U-turn on de minimis ban, following 'processing issues', as trade war heats up
White House-triggered whiplash has hit again with the news that a small but powerful sentence ...
GM: SUPPLY CHAIN WOESMAERSK: ROTTERDAM TEMPORARY SUSPENSION OF OPERATIONSATSG: OWNERSHIP UPDATERXO: COYOTE FILLIP GONEGM: SUPPLY CHAIN HITBA: CUT THE FAT ON THE BONER: STEADY YIELDMAERSK: SELL-SIDE UPDATESDAC: TRADING UPDATE OUT SOONTSLA: FEEL THE PAIN IN CHINAWMT: GUESS WHATXPO: SURGINGAMZN: LOOKING FORWARDCHRW: PAYOUT UNCHANGEDWTC: NEW HIGH MAERSK: 'AFLOAT IN A SEA OF RISK' F: TARIFF TRAFFIC WARNING
GM: SUPPLY CHAIN WOESMAERSK: ROTTERDAM TEMPORARY SUSPENSION OF OPERATIONSATSG: OWNERSHIP UPDATERXO: COYOTE FILLIP GONEGM: SUPPLY CHAIN HITBA: CUT THE FAT ON THE BONER: STEADY YIELDMAERSK: SELL-SIDE UPDATESDAC: TRADING UPDATE OUT SOONTSLA: FEEL THE PAIN IN CHINAWMT: GUESS WHATXPO: SURGINGAMZN: LOOKING FORWARDCHRW: PAYOUT UNCHANGEDWTC: NEW HIGH MAERSK: 'AFLOAT IN A SEA OF RISK' F: TARIFF TRAFFIC WARNING
UPDATED 2.2.25, 16.10 GMT to include tariff implementation delay
The US has agreed to postpone tariffs on Mexico for one month, following a call with Mexico’s president Claudia Sheinbaum.
In a post on social media, that revealed his transactional view of tariffs, Mr Trump said that Mexico would supply 10,000 soldiers on the US border to stop the flow of fentanyl and immigrants.
“We further agreed to immediately pause the anticipated tariffs for a one month period during which we will have negotiations headed by secretary of state Marco Rubio, secretary of treasury Scott Bessent, and secretary of commerce Howard Lutnick, and high-level representatives of Mexico. I look forward to participating in those negotiations, with President Sheinbaum, as we attempt to achieve a “deal” between our two countries.”
The US has a deal with Mexico already, the Trump administration-negotiated USMCA, which lawyers for all three countries will be carefully re-reading.
President Trump has a call with Justin Trudeau later today, prompting speculation that Canada too may at least temporarily escape the tariffs.
The threat of imposition of sweeping tariffs against the US’s three biggest trading partners on Saturday had been met with warnings of recession and operators have been urged to “get planning”.
Following campaign promises, president Trump threatened Canada, China, and Mexico with tariffs, prompting those neighbours to begin tit-for-tat retaliation against the US, and China threatening action through the World Trade Organisation.
Steve Lamar, CEO of the American Apparel & Footwear Association, said the tariffs would “inject massive costs into our inflation-weary economy”, with the reciprocal action harming exports essential for US farming and manufacturing.
He added: “We should be forging deeper collaboration with our free trade agreement partners, not taking actions that call into question the very foundation of that partnership.”
The association’s SVP of policy, Nate Herman, called for tariff relief and “commitment to smart trade policy and strong trade partnerships”, including the renewal of expiring and expired trade preference programmes.
This, he said, would not only strengthen US competitiveness with its southern neighbours, but would also serve to “stem the tide of migration” that Mr Trump has used to justify hitting Canada and Mexico with 25% tariffs and China with 10% tariffs.
However, the Atlantic Council said China would be “breathing a sigh of relief”, the levies applied on its goods markedly lower than promised in some of Mr Trump’s campaign pledges.
The council said hitting Mexico with 25% tariffs would “quickly erode the economic growth and improvements in supply chain security” from the US-Mexico-Canada Agreement, to leave China in a far stronger position, because it would now be a cheaper place to source from.
A White House statement said over the weekend said: “The extraordinary threat posed by illegal aliens and drugs, including deadly fentanyl, constitutes a national emergency under the International Emergency Economic Powers Act,” adding the tariffs would stay in place “until the crisis is alleviated” – although that concern has now abated following the decision to delay the tariffs.
Scott Curtiss, head of field presales for manufacturing at Relex Solutions, said following Brexit and the pandemic, these tariffs “spoke to the need for further diversification within global supply chains”.
“With Brexit and Covid we found that a lot of companies had two suppliers, but, for instance, they would both be in the same province of China, when what is really needed is a robust supply chain strategy with a differentiated supply base,” he told The Loadstar.
“This means companies need to be planning more, with different playbooks in place; you need to be in a place where if suddenly one raw material is hit with a tariff, you can reformulate and source elsewhere.”
Despite Mr Trump’s suggestion that the tariffs would be a short-term measure, removed once the “fentanyl crisis” was resolved, historian of US trade policy Douglas Irwin told the Wall Street Journal it was far harder to remove them than was perhaps understood.
“First of all, there are going to be domestic interest groups that have a stake in seeing those tariffs maintained, because they like the extra market share they’ve gained as a result,” he explained.
“Second, tariffs are a bargaining chip. So, why would we unilaterally get rid of these, even if there are some economic benefits, when we might use them in some negotiations down the road?” he asked.
As to any benefits, a report by the Biden administration, which led to the retention of tariffs imposed by Mr Trump during his first term, found that while they had led to US companies moving out of China, they also resulted in a more aggressive approach from China.
Mr Curtiss added that there had been a shift from China in recent years, the increase in diversification that global supply chains were undergoing stemmed from “multi-year” strategies that may take time to be fully realised.
The Wall Street Journal interview with Mr Irwin provides a good introduction on the historic role of tariffs in global trade
Catch up with all the latest supply chain news in today’s bite-sized News in Brief podcast
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