Since the European Union approved the U.S. trade deal today and the Strait of Hormuz is reopening, tariffs are likely to be the next hot topic on the horizon in supply chain. Thus, I thought summarizing the current status and what we should be doing was in order. Always interested in your feedback and ideas. – Lisa
What’s Going On With Tariffs
The recent Supreme Court ruling on tariffs created headlines and uncertainty, but it did not eliminate tariffs or the President’s ability to influence trade policy. Instead, it shifted the legal framework being used to implement tariffs and accelerated efforts to negotiate trade agreements with key trading partners. As manufacturers and distributors evaluate the impact on sourcing, supply chains, profitability, and growth plans, the more important question is not whether tariffs will continue, but how the tariff landscape will evolve. Understanding the administration’s post-ruling strategy, the status of major trade negotiations, and the practical actions companies should take to strengthen supply chain resilience will be critical to navigating the next phase of global trade.
Supreme Court Ruling on Tariffs
Although the Supreme Court said that the President cannot use the International Emergency Economic Powers Act (IEEPA) as authority for broad, sweeping tariffs.they did not rule that tariffs are unconstitutional and did not eliminate presidential tariff authority in general. Thus, the President immediately pivoted to Section 122 of the Trade Act of 1974 and announced a temporary 10% global tariff on imports. This tariff is in effect for 150 days while the Office of the United States Trade Representative (USTR) launched investigations that could support long term tariffs.
Post Ruling Tariff Strategy
Since Trump said he would like the same tariffs to remain in effect as he put in place prior to the Supreme Court ruling, the updated strategy appears to be replacing the tariffs with the following:
- Section 122 — short-term bridge tariff (the 10% global tariff).
- Section 301 — country- and policy-specific tariffs (including the forced-labor investigations).
- Section 232 — sector-specific tariffs tied to national security concerns
Government officials have said multiple times that they expect the tariff levels to remain unchanged from the pre-ruling tariffs unless trade agreements are worked out. Thus, they are signaling to business leaders to forecast accordingly.
Trade Deals
The trade deals are achieving results most thought were not possible. There are significant investments in the United States, markets opened for exports, expertise and investments shared with the U.S. for critical industries such as shipbuilding and mining, and tariffs increased to make manufacturing more competitive for critical items like steel, aluminum and rare earths. For example, the European Union voted today in favor of the trade deal, putting a 15% tariff rate on most EU goods while the EU eliminates tariffs on most U.S. goods and lowered non-tariff barriers. In addition, the EU will purchase significant energy products from the U.S. and cooperate in other areas. Japan is another key example. In this case, Japan received a 15% tariff ceiling, committed $550 billion in investment targeting strategic industries, agreed to expand access for certain agricultural products, and the two countries agreed to cooperate on supply chain security and critical minerals.
What’s on the Horizon: China, USMCA, India & the Rest
For the countries that do not have a trade deal, it is expected that section 301 or 232 will result in tariffs similar to the rate prior to the Supreme Court ruling. Thus, businesses can plan accordingly. There are a few caveats and negotiations underway:
- China: Many industrial products, machinery, electronics, components, batteries, chemicals, and strategic sectors are still subject to additional duties with the Section 301 tariffs. . The newer agreements did not eliminate the existing Section 301 structure. The May 2026 Summit established that China would purchase additional U.S. agriculture products, restore market access for beef and poultry, purchase an additional 200 Boeing aircraft, and create a U.S.-China Board of Trade and Board of Investment. Rare earths remain the largest supply chain issue which China agreed to address.
- USMCA: The USMCA will come up for renewal this year. The U.S. has already launched discussions with Mexico to increase North American content, tightening rules of origin, reducing dependence on China, strenghtening supply chain security, and several other topics. It is likely that the agreement will increase North Amercian content, toughen automative rules, increase China-related restrictions, and increase agriculture and energy concessions. It is unlikely the agreement will go away as there will be time for negotiations.
- India: The U.S. and India announced an interim trade framework and broader roadmap toward a trade deal. It is effectively in the implementation stage with negotiators working through the final details of the first tranche. The agreement positions India as one of the primary beneficiaries of U.S. efforts to build more resilient and diversified supply chains outside of China.
The rest: It is expected that the trade agreements in negotiation will either be finalized or the tariffs in place when the Supreme Court ruled will go into affect via the new sections.
What Should Companies Do?
As tariff policies continue to evolve, manufacturers and distributors should focus on strengthening supply chain resilience rather than reacting to each policy change. The most successful organizReations are evaluating their end-to-end supply chains, identifying risks and bottlenecks, and building the flexibility required to respond quickly to changing trade conditions.
Path Forward Recommendations:
- Resiliency: Strengthen supply chain resiliency by diversifying suppliers, qualifying secondary sources, and reducing dependence on single regions or countries.
- Reshoring/ Nearshoring: Evaluate reshoring, nearshoring, and regional sourcing opportunities to reduce tariff exposure, shorten lead times, and improve responsiveness.
- SIOP: Implement a robust SIOP (Sales Inventory Operations Planning) process to align demand, supply, inventory, capacity, and financial objectives while proactively identifying risks and constraints.
- Advanced technologies: Leverage advanced technologies such as artificial intelligence, predictive analytics, advanced planning systems (APS), digital twins, and automation to improve visibility, scenario planning, and decision-making.
- Visibility: Increase supply chain visibility across suppliers, inventory, production, transportation, and customer demand to identify disruptions before they impact performance.
- Profitability: Review product and customer profitability to understand the impact of tariffs, duties, transportation costs, and changing sourcing strategies on margins.
- Strategic capacity: Build strategic inventory and capacity plans for critical materials and components where supply disruptions could significantly impact customer service.
- What If: Develop scenario plans and contingency strategies to prepare for potential tariff changes, trade disputes, geopolitical disruptions, and supply shortages.
- MItigate risk: Collaborate closely with customers and suppliers to align expectations, share forecasts, and identify opportunities to mitigate risk across the supply chain.
- Operational excellence: Invest in operational excellence and continuous improvement to offset rising costs and maintain competitiveness regardless of the tariff environment.
Companies that take a proactive approach to resiliency, planning, and technology will be best positioned to navigate tariff uncertainty, protect profitability, and support profitable growth.
If you are interested in reading more on this topic:
Supply Chain Visibility Fueling Faster, Smarter & Proactive Decision-Making