Four steps companies can take in response to U.S. tariffs

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Robert Nihen

Director, Corporate Communications, KPMG US

+1 201-307-8296

By Bob Nihen

On March 8, 2018, President Trump signed an executive order imposing a 25 percent tariff on imported steel and a 10 percent tariff on imported aluminum products from certain countries under Section 232 of the Trade Expansion Act of 1962, which permits the imposition of additional tariffs for national security reasons. On June 15, the administration announced 25 percent tariffs on $50 billion in Chinese products as part of efforts to combat what it describes as unfair trade practices by China.

These and other more recent moves have sparked a heated debate about the possible economic impact of tariffs and concerns that tensions may escalate as other countries respond.

“The tariffs could impact a wide range of industries,” says Doug Zuvich, a Tax partner with KPMG LLP’s Trade & Customs Services practice. “More broadly, they will spur all companies to think more about their operations and supply chains as they consider how the playbook that has guided cross-border trade over the past several decades may be changing.”

According to Zuvich, multinationals should take the following steps in response to growing trade friction:

Understand which products and what volumes you import today may be impacted, using import data from U.S. Customs and Border Protection to do so
Assess the potential monetary impact of the tariffs on your company
Consider additional local-sourcing options in the short term
Explore the possibility of implementing certain strategies and taking advantage of duty-recovery opportunities to soften the impact, including duty drawbacks, first sale for export, foreign trade zone, and tariff engineering.

To talk with Doug Zuvich about tariffs, the changing trade environment, and the possible impact on companies, contact Bob Nihen.