The impact of US tariffs

In today's international trade environment, volatility has become a defining characteristic, largely due to the tariffs imposed by the United States. These tariffs, both global and industry-specific, have significantly disrupted operations for multinational corporations and small to medium-sized enterprises. While they primarily impact supply chains importing into the United States, countries importing products from the United States might soon be affected as well, if they have not already, due to retaliatory tariffs and ongoing trade deal negotiations.^[1]

As of 20 June 2025, the Trump Administration has levied additional tariffs under the International Economic Emergency Protection Act (IEEPA)^[2], targeting both global markets and specific countries. Section 232 tariffs^[3] affect various industries such as steel, aluminium, and automotive sectors^[4], whereas section 301^[5] tariffs focus on specific goods originating from China as well as those imported on Chinese-owned or manufactured vessels.

Importers into the United States must navigate the complexities of understanding to which of their products tariffs apply, how these tariffs may overlap, which tariffs are currently paused, which products are excluded, and any potential retaliatory measures applying.

Mitigating these tariffs and ensuring long-term supply chain resilience requires a coordinated, cross-stakeholder strategy.

Tariffs are based on the customs value of imported goods. If the customs value is based on an intercompany sale, then organisations should ensure their intercompany pricing aligns with World Trade Organization (WTO) valuation rules while exploring opportunities to reduce dutiable values. While both the United States and European Union follow WTO valuation rules, interpretations may vary. Reviewing customs valuation from a U.S. perspective is crucial. Programs like First Sale For Export (FSFE) can also help reduce declared prices to U.S. Customs upon importation.

Optimising the origin of goods is critical. Products assembled in one country using components from another may not automatically generate origin to the product. Businesses should assess the “last substantial transformation” rule and consider whether rerouting or altering production processes could shift origin to lower-tariff jurisdictions, while ensuring that the economic reality is complied with. 

Building redundancy into supply chains through dual sourcing, nearshoring or regional hubs can reduce dependency on high-tariff trade lanes. Strategic sourcing reviews should incorporate tariff costs as a key factor in total landed cost models.

Duty deferral or suspension mechanisms such as US Foreign-Trade Zones (FTZ), bonded warehouses, and Duty Drawback can reduce or defer duties. Companies with cross-border manufacturing or distribution should consider applying for authorisations to utilise these regimes.

Revisiting product classification under the Harmonized System (HS) may offer optimisation opportunities. In some cases, minor adjustments to design or assembly location may change the applicable duty rate or exclude the product from punitive tariffs.

With the expected retaliatory measures from the EU, businesses must prepare for continued volatility. Mitigating the impact of tariffs is no longer just a customs matter—it affects pricing, supply chain management, transfer pricing, intercompany agreements, and regulatory compliance.

At KPMG, we assist clients in assessing the financial impact of new tariffs, designing mitigation strategies, and building resilient, cost-efficient supply chains. Our cross-border teams integrate customs, transfer pricing, supply chain consulting, and trade technology to deliver coordinated solutions in uncertain times.