Supply Chain Briefing

Tariffs and Trade: What Manufacturers Should Expect Next

As new tariffs rolled out across the board today, I thought this would be a great topic for this week’s Supply Chain Briefing. I look forward to your feedback. – Lisa

Table of Contents

Tariffs have dominated supply chain conversations over the past year, creating uncertainty for companies around the globe. Since Trump’s original “Liberation Day” announcement, businesses have navigated new tariff policies, trade agreements, a landmark U.S. Supreme Court ruling, and ongoing government investigations that continue to reshape the global trade landscape. While the headlines have changed frequently, the overall direction has become much clearer. We will recap the key tariff milestones, explain where U.S. trade policy stands today, and discuss what manufacturers and supply chain leaders should do to position themselves for long-term success.

A Look Back at Tariff Milestones

Tariffs have dominated supply chain circles since Trump’s term started. Tariffs kicked off with Section 232 analyses related to national security. The Trump Administration rolled out tariffs for steel and aluminum early on. These were followed by phased in rollouts and/or announcements for autos, auto parts, copper, timber, lumber, pharmaceuticals and trucks.

The bulk of the tariffs were kicked off with Trump’s announcement on “Liberation Day” in April 2025. High tariffs were rolled out across the board to entice companies to invest in U.S. manufacturing and/or to rebalance trade. At first, markets crashed and companies halted most, if not all activity while waiting to better understand future trade guidelines and likely impacts on their end-to-end supply chain and financial results.

Within a few months, the panic subsided as frameworks of trade deals were announced and firmed up. South Korea, Argentina, and several Latin American countries were the first to announce a framework for a trade deal. The UK was the first to conclude a trade deal, followed by the European Union. India and Taiwan have also announced and/or signed in addition to many other smaller trading partners. China initially responded with escalating tariffs; however, that has been resolved at a lower level of tariffs with talks continuing.

In essence, the trade deals opened up markets for the U.S. (typically aerospace, agriculture, energy and the like) while setting a base tariff level for countries trading with the U.S. In several cases, there are strategic agreements for key investments in the U.S. and collaborations such as in shipbuilding, critical minerals, AI, automotive, etc. In addition, there have been substantial announcements and commitments of purchases of aerospace, energy, and agriculture.

In February 2026, the U.S. Supreme Court ruled that the International Emergency Economic Powers Act (IEEPA) does not give the president the authority to impose broad tariffs. Instead, they said the administration must use legal authorities that actually authorize tariffs such as the Trade Act of 1974 (unfair trade practices), the Trade Expansion Act of 1962 (national security), section 201 or other trade authorities. Thus, within days of the ruling, Trump invoked Section 122 of the Trade Act of 1974, which allows the president to temporarily address balance-of-payments problems. He instituted 10% tariffs on nearly all imports for 150 days.

During that 150 days, the U.S. Trade Representative (USTR) initiated 60 separate Section 301 investigations, one for each economy under review. The investigations focused in on whether countries prohibit the importation of goods made with forced labor, and whether they effectively enforce that prohibition. Separately, the Commerce Department has been conducting separate investigations under other statutes including Section 232 (national security investigations), antidumping (AD) investigations, and countervailing duty (CVD) investigations.

Results from the Trade Studies

USTR formed the legal basis for the new tariffs rolled out on July 24, 2026. They concluded that:

  • 54 economies lacked an adequate legal prohibition on importing forced-labor goods.
  • 6 economies had such laws but were not enforcing them effectively.
  • All 60 economies therefore imposed an unreasonable burden on U.S. commerce under Section 301.

Thus, 10% and 12.5% tariffs were rolled out, replacing Section 122’s tariffs that were expriring. A 10% tariff is assigned to imports from countries that the USTR determined have laws prohibiting imports made with forced labor and adequately enforce those laws. If not adequately prohibiting or enforcing, 12% tariffs were rolled out. In essence, this keeps the baseline tariffs largely equivalent wtih the goal of keeping stability and clarity for business leaders.

In addition, the latest status from the Commerce Department reviews of pharmaceuticals concluded with the following actions:

  • For patented (brand-name) pharmaceuticals, the U.S. will impose a 100% tariff on covered patented pharmaceuticals, biologics, and certain associated ingredients for 17 large pharmaceutical companies beginning on July 31 with most other companies beginning on September 29, 2026. Companies that negotiated qualifying domestic manufacturing agreements or otherwise received exemptions will avoid the tariff.
  • For generic pharmaceuticals, there is a 0% tariff on imported generic drugs for the next two years (beginning August 1, 2026). After that, there is 100% tariff in year one which increases to 200% thereafter.

Lastly, the USTR has opened additional investigations into topics such as:

  • Global manufacturing overcapacity, particularly in industries where foreign excess production is alleged to distort markets, potentially impacting industries such as steel, aluminum, chemicals, industrial equipment etc.
  • Germany’s pharmaceutical pricing practices.
  • Vietnam’s intellectual property policies.

The bottom line (excluding China) is that the administration is focused on domestic manufacturing for strategic and critical industries. Otherwise, tariffs will be significant for critical industries with a baseline tariff for the rest.

The Latest on the China & U.S. Trade Agreement and Tariffs

China remains the most heavily tariffed major U.S. trading partner. Even after the Supreme Court struck down the IEEPA-based “Liberation Day” tariffs, most of the tariffs that matter on Chinese goods remained in place. China now faces a combination of long-standing Section 301 tariffs from the first Trump administration, fentanyl-related tariffs, Section 232 tariffs on specific sectors such as steel, aluminum, and autos. Also, beginning today, the 10% Section 122 tariff was replaced with a new 12.5% Section 301 tariff tied to forced-labor enforcement.

The Trump-Xi summit in Beijing in May 2026 was about stabilizing the relationship while securing targeted economic commitments. Both sides characterized the meeting as constructive, but most of the outcomes were frameworks and pledges rather than comprehensive trade agreements. China pledged to increase purchases of U.S. agricultural products, with the goal of returning imports to roughly pre-2025 levels. Trump announced agreements that included China’s planned purchase of 200 Boeing aircraft, along with other commercial commitments involving U.S. companies. Lastly, the leaders agreed to establish new U.S.-China Boards of Trade and Investment to provide a formal mechanism for ongoing economic dialogue and to address commercial issues.

The next phase of the U.S.-China trade discussions is set to take place in the U.S. and is likely to focus on targeted negotiations rather than a sweeping trade agreement. The U.S. is paying attention to whether China follows through on commitments involving agricultural purchases, commercial deals, and critical minerals, while both sides continue discussions through newly established trade and investment channels. At the same time, ongoing U.S. investigations into manufacturing overcapacity and strategic industries such as semiconductors, pharmaceuticals, aircraft, batteries, and solar equipment could lead to additional tariffs. Broad tariff relief appears unlikely in the near term. We expect incremental changes and product-specific exemptions rather than a comprehensive rollback.

What Should Companies Take Away?

The biggest takeaway is that tariffs have evolved from a short-term negotiating tactic into a long-term business reality. While the legal authority behind certain tariffs has changed and trade agreements continue to evolve, the overall direction remains consistent: the U.S. is using trade policy to strengthen domestic manufacturing, reduce dependence on strategic imports, and encourage investment in critical industries.

Do not expect a broad rollback of tariffs, particularly for China or products tied to national security, healthcare, technology, and other strategic sectors. Instead, anticipate incremental changes, targeted tariffs, and ongoing country- and industry-specific negotiations. Rather than waiting for complete certainty, successful companies will continue to build flexibility into their operations.

What should you do?

  • Address risk: Assess your supply chain risk, diversify suppliers where appropriate, strengthen regional supply chains, and evaluate opportunities for reshoring or strategic partnerships.
  • Utilize SIOP: Integrate tariff scenarios into SIOP (Sales Inventory Operations Planning), which will improve supply chain visibility and enable contingency planning so that you can pivot as conditions change. To learn how to be successful with a rollout, download our eBook, SIOP: Creating Predictable Revenue and EBITDA Growth.
  • Invest in Technology: Strengthen your technology foundation with modern ERP systems, AI, supply chain visibility tools, and predictive analytics. The companies that can quickly model tariff scenarios, understand supplier impacts, and make data-driven decisions will respond faster and with greater confidence than competitors relying on spreadsheets and reactive planning.
  • Strategic view: Organizations that view tariffs as another strategic planning variable will be in the strongest position to mitigate risk, capitalize on new opportunities, and accelerate profitable growth. Take proactive action to get in front of evolving conditions to create success instead of mitigating challenges.

Our best clients are moving from reactive to proctive. Think ahead, take changing conditions into account, build resiliency into your systems, and innovate for success. There will be vast opportunities from significant investments and expansion of domestic manufacturing of critical industries and the opportunities to dramatically increase exports. The best companies will not only mitigate risks but will focus attention on preparing for profitable growth.

If you are interested in reading more on this topic:
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