Trump's policy will establish a baseline 10% tariff on all imports from countries around the world, except for those from countries adhering to the USMCA free trade agreement between the US, Mexico, and Canada. Non-compliant goods will remain subject to a 25% tariff.

For businesses that actively engage with the US through exporting goods, imposed tariffs will likely mean a squeezing of profit margins, during a time where the economic outlook continues to remain uncertain.

To mitigate the dilemma of absorbing additional costs or passing them down the supply chain to customers, LTS Global Solutions suggests that companies may once again be forced to reevaluate their supply chains by exploring alternative sourcing options and considering relocating manufacturing operations to tariff-friendly regions to stay competitive in 2025 and beyond.

Since returning to the White House, he has introduced a 20% levy on all Chinese imports, imposed a 25% tariff on steel and aluminium imports, and pledged a 25% tariff on most imported cars and auto parts – all aimed at renegotiating trade deals with US partners worldwide, emphasising the need to "put America first on trade."

Questions around what the repercussions of these tariffs will be still remain, most notably how countries will respond and how it will impact the global supply chain. China has already imposed a 15 percent border tax on imports of US coal and liquefied natural gas products, with Mexico and Canada also imposing levies of their own in retaliation.

On a global scale, the ripple effects of these tariffs are expected to be far-reaching, impacting everything from manufacturing costs to consumer prices.

Trump’s introduction of tariffs comes at a time where the global supply chain remains fragile, following a turbulent 2024 that saw widespread instability across major trade routes.

Mirza Baig, Global Business Director at LTS Global Solutions believes the addition of trade restrictions emphasises the need for UK businesses to remain agile and become more open to the idea of diversifying their presence away from tariffed regions if possible.

“Last year, supply chains were hit by a continuous cycle of geopolitical crises, namely the Russia-Ukraine War, ongoing conflict in the Middle East and repeated attacks on vessels by Houthi Rebels which passed through the Red Sea, Mirza said. While all of these issues continue to rumble on in some shape or form, President Trump’s tariff tirade will likely take the podium as the defining trade disruptor of 2025 and compound these pre-existing challenges.

“Undoubtedly the current pandemonium around the imposition of tariffs will result in short term market volatility, however it’s only once the dust settles that we can gauge the level of fallout from prolonged tariff disputes. If history is any indicator, these measures will likely prompt a further tit-for-tat retaliatory response from major trading partners on top of what has already been implemented, further disrupting global trade and as a result creating additional challenges for businesses reliant on international markets.

“Mitigating their impact over the coming year will be problematic for a lot of businesses. We have already had multiple discussions with customers concerning the possibility of evaluating their existing supply chains and identifying where adjustments can be made, whether that be establishing satellite manufacturing facilities in new regions to reduce dependency on heavily tariffed markets or diversifying into new markets.”

For firms, navigating through this maelstrom successfully will depend on their ability to closely monitoring policy developments and remaining agile during this period.

Mirza continued: “It is likely that amid these tariffs being imposed, new trade deals will be struck between countries to offset the financial burden of the tariffs and create more stable and favourable conditions for cross-border trade and manufacturers by offering preferential terms. A recent example of this is that talks between India and the UK regarding a free trade deal is set to resume in a bid to overcome the impact of protectionist US policies almost a year after talks had come to a halt.

“While it's unlikely that international markets will fully replace China as a global manufacturing hub, there is potential for a shift in supply chain patterns. Southeast Asia and the Indian subcontinent, with their lower labour costs and growing innovation, is actually a classic case study of a region becoming an attractive alternative for businesses seeking to diversify their manufacturing bases and mitigate tariff risks.

“Relocating parts or all of a business’s manufacturing process or breaking away from existing markets for instance is obviously an incredibly complex decision that requires careful planning and investment, but for many firms, it could be the most viable long-term solution assuming the tariffs will remain in place throughout Donald Trump’s Presidency.”

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