Companies prepare for deals in new tariff era

While media coverage of the new tariffs against Mexico, China and Canada has focused on immediate impacts, the deal President Trump struck with Mexican President Claudia Scheinbaum and Canadian Prime Minister Justin Trudeau to delay the tariffs on their respective countries emphasizes the need for companies to anticipate options for conducting business successfully in the new tariff regime.

Consistent with his action today, President Trump reminded us just last week of his desire to deal while addressing the World Economic Forum on how he will decide if trade in specific products can proceed: “If we make a deal, we make a deal; you’ll get it.”  

If bilateral tariff deals such as the one announced today don’t happen quickly, President Trumps's advice would seem to be that companies turn to determining what deals they can negotiate for themselves. As a result, the key questions companies must answer in the coming weeks include what deals will overcome the new tariffs and what the process is to negotiate a deal. As an immediate step, we recommend that companies assess whether the advantages their business brings the United States make them the type of company the administration believes best serves U.S. interests without new tariffs.

In the first Trump administration, a formal process at the U.S. Trade Representative enabled companies to request waivers of new tariffs imposed on certain products. This generally entailed making a submission describing excessive harm associated with a tariff and that waiving the tariff would not undermine their stated objective, i.e., countering China. The tariffs just imposed against China, Mexico and Canada (of which the latter two have been delayed 30 days) could prompt a similar mechanism, as President Trump authorized Homeland Security to develop rules to best implement his priorities.

Companies should consider key facts to support their case, such as the amount of employment they generate, how domestic industry can expand and how business might bring resources to the stated objectives of facing immigration and the drug trade.

If a formal process is not implemented, companies should also consider what stakeholders could help launch negotiations otherwise.

For more information, please contact Corey Norton or any member of Porter Wright's International Business & Trade group.