A 10% universal tariff and country-specific duties on U.S. imports will take effect on April 5 and April 9, respectively. Consequently, this is pressuring shippers to re-evaluate their supply chain strategies with some rushing to import goods to avoid fees, while others are holding back products in Asia.

One forwarder observed that shippers are adopting various tactics such as shifting from full container loads (FCL) to less-than-container loads (LCL) to expedite deliveries. Some are utilizing air freight, while others are pulling back orders. Some vendors are reconsidering delivery duty paid (DDP) arrangements to renegotiate pricing while others are seeking to alter contracts to shift the burden of duties.

Companies previously considering moving sourcing from China to other Asian countries are now reconsidering, as these alternative locations face steep tariffs too. Most notably is Vietnam, which faces a 46% increase.

One industry executive highlighted that the tariff initiative is prompting a fundamental reassessment of individual supply chains. Companies now need to consider risk management and strategic planning.

Chris Rogers, head of supply chain research at S&P Global Market Intelligence, predicts a $458 billion increase in import costs in an entire year, based on 2024 import levels. He pointed out that the extent of the impact will depend on responses from other governments and how firms adjust their pricing and sourcing strategies. “Given the wide-ranging nature of the duties and focus on consumer goods, price increases may be a main strategy followed,” he said.

Source: Journal of Commerce