2025 Trump Tariffs – What’s Going On, What’s Likely to Happen, and What We Can Do About It

By Barnali Mishra, Managing Director

“What’s going on with these tariffs? How do you guys see these impacting your clients? How can we mitigate the impact of these tariffs?”

As procurement consultants that specialize in serving private-equity-backed companies in the mid-market, our team at Treya Partners has been fielding these types of questions over the last several weeks.?

Here’s the latest on the Trump tariffs, their expected impact, and most importantly, how you can mitigate their impact (and, yes, Treya can help!).?

Trump Tariffs: The Current State of Affairs

• U.S.-Imposed Tariffs. On February 1, the Trump Administration announced 25% tariffs on Canadian and Mexican goods (with a lower 10% tariff on Canadian energy products); these have subsequently been postponed until at least March 1. On February 4, an additional 10% tariff on Chinese imports was implemented. Most recently, on February 10, the Administration announced a 25% tariff on all steel and aluminum imports into the United States with no exceptions or exemptions. These different tariffs are expected to have varying degrees of impact by industry.?
• Retaliatory Tariffs. Nations being hit by new U.S.-imposed tariffs are retaliating by imposing tariffs on American exports. China has been measured in its response. Instead of imposing blanket tariffs, it has been targeted – China has imposed 15% tariffs on American coal and liquefied natural gas and 10% tariffs on crude oil, farm equipment, and certain vehicles.

Trump Tariffs: Who Will Be Impacted and How (in a Nutshell)

These tariffs have far-reaching repercussions for industries engaged in cross-border commerce:

• Importers. Companies reliant on imports from China, Mexico, and Canada for their inputs (as well as those importing steel or aluminum from any international source) will likely endure increasing costs in 2025, leading to higher production expenses and reduced profit. This situation forces businesses to choose between absorbing costs or passing them on to customers, potentially impacting their price competitiveness. Domestic suppliers are also expected to raise prices, as the competition they face from imports will decrease, and demand for their products may outpace supply.

• Exporters. American companies that export to China, Mexico, and Canada will be impacted by retaliatory tariffs that have been imposed (or are expected to be imposed) by those countries, likely increasing costs of and reducing international demand for impacted American products.

• Consumers. American consumers will also feel the pinch. The nonpartisan Tax Foundation estimates that the average tax burden per U.S. household could climb by over $800 in 2025 if all proposed tariffs are implemented. This increase in consumer prices could dampen domestic spending, potentially slowing economic growth.

Trump Tariffs: The Expected Impact (in a Bit More Detail)

What is going to happen as a result of these tariffs? We’ve outlined potential impacts below.

• Higher Costs for Imported Products (Inputs and Finished Goods). Some or all of the added cost of the tariffs will be passed on to the end-user of the product in question, unless it can be sourced from another country (that does not have tariffs imposed on it) for a price that is equal to or lower than the pre-tariff cost.

• Higher Costs for Domestic Alternatives to Internationally Sourced Products. As tariffs are imposed, U.S. producers of products that are often sourced from China, Mexico, and Canada (and now subject to tariffs) will increase prices due to higher demand and decreased competition.

• Domestic Production Boost. A key objective of tariffs is boosting domestic manufacturing, and if tariffs remain long-term, U.S. companies that are currently reliant on international inputs will turn to domestic sources of supply, leading those manufacturing in the U.S. to ramp up domestic production to meet increased demand.?
• Decreased Supply (Potential Allocation). In the near-term, U.S. domestic manufacturing capacity will likely be insufficient to meet increased demand if a significant number of U.S. companies switch their sourcing from China, Canada, and Mexico to the U.S. As a result, product availability could decrease and products may go “on allocation,” as they did during the pandemic.

• Supply Chain Disruptions / Delays. Increased costs and potential shortages could delay production schedules for products reliant on inputs subject to tariffs. There may be extended lead times for delivery of products subject to tariffs.

• Increased Prices for Consumers. If tariffs result in higher material costs and manufacturing delays, the price of products that have key inputs impacted by tariffs will rise.?
• Layoffs / Economic Slow Down. Depending on their scale, retaliatory tariffs may decrease the sales of American companies that export products to China, Mexico, and Canada. In addition, the increased cost of goods may lead to reduced profitability for companies that have high tariff exposure. Both of these types of situations may spark layoffs.

What’s My Risk? Assessing Your Exposure to Tariffs

There are a few simple steps you can take to assess your organization’s exposure to tariffs – Treya’s complimentary spend analysis can help.

What Can You Do to Mitigate Tariff Impacts???

There are quite a few steps you can take to mitigate the impact of tariffs, and in many of these areas, Treya can help.

1. Diversify Supply Sources

• Diversity Countries of Origin: Diversify your supply base to reduce reliance on a single country or region (for example, Apple is expected to ramp up production in India, Malaysia, and Vietnam to reduce its exposure to tariffs on China).
• Onshoring: Move production and/or sourcing to the United States, reducing tariff exposure and decreasing lead times.

2. Utilize Cost-Plus Agreements and/or Tie Price Adjustments to Recognized Market Indices

• Consider using cost-plus agreements to limit price volatility while allowing suppliers to account for tariffs-driven increases.
• Establish contractual language for price adjustments that is tied to fluctuations in raw material and commodity costs; linking price changes to recognized market indices can help companies ensure pricing transparency and alignment with actual market conditions in the U.S. and prevent arbitrary increases.

3. Explore Opportunities for Substantial Transformation of Goods in Countries Not Hit with Tariffs

• Explore if an unfinished good from a country hit with tariffs can be shipped to another country where tariffs have not been imposed where it can undergo “substantial transformation” in order to not be subject to tariffs.

4. Leverage Tariff Exemptions and Optimize Harmonized Tariff Schedules (HTS) Code Classifications

• Apply for tariff exclusions on certain goods that meet specific criteria.
• Stay informed about relevant tariff schedules and exemption.
• Explore if your organization can benefit from reclassifying your products into the optimal HTS codes.

5. Strategic Stockpiling and Inventory Management

• Consider strategically stockpiling goods likely to be impacted by tariffs, especially if you have the working capital and storage capacity.
• Improve forecasting and inventory management to ensure product availability during potential disruptions.

6. Logistics Optimization

• Consider alternative shipping routes, ports, or regional hubs to avoid bottlenecks caused by customs processing at certain entry points.

These are uncertain times, but there are definitely many things you can do to protect yourself from the full impact of these tariffs – and our team at Treya Partners is ready to help. Contact us today to ensure you’re prepared to mitigate the impacts.

Sources: IBISWorld, NPR, Bloomberg, CNN, Treya Partners analysis