President Trump introduced a new spherical of tariffs that took impact July 24, 2026. The tariffs apply to 60 buying and selling companions, together with on imports from Canada, Mexico, China and all nations within the European Union — a few of the United States’ largest commerce companions. They’re additionally separate from the tariffs on sure imports from Canada introduced July 20, 2026, to take impact August 19, 2026.
The President enacted the tariffs underneath Part 301 of the Commerce Act of 1974, based mostly on investigations into whether or not any of those buying and selling companions fail to ban or to successfully implement a prohibition on the importation of products produced wholly or partly with pressured labor and whether or not the failure is unreasonable or discriminatory and burdens or restricts U.S. commerce. The Part 301 investigations started in March.
The tariffs vary from 10% to 12.5% — nations that dedicated to introducing prohibitions on pressured labor can pay a ten% responsibility, whereas people who haven’t shall be charged 12.5%. A truth sheet on the brand new tariffs famous they may apply to 99.4% of U.S. imports.
These tariffs are along with President Trump’s earlier promise to, on August 19, 2026, impose 50% tariffs on electronics, plastics, alcohol, dairy and greater than 500 Canadian merchandise. The president mentioned they’re designed to offset unfair disadvantages confronted by key American exports.
“Canada, through discrimination or an unreasonable and unequal imposition, burdens U.S. commerce but not the commerce of other countries and disadvantages U.S. commerce compared to the commerce of other countries,” the president mentioned in his proclamation.
The President plans to institute the brand new Canadian tariffs underneath the long-dormant Part 338 of the Tariff Act of 1930. This mechanism has by no means been used earlier than and is probably going to attract authorized challenges.
However the Part 301 tariffs usually tend to stay in impact.
Ross Hofherr is co-leader of Harris Seaside Murtha’s Worldwide Commerce Apply Group. Harris Seaside Murtha
How companies can put together
Whereas companies have been residing with 10% tariffs for a while, a few of these will improve and the prospect of fifty% tariffs on Canadian items could also be sufficient for companies to rethink provide chains.
Contingency plans may embody:
Diversify provide chains by transferring manufacturing to a different nation with decrease tariffs.
Pull ahead Canadian items and retailer them right here in the US earlier than tariffs kick in.
Briefly outsource to nations with decrease tariffs.
Reshore operations to the US.
Go on elevated prices to the buyer.
Different actions to contemplate:
Pressure Majeure Provisions: A drive majeure provision is a clause excusing one or each events from their contractual obligations if a unprecedented occasion outdoors their management makes it tough or unattainable to satisfy these obligations. Tariffs may set off the supply as an unexpected authorities motion that might disrupt provide chains or improve prices to a prohibitive degree.
Worth Changes: Present contracts could have clauses that permit for value changes to replicate modifications in tariff charges, particularly if tariffs are carried out after the contract is signed. Conduct a radical audit to find out any alternative to regulate the contract.
Price Inclusion and Sharing: Does your contract embody tariff prices within the acquisition price of imported items for stock costing functions? Does it embody cost-sharing clauses, so the prices of tariffs are break up between the customer and vendor?
Escalation Clauses: These contract provisions permit for changes to the contract value when sure circumstances are met, corresponding to value will increase in supplies or labor.
Change order procedures: These formalize how contract scope, price and schedule are modified because of sudden value will increase or delays brought on by tariffs or different unexpected circumstances.
Insurance coverage: Some insurance coverage insurance policies present companies with protections in opposition to monetary losses when a buyer can’t pay due to circumstances corresponding to financial downturns, provide chain disruptions and tariffs. Companies can leverage commerce credit score insurance coverage if their suppliers or prospects are negatively impacted by commerce limitations. These insurance policies usually cowl nonpayment, together with defaults brought on by tariff-related financial disruptions or provide chain points.
Part 301 and Part 338
Each units of tariffs are more likely to face authorized challenges. Small companies filed a lawsuit over the Part 301 tariffs on the day they have been introduced, calling them overly broad.
Specialists usually consider the Part 301 tariffs usually tend to face up to authorized challenges than President Trump’s sweeping “Liberation Day” tariffs struck down by the U.S. Supreme Court docket, particularly since an investigation was carried out by the U.S. Commerce Consultant in reference to the Part 301 tariffs.
The Part 338 tariffs could have a harder authorized path. U.S. importers confronted with larger prices may problem the brand new tariffs with litigation on a number of factors:
Explicitly denying preferential duty-free therapy to in any other case USMCA-compliant items straight breaches current North American free-trade pacts;
It’s unclear if the U.S. Worldwide Commerce Fee was legally required to conduct a proper, impartial investigation earlier than the tariffs have been introduced.
The Commerce Growth Act of 1962 and the Commerce Act of 1974 – newer laws than Part 338 — channeled commerce disputes by way of institutional, multilateral-compliant programs, mandating formal investigations, public hearings, and statutory timelines earlier than addressing unfair international commerce practices. That is fairly totally different from Part 338’s permitting the president to do it by proclamation solely.
Then again, the acknowledged function of Part 338 focuses on discrimination by international nations that locations the commerce of the US at a drawback. Canada has banned the import and distribution of U.S. alcohol in sure provinces, restricted U.S. dairy producers’ entry to the Canadian market and positioned a cap on sure U.S. car imports – all strikes that might be deemed to drawback the US, permitting the usage of Part 338 to face up to authorized challenges.
Whereas uncertainty exists on the usage of each 301 and Part 338, it is extremely clear the Trump administration considers tariffs a precedence and companies might want to modify.
Ross Hofherr is co-leader of Harris Seaside Murtha’s Worldwide Commerce Apply Group.
