When it comes to the tariff situation, chaos and uncertainty reign! Now that the July 9 date for tariffs to take effect has passed and the new effective date is August 1, your guess about what will be happening next is as good as anybody else’s guess because, to be blunt, nobody knows what will happen when August 1 arrives. Will the tariffs go into effect as planned or will there be more changes based on whether or not there's progress with trade deals?
There is one thing that is certain even amidst this uncertainty. If your company doesn’t have a written tariff management plan that addresses how various scenarios will affect your company, you are guessing and playing with fire.
Here is a quick look at a few of the updates and what to watch. One of the biggest dates ahead is the ruling expected on July 31 about whether or not the country-specific tariffs can proceed. If the tariffs are allowed, the costs could be staggering. To date, $108 billion has been collected in tariffs during the first half of this year compared to $57 billion during the same time frame last year.
In the wake of the July 9 deadline in which only two trade deals materialized with the U.K. and Vietnam, we’re seeing a major escalation in proposed rates. The E.U. has been threatened with a 30% rate, Brazil is facing 50%, and Russia could get a 100% tariff if they don’t end the war in Ukraine. Of course, we wouldn’t be surprised to see more tariff changes before anything actually moves forward.
And that is why we continue to highlight the importance of having a tariff management plan that considers various scenarios and the questions associated with each scenario. For example, how will tariffs impact your cash flow and other balance sheet categories? Do you know how it will impact your cash conversion cycle or your inventory strategies? Have you identified any alternatives? A tariff management plan can address the questions your company is facing and help you to quantify the potential impact quickly. Here at TranzAct, we have a team that's ready to help you develop this plan and encourage you to get in touch.
Additionally, this planning can surface areas to improve such as adjustments to Incoterms. We’ve found that companies can reduce their cost per container by as much as $400-600 and this is outside of any tariff policies.
This week we also want to alert you one last time about the LTL freight classification changes introduced by the NMFTA that will take effect July 19, 2025.
When the week starts next Monday, we are going to have a different LTL pricing system in place. Are you able to accurately quantify how it will affect your business? Do you know how to charge customers for freight? Have you identified your options if the costs are higher than expected?
If you haven’t prepared for these possibilities yet, we’re here to help. We have an LTL assessment and a team with tons of LTL experience that can help you understand what this means to your company. If you'd like to get insights or ask questions, we encourage you to schedule a time to meet with our Director of Logistics, Jeff Horwath. Now is a great time to get any information you're missing.
We also have a NMFC advice page to help you identify if the products your company ships will be affected and how to respond.
If you’re looking for any other type of help, simply get in touch. Just send us an email, give us a call at 630-833-0890 Ext 190, or schedule a time to meet via Calendly.
BY MIKE REGAN, CO-FOUNDER OF TRANZACT
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