KPMG Partner on Navigating Global Trade Disruptions and Tariffs

Global Trade Landscape and Tariffs

• 🌍 The global trade environment is characterized by country-specific tariffs, industry-specific tariffs, ongoing trade deals, and numerous investigations with unknown impacts.
• 📈 The U.S. has collected approximately $80 billion in tariff revenue this year, more than double the previous year.

Impact on Businesses and Consumers

• 💡 The absorption of tariff costs varies significantly; some prices are increasing, while others are stabilized by market conditions or supplier negotiations.
• 🔄 Companies are actively seeking ways to mitigate tariff impacts by relocating supply chains and exploring new operational models.

The De Minimis Rule and E-commerce

• 📉 The de minimis rule, previously set at $200 and then $800, allowed for duty-free small parcel shipments, significantly benefiting e-commerce.
• ⚠️ Companies exploited this rule by establishing warehouses in Mexico and Canada to ship into the U.S., creating disadvantages for some domestic businesses.
• 🚫 The rule has effectively been eliminated, requiring customs entries for shipments that previously qualified, causing turmoil for businesses reliant on this e-commerce benefit.

Strategic Responses to Trade Disruptions

• 🚀 Companies are moving beyond simple mitigation to rewiring their supply chains and engaging in comprehensive tax and trade planning.
• 📊 The use of technology, data, and AI is crucial for scenario planning and modeling to navigate trade complexities.
• 🛠️ The customs function is evolving from an operational border task to a more strategic role within the overall business structure.

Agricultural Tariffs and USMCA

• 🍎 Tariffs exist for agricultural goods from Mexico and Canada, particularly punitive tariffs under the IBR, though the Supreme Court's ruling is pending.
• ✅ Meeting USMCA (United States-Mexico-Canada Agreement) requirements can allow goods to avoid these specific tariffs.