Trump’s Tariff Wars: Mitigating the Risk for Supply Chains

Throughought his presidency, President Trump has used tariffs – and the threat of tariffs – to address an unprecedented variety of economic and national security threats. As if to underscore the point, on December 2, 2019, the Trump Administration announced or threatened new tariffs in response to three different disputes:

• President Trump announced steel and aluminum tariffs on Brazil and Argentina to counter the alleged manipulation of their currencies;  
• Robert Lighthizer, the U.S. Trade Representative, released the results of a Section 301 investigation into a French digital services tax, calling for punitive duties of up to 100% on $2.4 billion in French agricultural and consumer products; and
• Secretary of Commerce Wilbur Ross again threatened increased tariffs on consumer goods from China if a trade deal with Beijing is not reached by December 15.

The Administration has used a variety of legal authorities to impose or threaten tariffs, including Section 232 of the Trade Expansion Act of 1962 – which authorizes import duties for national security purposes – and Section 301 of the Trade Act of 1974, which is intended to address discriminatory or unlawful trade practices. The Administration threatened tariffs against Mexico under the International Economic Emergency Powers Act in June 2019, which historically has provided the legal basis for national security measures such as sanctions and export controls.

The Administration has used tariffs to target both adversaries and allies, and to address all manner of disputes, ranging from broad national security and economic interests (such as the China tariffs) to discrete disputes (such as those tariffs imposed in response to a World Trade Organization ruling that European countries unfairly subsidized Airbus, to the detriment of Boeing). Unexpected tariffs disrupt supply chains and can lead to increased costs for manufacturers and consumers. While some had expected tariffs to be temporary, there are no signs of permanent abatement. For companies that had adopted a wait-and-see approach and for those now facing the impact, it is time to consider mitigation strategies.

Read "Trump’s Tariff Wars: Mitigating the Risk for Supply Chains."