previous slide, it was 0% on that April 2 date. However, they are two of the three countries that are impacted by a tariff, on fentanyl. Right? We know that China is the is the third. But Canada and Mexico, are subject to a 25% tariff, I e bifentanil tariff. And I think it was reading the reading the letters that Trump posted on truth social, it was very apparent to me what his views are, on the fentanyl crisis. Right? If you look at the if you look at the letters from Canada and Mexico, in both letters, fentanyl was specifically called out in three separate, paragraphs. So for Canada and Mexico, right, we currently see 25% fentanyl, 50% steel and aluminum, 25% on auto, of course, for for non USMCA qualifying goods. I I mentioned that I mentioned that to say that, one thing that's unclear right now, well, there's two things that are unclear. One is whether or not these rates these new reciprocal rates on Canada and Mexico will include USMCA qualifying goods or not. And there's also a question about whether or not this 35% is going to be reciprocal rate, or a, or an increase to the existing IEPA tariffs being the being the 25% fentanyl rate. Moving on to the next slide. Yeah. Great. Alright. So I called out a few additional deals here. Right? UK, China, Vietnam, these were three countries that had deals or agreements in place, ahead of July 7. For The UK and China, these agreements information regarding these agreements were published by the White House on whitehouse. gov. There have not been any federal register notices published as of yet. Nothing on Vietnam though. So really quickly on The UK, I'm not going to spend, too much time here as this was covered in-depth in previous webinars. But The UK The UK is subject to the same 10% baseline reciprocal tariff, but they have benefited from reduced rates on the sectoral tariffs. Auto parts, autos, and steel and aluminum, where they're currently at 25%, where the rest of the world is seeing 50%. China. Right? We know that on May 12, The US and China finalized the trade deal. Reciprocal tariffs is a baseline of 10%. The current deadline is August 12. Again, this was a carve out in the executive order. So China is maintaining that August 12 deadline and not subject to the August 1 deadline, that the rest of the world is subject to. And as it stands, the reciprocal rate is going to be 34%. I know there have been some conversations around a possible 55%. There has been nothing official confirming that. So as it stands right now, it's 34% going into effect on August 12. Moving on to Vietnam. So on July 2, Trump made a Trump posted on Truth Social, that The U US had reached a trade deal with Vietnam, a 20% reciprocal reciprocal rate, their liberation day rate was 46%. A 20% reciprocal rate, but 40% for goods trans shipped. This created a lot of a lot of conversation. More and more people are speculating on what trans shipping means. In this context, what does it mean to president Trump? We don't have anything confirmed yet. I think this is gonna be one of those, one of those topics that may take some time for both the administration, customs and border protection, and commerce to provide us, direction on on exactly what this means. And the last thing here, just wanted to touch on quickly is bricks. There was a post on Truth Social, on July 6 that where Trump stated that an additional 10% tariff would be charged to any country aligning themselves with the anti American policies of BRICS. So nothing again, nothing official on this as well, but we will, we will continue to monitor, and look for anything there. And I'll go ahead and, pass it back to Angela, for an update on February.

Angela Lewis

19:22 - 34:51 Thanks so much, John. Appreciate those updates as we kinda hang in the balance waiting for official information to come. So with February still being a hot topic, we thought we'd step back today and do a little bit of an overview. I wanted to start by stepping even further away from two thirty two and really talk about something that we've been hearing a lot, especially as we're seeing the president and some of these tariffs wrapped up now in court. We hear from time to time from industry, from others, from pundits, you know, who has the power to, impose tariffs? Is it congressional power or is it presidential power? And the truth is that the US constitution is who gives congress, or what gives congress the power to regulate international trade. But congress has delegated a lot of that authority or some of that authority over to the president with time. And there's a couple key legislative acts in which this authority has been delegated. So we'll go through these briefly, and then we'll start focusing specifically on section two thirty two. First, there's the Tariff Act of 1930, also known as the Smoot Hawley Tariff Act. It provides clarity around antidumping and countervailing authority. And, if any of you guys may recall, was made famous in the movie Ferris Bueller. Anyone? Anyone? The Trade Act of 1974 is another legislation. It's commonly referred to as section three zero one, which focuses on unfair trade practices. And then, of course, what we've all come to learn about this year is the International Emergency Economic Powers Act of 1977, known now as IIPA, which gives the president authority over commerce due to national threats outside of The US. Now that one may seem a bit a bit vague or unclear, which is probably also why this is, making its way through the courts. We will hear more when the federal, Circuit Court of Appeals starts oral arguments on July 31. More to come on the IEPAs. But the other, legislation, the one we'll focus on today, is actually the Trade Expansion Act of 1962, commonly known as section two thirty two. And this, legislation allows the president to impose restrictions on imports if the secretary of commerce determines, following a formal investigation, that the imports threatened to impair US national security. So let's talk about that investigation process for a bit. The head of any department or agency or any interested party may request that the secretary of commerce investigate the effects of a specific import product on US national security. The secretary of commerce themselves may also self initiate an investigation. And once the secretary starts the investigation, they actually have up to two hundred and seventy days to issue a report and the findings of this report to the president. If no threat is found, then no further action will be required. But if a threat is found, then the president has up to ninety days to decide if he agrees and whether or not to act. Once the president makes a decision to act, then there is fifteen days to implement that action, and the president must inform congress within thirty days of the decision to act that he is doing so. Just some quick background here. So from 1962 when this legislation was created up until 1992, when the World Trade Organization was formed, there were 24 investigations initiated, eight cases found national security threats, and in some cases, fees or embargoes were levied. That That was kind of the outcome. Now once the WTO was formed, up until the first Trump administration, only two cases were opened. One in 1999 for petroleum, in which commerce cited a national security threat, but the president decided not to take action. And then another one in 2001 on iron ore and semi finished steel where commerce did find a security threat. Now Trump's first term, seven investigations were initiated, and then all but one commerce found a threat to US national security. As we all know, the president imposed tariffs on steel and aluminum in 02/2018, but the other products the Trump administration decided to begin with tariffs. Interestingly enough, the Biden administration did conduct one two thirty two investigation on neodymium, a permanent magnet made of critical minerals for defense. Commerce did find a threat to US national security during that investigation. President Biden agreed and announced various actions to reduce our dependency on these goods specifically from China. So while the use of two thirty two is not necessarily new, we are absolutely seeing more investigations from this administration than ever before. So let's go on to the next slide and take a look at where we are today with some of those. Now one of the first actions that the current administration took in early February was to issue a proclamation expanding and increasing those original steel and aluminum two thirty two tariffs from 2018. It was originally increased and effective on March 12 at 25%, but has been raised to 50% as of June 4. And after kicking off the steel and aluminum, the president then added the 25% tariffs on automobiles and auto parts, which went into effect on May 3. Now what we've already seen and what everyone should be very aware of is that these lists, of affected products could continue to expand. Each year and multiple times per year, industry will have an opportunity to make requests for expansions, which will be followed by a review from the commish department and modifications, which will be made up to sixty days after that review. So continue to look for changes with, these $2. 32 tariffs. Now let's take a look at some of the open investigations. So as I said, the secretary of commerce has two hundred and seventy days to complete investigations. So looking at copper, for example, the deadline for this investigation is actually December 5. However, on July 9, Trump did post to Truth Social that he was announcing a 50% tariff on copper effective August 1 after receiving a robust national security assessment. So, basically, the secretary of commerce has come back much earlier than those two hundred and seventy days with the assessment. Trump, as of this recording, we have not seen the official executive order, though it, along with a full list of affected tariffs, should be published very soon if it is to go into effect by August 1. The US does import more than half of the copper that we consume with more than 60% of those imports coming actually from Canada and Chile. So it will be interesting to see if there is a USMCA exemption here or not. Similarly, The US imports 30% of its lumber, from Canada. And the National Home Builders Association has come out against this investigation saying our housing crisis is a bigger threat to national security than imported lumber or timber. So so far, the administration has made no comment on timber and the lumber investigation, though that can stay open for quite some time as well. However, last week in a cabinet meeting, Trump did provide insights into the pharmaceutical investigation saying we will be announcing something very soon on pharmaceuticals. We are going to give people about a year, a year and a half to come in. And after that, they are gonna be tariffed at a very, very high rate, like, 200%. The US does import nearly 80% of its generic drug, tablets, and capsules, and half of all branded drugs. So the idea, it seems like, with that timeline would be to give companies the opportunity to, create these drugs, domestically instead of sourcing from abroad. Moving down to semiconductors and equipment, imports are highly concentrated with five countries providing nearly 80% of the semiconductor tied imports. China tops the list, supplying more than a quarter, followed by Taiwan and Mexico. And the administration is pushing to move our reliance away from foreign countries for these ever important chips. In regards to critical minerals, no one country supplies the majority of our critical minerals, but as a group, China does dominate on some specific minerals such as gallium. And then just this week, we do have two new investigations that were announced on polysilicon and its derivatives, and then unmanned aircraft components and their parts, think drones. The commerce department is taking input from industry until August 6, not just industry, but interested parties, and are looking to better understand things like The current US demand for these products and the feasibility of domestic industry to meet current consumer demands, as part of the entire investigation. So, technically, these are the newest investigations and could be open until 03/28/2026. We will hear more on these investigations with time. But as you can see, the administration is moving faster than the time frame needed. As I mentioned on the last slide, section two thirty two tariffs rely on commerce to find a national security threat, so during the investigation process. But national security is actually not well defined or defined at all in section two thirty two, and that has become more and more debated as more and more of these investigations open up. The administration has made it very clear that they interpret economic security as national security, and the president outlined his plans for The US basically on day one when he published his America First policy. He further promoted that via the one big beautiful bill. So let's take a look, and review the impacts of the one big beautiful bill on trade now that it has officially passed. After all, if carrots are the stick, the one big beautiful bill was really meant I'm sorry. If tariffs are the stick, the one big beautiful bill was really kinda meant to serve as the carrot. So the one big beautiful bill doesn't do a whole lot for trade necessarily, but there are a few things we should call out here. De minimis, for one, is probably the biggest impact. It ends de minimis for all countries starting 07/01/2027. There are also new penalties that will be instituted $5,000 for the first instance and $10,000 for the second instance. Think of this as undervaluing products and saying, that they are worth less, than they actually are, so manipulation of your imports. It also is only applicable to commercial goods. So if you are moving across borders and bringing in personal effects, you can still bring that in at, no tariff. But we know it's closed for China already. It is going to officially close for all countries starting 07/01/2027. I also wanna note just really briefly that there was an important change for de minimis, last week regarding FDA. So FDA regulated products were able to, be submitted without, there was an exemption for low value FDA related products, regulated products. This has since been rescinded. So any good, even if it is low value today, that requires FDA will now be, required to submit a formal entry. Moving back to the one big beautiful bill, a couple other callouts and something that I think will affect goods moving across the borders is the funding for CBP through fiscal year twenty twenty nine. So we're seeing quite a lot of money injected for CBP, 4,000,000,000 for personnel, 2,000,000,000 for retention, hiring, and bonuses, and 5,000,000,000 for facilities. Also, procurement and integration of new nonintrusive inspection equipment to combat the entry or exit of elite of illicit narcotics. So we could see new ways in which customs is doing exams, increased exams, but also just increased CBP personnel. So, hopefully, we'll see faster response times, but just know that there is a lot of money being put into CBP to help fund them. Also, like I said, more of the carrot here, domestic manufacturing incentive. So the administration has made it clear since the America First policy that they are looking to move manufacturing domestically. A 100% bonus depreciation for new investments in machinery, equipment, even manufacturing facilities. Expense cap is doubled to enable larger amounts of equipment to be fully expensed in the first year. And then interest expense deductions related to financing investments, acquisitions, and expansions is also part of this bill. And then going back, to the semiconductors, we are seeing incentives for production of semiconductors. So once again, the administration is really trying to promote, bringing that domestically. And in closing, I know we're running a few minutes over, so apologize for that. We wanted to just share a couple helpful resources with you all once again. So we have our ACE analysis. We leverage five years of your import data. This is your custom source of truth to help you find potential duty savings, look at your compliance risk, and also missed, opportunities and cost savings. This is free for anybody who wants to receive one. You can click the request ACE analysis button, and our BD team will reach out to you. Also, if you haven't used it yet, please check out our tariff simulator. It is not behind a paywall. This is free and open to all users. You can get your, correct tariff amount, including landed cost and dynamic shipment scenarios and real time data on what the tariffs are as of today. I will say that this does not include anything that is speculative. This is only updated once we see an official executive order. And then if you do need any help from any of our experts for classification and duty rates, please reach out to our classification team, or trade advisory, customs brokerage, please re out reach out to customs BD, and we are happy to assist you. So we will run over a few more minutes. I will have John join me back on stage, and we'll take a few minutes to answer some audience audience questions. I don't think we'll have time to get to them all, so apologies in advance. But we will also open up our feedback survey at this time, so please share your feedback on today's webinar so we can continue to curate some really great content for you. Alright. Let's dive into our first question, John. Maybe I'll swing it back to you. Do we have any indications as to whether or not The US will continue to honor USMCA with the new 35% tariffs for Canada and Mexico?

John Stampfer

34:51 - 35:24 Yeah. So as as I mentioned earlier, this is this is one of the things that we're still waiting for clarification on. Right? We know that we know that currently, there are, goods goods that do qualify, are not subject to all the tariffs. But with the with the new rates, the 35% for Canada and the 30% for Mexico, right now it's unclear as to whether or not on August 1 these new rates will or will not apply to USMCA qualifying goods.

Angela Lewis

35:24 - 35:40 Yeah. Absolutely. Let's do another one. Just, for Vietnam, is there a difference in the reciprocal tariff rate between made in Vietnam using China and non China inputs?

John Stampfer

35:40 - 36:29 Yeah. So this is we we we touched on we touched on this a little bit. Right? This is where the 2040% comes into play, and this idea around trans shipping and what trans shipping means. Nothing official has been published on this. There's a lot a lot of speculation on what this is actually going to mean. But a lot of people are saying that this could potentially be related to, Chinese input, Chinese content that is being shipped to Vietnam, further manufactured, and then exporting to The US. Again, it's all speculation right now. Hopefully, we have more information ahead of the August 1 deadline.

Angela Lewis

36:29 - 37:13 Yeah. Agreed. I think when we look at the word transhipment rate, we don't necessarily think it it actually is about the vessel and the way the vessel moves. It's probably about the content of the goods. And we do see this, like, for example, in pharmaceuticals, it's actually dealing more with India, but a lot of that raw material is coming from China and then going to a third country and maybe even incorrectly taking on that country of origin. So we assume that's what they're trying to avoid here. But waiting for more information and more clarity, this is definitely new language that we have not seen before. John, there was a question about India on the reciprocal tariff country list. Are they still subject to increased tariffs come August 1?

John Stampfer

37:13 - 37:56 Yeah. So for India, the reciprocal rate that was given to them on April 2 was 27%. And they have not, India was not one of the, 25 letters that were sent out last week. Right? So what their rate as as it stands right now has not changed. We can assume it's the 27% rate, and we will need to wait and see what, what the Trump administration is going to do for countries that did not receive a letter ahead of August, ahead of the August 1 deadline.

Angela Lewis

37:56 - 38:09 Yeah. There's also a question about when will these tariffs go into effect? Does it mean it will be based off the bill of lading date or the entry date? You wanna, you know, start with that, John?

John Stampfer

38:09 - 39:07 Sure. So the executive the executive order and this is language that we that we see all the time. Right? With the executive order, they said that it's for all goods entered for consumption or withdrawn from warehouse for consumption, on or after 12:01AM on on August 1. We have seen in the past that in addition to that import and entered for consumption stipulation, also an export requirement. We have not seen that as of yet. It is possible that we could see something in an but we have not seen anything regarding that yet. So it's uncertain right now as to whether or not there will be, an export stipulation in addition to that entered for consumption.

Angela Lewis

39:07 - 39:49 Yeah. My best guess is there won't be an export stipulation, but, you know, with everything else, we we wait to see in the official language and how it's read, and then we interpret from there. But I would base it off the entry arrival date and and not an export date. Alright. I think we're seeing a lot of questions on USMCA. It might be good to do a follow-up in a future, webinar on this. Does the 30% proposed August tariff for Mexico include the 25% IEPA tariff that is already in effect for non USMCA products, or is that an addition to making the total 55%?

John Stampfer

39:49 - 40:19 Yeah. That was that was one of the things that I I had mentioned, on the slide with with with Canada and Mexico. That is one thing that, one of many things that is still unclear here, whether it's going to whether those are going to stack on top of one another, or whether or not it's an increase from the current 25, I e, array moving it up to 30%. So we're pretty good on that.