The 30-Day Pause on Tariffs: What This Means for Supply Chains

Canada and Mexico will delay the enforcement of tariffs by 30 days, but the planned 10% tariff for Chinese imports went into effect. What does this mean for the future of supply chains?

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The United States, Canada and Mexico will delay the enforcement of tariffs by 30 days, after what Canadian Prime Minister Justin Trudeau called “a good call with President Trump.”

Canada will deploy nearly 10,000 frontline personnel to strengthen border security as part of a $1.3 billion plan to reinforce their shared border to target the flow of fentanyl. The country will also appoint a “Fentanyl Czar” and launch a joint strike force with the United States to fight organized crime, drug trafficking and money laundering. Trudeau also said he would sign a new $200 million intelligence directive related to combat organized crime and fentanyl distribution.

Meanwhile, Mexico will send 10,000 troops to the U.S.-Mexico border to aid in the prevention of drug trafficking between the two countries, according to Mexico’s President Claudia Sheinbaum.

This comes after President Trump signed three executive orders last week; one placing 25% tariffs on goods from Mexico, a second installing 25% tariffs on goods from Canada and a 10% tariff on Canadian energy sources, and a third that levies an additional 10% tariff on imports from China. What’s more, President Trump enlisted a 10% tariff on all imports from China, however China hit back with levies on certain American goods such as coal, key minerals, crude oil, machinery, and more. Manufacturing, energy, and technology are among the industries being hit the hardest with additional duties, but across the board, shippers, businesses, and consumers will be faced with higher costs.

However, the planned 10% tariff for Chinese imports did go into effect, impacting all shipments currently en route. This includes 15% tariffs on natural gas and coal; 10% levies on oil, farm equipment, and certain automobiles; and imposing export controls on tungsten, indium, bismuth, tellurium, and molybdenum, which are used in a wide range of goods such as solar panels, smartphones, medications, and construction materials, according to project44 data.

But what does this mean for the different aspects of supply chain? And when time is up, what’s next?

For transportation and fleet management, it means, Q1 could experience little to no effects but Q2, the repercussions will be felt hard.

“The immediate impact of tariffs on trucking, freight, and supply chains will be muted. Goods already en route, shipments six weeks out on the water, and landed inventory will continue to flow, meaning the real disruption will be felt in Q2 as businesses adjust to the new reality,” says Hamish Woodrow, head of strategic analytics at Motive. “By the end of the day, companies will be deploying mitigation strategies—many will delay inventory shipments to later in the year, waiting to see if the policy shifts or exemptions are introduced. Those who preloaded inventory will likely adopt a wait-and-see approach, holding off on further adjustments until the market reacts. In the short term, sourcing alternatives are limited, forcing supply chains to pause and reassess long-term investments while monitoring policy developments.”

What’s more, ultimately, the burden of these tariffs will fall on U.S. consumers and retailers, Woodrow adds.

“Prices will rise, and businesses will pass along costs as they navigate increased expenses and uncertainty. Mexico’s role as the dominant trade partner will remain strong, our data showed trade through the Laredo port is up nearly 30% year-over-year, and October 2024 set a record 677,000 truck crossings. But any prolonged disruption could reshape regional supply chains in ways that will be felt for years to come,” he adds.

According to the Conference Board, the combined effect of the administration’s tariffs on what are the Top 3 U.S. trading partners could result in a 0.9 percentage point cut to the United States’ real GDP growth over four quarters. The Conference Board analysis also shows U.S. inflation increasing 0.6% over four quarters, due to these combined tariffs. Together, goods from Canada, Mexico and China make up 41% of imports into the United States, with an annual value of $1.4 trillion.

However, based on 2024 trade, new tariff rates could add $233 billion, according to insights released by Trade Partnership Worldwide. What’s more, U.S. companies could pay $700 million a day in extra taxes; Texas imports alone could face $1 billion per week in new taxes, and Montana imports could see a 2,625% tariff spike vs. current rates.

The upcoming tariffs could impact 42% of U.S. imports by volume, potentially impacting a significant portion of goods entering the country, according to project44 data. Canada has already announced a 25% tariff on U.S. imports, with Mexico and China likely to follow, affecting key U.S. industries such as agriculture, machinery, and automotive. Collectively, these countries account for over 50% of U.S. exports by volume.

 

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