In this week’s recap article, we’ll cover some of the latest tariff-related developments that you should be aware of, breakdown what the next few weeks have in store, and discuss why operational agility is more important than ever before.
If you didn’t read last week’s article and need to catch up, click here.
One of the hot debates from the past few weeks was whether or not President Trump would allow any exemptions on the steel & aluminum tariffs. While the Section 232 memorandum explicitly states that no new country-specific exemptions will be granted, the fact that countries like Mexico and the UK have held off on retaliating against these tariffs in hopes that they can work something out has led many to believe that accommodations would be made.
On Monday March 17th, however, Trump settled this debate once and for all by announcing that he has no plans to create any exemptions for these tariffs.
This is great news for domestic steel & aluminum producers, who truly have the opportunity of a lifetime in front of them. Those who were banking on new exemptions on the other hand however will need to quickly face reality.
This is likely to result in retaliation from countries like Mexico. While Mexican President Claudia Sheinbaum has not announced any plans for retaliation so far, this will be something to watch out for in the coming weeks, especially as we get closer to April 2nd, when both the paused 25% tariffs on USMCA goods from Mexico and the reciprocal tariffs take effect.
Both Canada and the EU on the other hand have already retaliated with new tariffs on US goods, which we wrote about in our Week 8 Recap from last week.
Following the implementation of the Section 232 Tariffs, the EU announced plans to implement retaliatory tariffs on nearly $30B (USD) of US exports of beef, poultry, motorcycles, bourbon, peanut butter and jeans starting in early April. While these tariffs will still go into effect in April, the EU announced on Thursday March 20th that they would postpone the implementation to mid-April in order to make more time to negotiate.
This shouldn’t come as much of a surprise. After the EU announced their plans to retaliate, Trump hit back by threatening a 200% tax on wine imports from the EU unless they walk back their retaliatory tariffs. With the US being the largest export market for European Wine, this would be a devastating blow to the EU.
Additionally, with Trump’s recent announcement that he currently has no plans to offer any Section 232 tariff exemptions, it’s not looking likely that the EU will be able to work out a deal. This means that for now at least, both the 200% wine tax and the EU retaliatory tariffs are still on the table.
While this of course could change in the coming weeks, domestic wine producers should prepare themselves now as this presents a massive growth opportunity. For context, nearly a fifth of all wine consumed in the US comes from the EU. Additionally, domestic wine sellers and importers have said this would essentially shut down the European wine business in the US.
Due to Trump pausing the 25% Canada & Mexico tariffs twice as well as recent comments from Treasury Secretary Scott Bessent indicating a possible delay in their activation, many have wondered whether or not Trump’s reciprocal tariffs will go into effect on April 2nd like initially planned.
Late Sunday from Air Force One however, Trump cleared the air by stating “April 2 is a liberating day for our country. We’re getting back some of the wealth that very, very foolish presidents gave away because they had no clue what they were doing.”
While the exact specifics have yet to be announced, Treasury Secretary Scott Bessent has stated that “What’s going to happen on April 2, each country will receive a number that we believe that represents their tariffs. So, for some countries it could be quite low. For some countries it could be quite high.” Additionally, Bessent said that the Trump administration is particularly focused on the countries that have the highest tariffs and large trading volumes with the US, which he referred to as the “Dirty 15.”
These countries include:
In light of this, Bessent alluded to the fact that affected countries would have the ability to negotiate by stating "We are going to go to these countries and say, look, here's where we think the tariff levels are, non-tariff barriers, currency manipulation, unfair funding, labor suppression, and if you will stop this, we will not put up the tariff wall".
UPDATE: New reports coming out on Monday March 24th indicate these tariffs might be implemented at a later date than April 2nd. News Story
In addition to the reciprocal tariffs slated for April 2nd, Trump has also announced plans to implement new sectoral-specific tariffs. While these were first announced in mid-Feburary, they haven’t been talked about much until Trump confirmed them this week. As indicated by the name, these tariffs will apply to specific industry sectors. As far as what sectors these will apply to, Trump has stated plans to impose ~25% tariffs on imports of cars, semiconductors and pharmaceuticals.
In the case of semiconductors and pharmaceuticals, Trump previously told reports at Mar-a-Lago that he intends to increase the rate even more over time, but that he first wants to give affected companies a chance to reshore production.
When implemented, these tariffs will have drastic effects. For context:
To add fuel to the fire, Trump told reporters aboard Air Force One late Sunday that “in certain cases, both” types of levies would be placed on imports. However, he hasn’t yet elaborated on which countries would be subject to both.
For now, the 25% tariffs on Canada & Mexico, the Reciprocal tariffs, and the Sector-Specific tariffs are all expected to take effect on April 2nd just 12 days away.
With that being said, there’s a lot that could happen between now and then. For starters, automakers will continue to do whatever they can to get Trump to continue allowing parts and vehicles that meet USMCA regulations to remain tariff-free. While there’s been nothing from the Trump administration indicating this is a possibility, it’s certainly not something to rule out considering that the automotive sector would be one of the most heavily impacted by these tariffs. Additionally, Trump has previously stated that the 25% Canada & Mexico tariffs will stack on top of the section 232 tariffs, which would bring duties to a steep 50% on imports of steel & aluminum from these countries starting April 2nd. With much of the food & beverage products sold in the US being packaged in aluminum cans, businesses in these sectors need to move fast and identify new suppliers, especially with peak season for beverage distributors quickly approaching. The same is true for domestic producers of aluminum cans, who have a massive growth opportunity in front of them if they can quickly scale.
As far as the reciprocal tariffs, Treasury Secretary Bessent has stated that some countries may try to pre-negotiate a deal and could avoid these tariffs entirely if they’re willing to drop their own. While as of now no countries have reached an agreement with the Trump administration, this could change in the next few weeks. Additionally, once these tariffs do go into effect, the Trump administration expects many countries will reach out in an effort to make a deal, which of course would involve them dropping their own levies on American products; a move that could greatly help domestic manufacturers.
Regarding the sectoral tariffs, expect more details to come on this. Specifically, expect the Trump administration to 1) announce when these tariffs will go into effect if they don't on April 2nd, and 2) clarify how these tariffs will work with the reciprocal tariffs and in which cases they will stack on top of each other.
Additionally, while Mexico hasn’t yet retaliated against the steel & aluminum tariffs, it’s likely that they will at least announce plans to do so as we get closer to April 2nd.
Lastly, while the EU has stated intentions to negotiate regarding their retaliatory tariffs on imports from the US, it’s not clear yet how soon this will happen. Regardless, sectors impacted by the retaliatory tariffs as well as those who either import European wine or produce wine domestically should pay close attention to this.
China Update - last week we wrote about how there were currently no plans for the Trump Administration to meet with China. Earlier this week however, Trump hinted that Chinese President Xi Jinping could potentially make a trip to Washington in the near future. Additionally, Montana Senator Steve Daines is scheduled to meet with a senior Chinese leader tomorrow ahead of an annual business forum in Beijing. Daines will bethe first American politician to meet with a senior CCP official since Trump returned to office.
Things are moving fast, and they’re changing constantly. That’s why operational agility is more important than ever before. Nobody really knows what will happen next, and with Veryable, you don’t necessarily need to. While others sit on their hands and wait until it’s safe to scale up and commit to new hires, Veryable users already did, and they’re capitalizing on the opportunities you aren’t prepared for. They’re not dealing with long hiring cycles, or having to play it safe so that they don’t end up overstaffed if higher demand doesn’t persist. With an essentially infinite supply of skilled and thoroughly vetted workers just a few clicks away, they’re able to pivot in just a day or two, and then scale back down even faster if the need arises. While there may be a lot of uncertainty in today’s landscape, one thing is for certain, and that’s that those with Veryable implemented into their operations will win the next few quarters and beyond.
To learn more about why this is, check out this article.
If you find these weekly recap articles helpful, make sure to check out our new US Manufacturing Today Podcast. Hosted by our Head of Reindustrialization Matt Horine, this podcast dives deep into the changes taking place under Trump 2.0, and also features insights and perspectives from current operations professionals like you.
You can find this podcast on: Apple Podcasts, Spotify, YouTube, or PocketCasts. Or you can listen on our website at: https://www.veryableops.com/us-mfg-today-podcast
To learn more about the changes taking place, visit our Navigating Trump 2.0 page. On this page you’ll find a full breakdown of Trump’s tariffs, as well as various blog articles that discuss how Veryable can help you thrive in this uncertain and rapidly changing landscape.
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