Talks with Mexico and Canada officials have resulted in President Trump extending the tariff pause until April 2nd. Initially, the Trump administration planned to enforce the tariffs on February 1st, then postponed them to March 4th. The charges include a 25% tax on all goods from Mexico and most importations from Canada. All imports from China will see a 20% tax hike. Importers will not have to pay tariffs on goods that comply with the USMCA. The USMCA (United States-Mexico-Canada Agreement) is a free trade agreement between the U.S., Canada, and Mexico. Nearly half of the goods Mexico exports to the U.S. are USMCA compliant, while approximately 40% from Canada are.
The Goal Behind Trump Extending The Tariff Pause
President Trump’s tariff extension is part of an ongoing trade war between the U.S. and its largest trade partners. A week ago, Trump announced a tariff pause for auto imports from Mexico and Canada. The pause for USMCA goods comes after Trump met with Mexico’s president, Claudia Sheinbaum. Sheinbaum noted, “We had an excellent and respectful call in which we agreed that our work and collaboration have yielded unprecedented results within the framework of respect for our sovereignties.” Retaliatory tariffs against U.S. importations into Mexico have also been paused by Mexico’s president until further notice. The primary reason for the tariffs is to address illegal immigration and drug trafficking into the U.S.
During the meeting, Trump extended the tariff “out of respect” for Sheinbaum for addressing fentanyl trafficking. Mexico has also been working more strongly to strengthen border protection against undocumented migration. While there have not been talks with Canadian Prime Minister Justin Trudeau, the pause will also affect Canadian imports. Another reason behind the tariffs is to bring manufacturing and trade back into the U.S. Trump believes it will stimulate the U.S. economy and create jobs; however, many have opposed the plan. Analysts believe the tariffs will raise costs for a shipper’s supply chain and potentially lead to inflation.
How Will Domestic Shipping Be Impacted by The Tariffs?
Although the tariffs will directly impact international shipping, they will significantly affect moving goods domestically. A standard part of most supply chains is trucking for first or last-mile logistics. Another example is drayage services, which is the movement of goods short distances, such as from a port to a location. If the tariffs result in manufacturing returning to the U.S., the trucking industry could be positively impacted. There would be a greater need for truckers to transport the finished product to stores or other locations. There is also a belief that the tariffs will negatively impact domestic shipping due to high importing costs. In supply chains, these costs can fall on the trucker.
When shipping cargo domestically, it is essential to be aware of anything that can disrupt the transportation process. Awareness can allow you to take the necessary steps to protect your cargo. An ideal way to do this is by speaking with a freight broker. Brokers are the middlemen between the shipper and carrier and coordinate a shipment’s movement on behalf of the shipper. They also educate you on the steps to take and give you the best action to prevent disruptions. Reach A1 Freight Solutions at 786-375-9420 or info@a1fsinc.com for a quote to move your cargo domestically.