Understanding the new tariff landscape: Insights for manufacturers

U.S. trade policy is entering a new and complex chapter, particularly for manufacturers with supply chains in China, Mexico or Canada. As of spring 2025, three sets of tariffs are in effect — with more expected on April 2.

The new trade landscape has left many small and midsized manufacturers uncertain about how to plan for the months ahead. For companies that source raw materials or components from abroad, the cumulative effect of overlapping tariffs can significantly inflate the cost of imported goods. Currently, there’s no clear path for exclusions or relief.

The compounding nature of modern tariffs

Historically, manufacturers only worried about isolated tariff actions, such as the Section 201 steel safeguard measures of the early 2000s. Today, however, trade actions are layered across multiple legal authorities and categories, resulting in cumulative costs for importers. At once, U.S. importers are managing the effects of:

• New global tariffs with no country exemptions (e.g., the 25% tariff on steel and aluminum imports under Section 232 that took effect on March 12, 2025).
• New geographically targeted tariffs (e.g., the 25% International Emergency Economic Powers Act (IEEPA) tariff on shipments from China, Mexico and Canada, and the 10% tariff on energy resources and critical minerals from Canada).
• Historic tariffs (e.g., Section 301 tariffs, which impose a 25% duty on 6,800 Chinese imports and a 7.5% rate on another 3,200 products).

Combined, these tariffs create a significant and often unpredictable burden on importers, particularly when goods are subject to more than one tariff category.

Tariffs quickly add up.

Tariffs on Chinese imports

As of March 4, 2025, a 20% IEEPA tariff applies to all imports from China. Many of those items are also subject to existing Section 301 and Section 232 tariffs. For example, a Chinese-made steel or aluminum part could be subject to:

• 25% under Section 301.
• 25% under Section 232.
• 20% under IEEPA.

That means the total tariff burden could exceed 70% — and that’s before additional duties and processing fees. Products not made of metal are still subject to the IEEPA and Section 301 rates, resulting in effective tariffs of 27.5% to 45%.

This tariff structure creates two distinct challenges for U.S. manufacturers: managing rising costs for imported components and competing against higher-priced imports. Companies must closely track the evolving tariff structure and evaluate how competitors’ pricing may shift as a result of trade policy.

Steel and aluminum tariffs expand under Section 232

As of March 12, 2025, a 25% tariff applies to all imports of steel and aluminum, from all countries, with no exclusions.

Sources in Washington, D.C., suggest the U.S. Department of Commerce is unlikely to reinstate the Section 232 exclusion process, which closed on February 10. Instead, the administration appears to be phasing out the process entirely, reinforcing a more hardline approach to metal imports.

Even trading partners with existing free trade agreements — such as the United States–Mexico–Canada Agreement (USMCA) — are not exempt. Each country or nation bloc must negotiate separate exemptions, further complicating the trade landscape.

Tariffs on downstream products and derivatives

The administration also expanded Section 232 to cover derivative products, including a 25% tariff on 167 steel derivatives and 123 aluminum derivatives.

A new application process is expected to launch around May 12, 2025, which will allow U.S. manufacturers to request additional goods be added to the derivatives list. While this offers an opportunity for domestic producers to seek protection for vulnerable products, it also poses risks for importers. Companies that source finished goods made from steel or aluminum must monitor the Commerce Department’s updates regularly to ensure accurate tariffs are accounted for in their purchasing and pricing strategies.

Trade with Mexico and Canada is under new pressure

Under IEEPA and Section 232, the administration announced a new round of 25% tariffs on imports from Mexico and Canada. The tariffs were justified on non-trade grounds, namely border security issues.

The president also accelerated negotiations to revise the USMCA. Meetings were originally scheduled for 2026, but the administration asked for the agreement to be updated this year. This creates further uncertainty for manufacturers with supply chains that cross the U.S. southern or northern borders.

A new round of tariffs, set to take effect on April 2, would apply to all imports from Mexico and Canada not deemed USMCA-compliant. Canada has already announced retaliatory tariffs on U.S. exports. The result may be a scenario where components face multiple tariffs as they move back and forth across borders — a costly outcome for North American manufacturers.

If current plans proceed, the combined Section 232 and IEEPA tariffs could raise the total rate on Canadian steel to 50% and on Canadian aluminum to 35%. That’s a significant escalation given Canada’s role as the U.S.'s primary aluminum supplier.

April 2: ‘Liberation Day’

On his first day in office, President Trump issued a memorandum calling for an audit of global trade barriers targeting U.S. exports. The report is due April 1, and administration officials have signaled that a major announcement will follow on April 2.

Dubbed “Liberation Day” by the President, this policy rollout is expected to introduce reciprocal tariffs on a wide array of imports, potentially worth trillions of dollars. Countries that impose tariffs, taxes or other barriers on U.S. goods may face equivalent trade restrictions in return.

In the administration’s first 50 days, tariffs have already been imposed on hundreds of billions of dollars in goods. Additional investigations into foreign trade practices are underway, with new protective measures under consideration. U.S. manufacturers should anticipate further developments over the next two months and plan accordingly.

Strategic takeaways for U.S. manufacturers

With overlapping tariffs targeting multiple trade partners, the 2025 trade environment demands active engagement from business leaders and procurement teams. U.S. manufacturers can take these actions now to prepare for the uncertainty ahead:

• Audit your supply chain and identify all imports that may be exposed to current or upcoming tariffs.
• Monitor tariff announcements so you understand the status of IEEPA, Section 301 and Section 232 changes, including derivative product expansions.
• Model cumulative costs to avoid surprises. Calculate the total tariff burden on key goods, particularly those that pass through China, Mexico or Canada.
• Adjust pricing and sourcing as needed to reflect the increased cost of imports.

How Wipfli can help

Navigating tariffs is never easy. But you don’t have to do it alone. Wipfli’s experienced manufacturing and tax professionals are well-versed in handling complex tax situations. We can help you understand the impact of tax obligations, mitigate risk and stay compliant. Contact us for help with your tariff concerns.

This article was also authored by Omar Nashashibi, founder of Beltway Insider, who provides Wipfli with insights on federal government issues.