Calculating Tariffs: They Add Up

Twenty-three years ago, lobbyists were focused on a singular tariff, the Section 201 safeguard, President Bush’s steel tariffs. Fifteen years later, during the first Trump administration, lobbyists went from working on one tariff action to two — Section 232 tariffs on steel and aluminum and Section 301 tariffs on imports from China.

Today, in President Trump’s second term, we currently face three sets of tariffs, with more expected starting as soon as 4/2/25. With all the uncertainty emanating from Washington, D.C., it is hard to fault the thousands of small businesses manufacturing in Michigan who struggle to understand what is coming next.

When working with manufacturers, we first advise them to not look at the President’s action as a singular step with a start and stop date but rather as a series of tariffs that are added together.

Some tariffs apply globally with no exceptions, such as the 25 percent rate on steel and aluminum imports, which took effect 3/12/25. Others are country-focused, such as the 25 percent  tariff under the International Emergency Economic Powers Act (IEEPA) on shipments from China, Mexico and Canada, and a 10 percent  tariff on energy resources and critical minerals such aluminum, magnesium and nickel from our northern neighbor. In addition, both Presidents Biden and Trump maintained the 25 percent tariff on 6,800 Chinese imports under the Section 301 action and a 7.5 percent tariff on 3,200 imports from China.

The tariffs can quickly add up.

Imports from China (IEEPA, Section 301 and 232)

Today, imports from China face a tariff rate of at least 20 percent due to the IEEPA action covering all articles from China as of 3/4/25. However, many imports can exceed a 70 percent tariff rate.

A prime example is a part made in China of steel or aluminum that appears on the Section 232 steel and aluminum derivatives tariff list. The part from China is likely subject to the 25 percent  tariff under the Section 301 tariff, though also falling on the Section 232 steel and aluminum derivatives list adds an additional 25 percent . This 50 percent  rate is combined with the 20 percent  blanket tariff under IEEPA for a total of 70 percent, plus additional duties and fees.

Even goods not containing steel or aluminum, the IEEPA 20 percent  tariff, added to the Section 301 tariff rate of 7.5 percent  or 25 percent  rates is significant, whether at 27.5 percent  or 45 percent .

How do manufacturers use this information to their benefit?

For the thousands of Michiganders competing against imports from China, the tariffs are a form of protection. For the manufacturers and distributors importing from China, they must factor in the added tariffs, which can regularly exceed 45 percent , with no product exclusion process to avoid the increased costs. Your sales team should take note of the increased price on competitors’ imports, while your purchasing manager must regularly track the ever-changing tariff landscape.

Section 232 steel and aluminum tariffs return

Effective 3/12/25, a 25 percent tariff applies to all steel and aluminum imports from any country, with no exceptions (as of this writing). Many in Washington, D.C. believe that President Trump is personally driving the tariffs on imports of steel, which remain a priority for this administration.

Sources both on Capitol Hill and within the Trump administration indicate that it’s unlikely in the near future the U.S. Department of Commerce will create an exclusion process allowing importers to request a temporary suspension of the tariff on imports from a specific country. To the contrary, all indications are that the Department has begun disassembling the previous Section 232 exclusion process, which closed on 2/10/25.

Each country, or nation-bloc in the case of the European Union, must seek an exemption from the steel or aluminum tariffs on their own. The 25 percent tariff applies to all nations, regardless of a free trade agreement in effect, as is the case of the U.S.-Mexico-Canada Agreement (USMCA), which President Trump negotiated — the tariffs apply.

We are not anticipating a reversal of this policy toward imports of metals, especially as the Trump administration considers further use of the 232 trade laws to cover imports of copper.

Derivatives of steel and aluminum (Section 232)

In his Executive Order announcing the return and expansion of the Section 232 tariffs on steel and aluminum, President Trump recognized that the tariffs on raw materials led to increased imports of downstream goods containing the metals. The tariffs shifted the injury from the steel and aluminum producers to the steel and aluminum users.

To address this unintended consequence, the Trump administration extended the 25 percent tariffs to 167 derivatives of steel and 123 aluminum derivatives. The Commerce Department will around 5/12/25, create an application process for other U.S. manufacturers to request the government apply the 25 percent  tariff to their product as well. This derivatives inclusion process will present an opportunity for manufacturers of steel or aluminum derivatives to have the tariffs expanded to protect their products but also creates a challenge for importers who must regularly follow the process in the event a product they import is added to the 25 percent tariff list.

Tariffs on Canada and Mexico (IEEPA and Section 232)

Our two most important trading partners face a difficult path ahead. The President’s Executive Order imposing tariffs on Mexico and Canada did not focus on manufacturing, USMCA, or the many trade disputes between the three nations. The President imposed this first round of 25 percent tariffs on imports on the two countries due to border-related issues. For manufacturers integrated across Canada and Mexico, this means the President is just getting started. Separately, he has ordered his advisors to move up the USMCA negotiations from July 2026 to this year, possibly creating more uncertainty in the relationship.

President Trump imposed, and then suspended, the 25 percent tariffs on all non-USMCA-designated imports into the U.S. scheduled to take effect. If reinstated on 4/2/25, the tariffs would apply to all goods on imports from Canada and Mexico. Tariffs would apply to the entire value of the good upon entry. Canada has already begun imposing tariffs on U.S. exports. A component could potentially face tariffs multiple times for each instance it crosses the border — likely making those manufacturers globally less competitive.

The U.S. imports most of its aluminum from Canada, which is currently subject to a 25 percent tariff under the Section 232 action, as are both metals from Canada and Mexico. Barring any change in policy, on 4/2/25 the combined tariff rate when adding in the Section 232 tariffs with IEEPA is 50 percent on steel from Canada and 35 percent on the aluminum sourced from our largest supplier.

Global reciprocal tariffs (IEEPA, Sections 301, 232 and 122)

On his first day back in office, President Trump signed the America First Trade Policy memorandum, directing his agencies to deliver a report by 4/1/25 covering the tariffs and trade restrictions other countries place on the United States. Officials in the Trump administration are preparing a major announcement on 4/2/25, possibly involving tariffs on “trillions of dollars” of imports from around the world.

The President himself has declared that 4/2/25, is “Liberation Day,” and that he intends to impose reciprocal tariffs on countries which apply a duty, tariff, tax or other barrier on U.S. exports.

In his first 50 days in office, President Trump imposed tariffs on goods worth hundreds of billions of dollars, added protections for targeted industries and launched investigations of trade practices from around the world. Michigan manufacturers should watch closely, as the next 50 days could bring even more uncertainty and opportunity.

About the Authors

Wipfli is an MMA Premium Associate Member and has been an MMA member company since February 2018. Visit online: wipfli.com.