Who pays tariffs on imports... and what are tariffs, exactly?
Tariffs are more than just numbers on a spreadsheet — they're powerful variables that can reshape the future of businesses that are navigating international trade. These trade barriers, imposed by governments to control the flow of goods, can drastically affect everything from pricing to supply chains to overall business strategy.
With newly minted tariffs recently implemented by the Trump Administration, and more likely in 2025, understanding how these policies work, who pays tariffs on imports and finding ways to optimize your supply chain is key to maintaining a competitive edge.
So, what exactly are tariffs, and why should businesses care? Worldwide Express dives into the world of tariffs, explores their impact on global trade, and highlights how partnering with a third-party logistics (3PL) shipping provider can help businesses tackle supply chain challenges.
What is the definition of tariffs?
A tariff is a tax imposed by a government on imported goods. These additional costs are paid by the importer — not the foreign exporter. Tariffs serve a variety of purposes, each with their own desired outcome. Understanding how tariffs work and the effect they have on businesses is crucial for those looking to optimize their logistics and supply chain strategy.
What is the purpose of tariffs?
Here are three examples of why a government might impose tariffs:
- Protecting domestic industries: By making foreign goods more expensive, tariffs may encourage consumers to buy homegrown products — and businesses to sell these products — instead of their international equivalents.
- Revenue generation: Tariffs are a source of government income, funding public infrastructure and other national initiatives. Funds generated by tariffs go to the U.S. Treasury Department.
- Political leverage: Sometimes, tariffs are used as a bargaining chip in international negotiations, pressuring other countries to change their policies or actions.
Tariffs 101: Who pays tariffs on imports?
In international trade, importers — shippers like you — are almost always responsible for covering the cost of tariffs, which can influence the final price of goods for consumers.
How do tariffs impact businesses and shippers who rely on international shipping?
For businesses that import goods, tariffs can have a profound effect on operations — particularly since they must pay for these tariffs themselves. Here's how the impact of tariffs is felt across the supply chain:
| Cost increases The most immediate effect of tariffs is an increase in the cost of imported goods. Businesses that rely on foreign materials and products — such as steel, electronics or textiles — are forced to pay higher prices due to tariffs. This increase in costs can lead to reduced profit margins or higher prices for consumers. |
Supply chain disruption Tariffs can cause significant disruptions to supply chains. When tariffs change or new ones are introduced, businesses must adjust their sourcing strategies, which can lead to delays in shipments. These disruptions often result in uncertainty, as businesses cannot predict how long tariff hikes will last or how much they will impact costs. |
| Competitiveness Higher shipping costs due to tariffs can make U.S. businesses less competitive in the global marketplace. If competitors in other countries, particularly those with no tariffs, are able to offer similar products at lower prices, U.S. businesses are at risk. This is particularly concerning for SMBs that may not have the resources to absorb the additional costs. |
Price pass-through To offset tariff-related increases in costs, many businesses pass these higher prices onto consumers. While this may help protect profit margins in the short term, it can also lead to lost sales if customers are unwilling to pay higher prices. Businesses must carefully weigh the risks of price increases against the potential for reduced demand. |
Trump Tariffs 2025: A Look at Recent Administration Moves
Under President Trump's Administration, tariffs have become a cornerstone of U.S. trade policy. Here is an overview of Trump tariffs so far in 2025:
- 10% tariff on China — In February 2025, the Trump Administration implemented a 10% tariff on all imports from China, aiming to address significant trade imbalances and China's alleged unfair trade practices. These broad tariffs on China affects a wide range of products, including electronics, machinery and consumer goods, potentially leading to higher prices for American consumers. In response, China has retaliated with its own tariffs on U.S. exports, escalating trade tensions between the two nations.
- 25% tariff on steel and aluminum — A major move in February 2025 was the imposition of a 25% tariff on steel and aluminum imports, with no exemptions for any countries. These new tariffs apply universally to all steel and aluminum imports, eliminating previous country-specific exemptions. This means that steel and aluminum products from China, along with those from other countries such as Canada, Mexico and the European Union, are now subject to the full 25% tariff.
- Tariffs on Mexico and Canada imposed, then paused — In early February 2025, the Trump Administration announced a 25% tariff on imports from Canada and Mexico, citing concerns over illegal immigration and drug trafficking. This tariff was scheduled to take effect on Feb. 4, 2025, but was paused for 30 days following agreements with both countries to enhance border enforcement and combat drug smuggling. The pause allows for further negotiations on Shoeconomic agreements and border security measures.
- Reciprocal trade and tariffs — On February 13, Donald Trump emphasized his commitment to reciprocal trade policies, where the U.S. seeks equal treatment from trading partners. This strategy involves imposing tariffs on imports when other countries engage in unfair trade practices. Trump's approach aims to strengthen U.S. industries and protect jobs. While supporters argue it will promote fairer trade, critics warn that such tariffs can escalate tensions and disrupt global markets, ultimately raising prices for consumers.
- 25% tariffs on autos, pharmaceuticals and chips — On February 18, Donald Trump revealed plans to impose a 25% tariff on autos, pharmaceuticals, and semiconductor chips. Citing the need to protect American industries, Trump believes this move will safeguard U.S. jobs and reduce reliance on foreign imports. However, opponents argue that these tariffs could drive up costs for U.S. businesses and consumers. The decision has sparked debate over its potential long-term effects on both domestic economic growth and international trade relations.
Five Steps to Protect Your Supply Chain, Shipping and Logistics Against Tariffs in 2025
As tariffs continue to fluctuate, it's crucial for businesses to take proactive measures to protect their profits. Here are five strategies to safeguard your business against rising tariffs:
1. Diversify your supply chain
- Source from countries with favorable trade agreements or lower tariffs: By diversifying suppliers across various countries, you reduce the risk of tariff hikes in a specific region.
- Consider nearshoring or reshoring: Relocating parts of your supply chain closer to home can help mitigate the impact of tariffs and improve shipping times.
2. Evaluate tariff classifications and exemptions
- Ensure accurate product classification: Misclassification can lead to unnecessary tariff increases. Work with customs experts to ensure your goods are properly classified.
- Research tariff exemptions: Some products may be eligible for tariff exemptions or special programs. These exemptions can significantly reduce your overall tariff burden.
3. Negotiate with suppliers
- Share cost increases with suppliers: In some cases, suppliers may be willing to negotiate pricing or payment structures to offset the impact of tariffs.
- Consider long-term contracts: Locking in stable pricing through long-term contracts can help you avoid the uncertainty of future tariff fluctuations.
4. Optimize shipping and logistics processes
- Use efficient routes or methods: Streamlining shipping routes or switching to more efficient shipping methods can help reduce overall shipping costs.
- Explore Free Trade Agreements (FTAs) and duty drawback programs: Utilize available trade agreements or rebate programs to reduce the cost burden of tariffs.
5. Increase inventory or stockpile critical products
- Import goods ahead of tariff hikes: If you anticipate tariff increases, consider importing critical goods in advance to lock in lower prices before tariffs rise.
- Strategically build inventory: Having a reserve of essential goods can cushion your business against future supply chain disruptions or price increases.
How a 3PL Can Help Offset Tariffs With Supply Chain Management
Managing the complexities of tariffs takes time, effort and strategy. A 3PL can be your ally in navigating the impact of tariffs on your business. Here's how a 3PL can assist:
1. Supply chain optimization
A 3PL and its team of specialists can help you identify cost-effective sourcing options and streamline logistics to reduce the impact of tariffs. With the right supply chain strategy, a 3PL ensures your business runs as smoothly as possible.
2. Warehousing and inventory optimization
By managing your warehousing needs, a 3PL can help optimize inventory levels, ensuring you have the right amount of stock at the right time, without overpaying for imports subject to tariffs.
3. Expertise and knowledge
3PLs are experts in customs and international shipping regulations, tariff classifications and global trade agreements. Their knowledge can help you navigate the complexities of the current Trump Administration tariffs and ensure compliance with changing trade policies.
4. Cost reduction optimization
3PLs use their extensive carrier networks to negotiate better shipping rates and optimize logistics, ultimately helping you reduce the impact of shipping tariffs on your bottom line.
5. Technology and automation
With advanced technology and data analytics, a 3PL can provide real-time tracking, predictive analytics and actionable insights, allowing you to make informed decisions that minimize tariff-related costs.
6. Flexibility and scalability
A 3PL offers flexible and scalable solutions, adapting to the changing needs of your business as tariffs shift and market conditions fluctuate.
Worldwide Express Can Help You Navigate Tariffs — Now and In the Future
If you have ever asked, "what are tariffs" then you have come to the right place. With over 30 years of expertise in logistics, Worldwide Express is here to help you navigate the complexities of tariffs. As part of the WWEX Group, alongside GlobalTranz and Unishippers, we're part of one of the largest and most diverse 3PL networks in the industry.
Our solutions include access to a vetted network of 75+ less-than-truckload (LTL) and 45,000+ FTL freight carriers, warehousing and inventory management solutions, along with cutting-edge technology to help you minimize tariff impacts and optimize your supply chain.
Reach out today for a free consultation and let us help you navigate the challenges of tariffs.
Bonus Content: 10 Key Tariff Terms You Should Know
Tariffs are an essential part of international trade, influencing everything from global supply chains to the price consumers pay for imported goods. To fully understand how tariffs work and their impact on the economy, it's important to familiarize yourself with some key terms. Here are some of the most important terms to know about tariffs.
An import duty is another term for a tariff. It refers to the specific tax levied on goods brought into a country. Import duties can vary based on the product category, country of origin and even trade agreements between nations.
An ad valorem tariff is a type of tariff where the tax is based on the value of the imported good. For example, a 10% ad valorem tariff on a $100 item would result in a $10 tariff. This is one of the most common methods of taxing imports.
A specific tariff is a fixed fee applied to a specific quantity of an imported good, regardless of its value. For example, a specific tariff might charge $5 for every ton of steel imported, no matter the price of the steel.
These are government-imposed restrictions or regulations that limit international trade. Tariffs are one of the most common forms of trade barriers, but other barriers include import quotas, subsidies for domestic industries and licensing requirements.
This refers to a principle where a country agrees to offer the same trade advantages to one country that it offers to others. This status helps to ensure fair trade practices and is often used in trade agreements between nations.
These are tariffs imposed on imported goods to offset subsidies provided by foreign governments to their domestic industries. This ensures that foreign goods are not unfairly priced due to government support in their home country.
These duties are tariffs imposed to prevent the practice of dumping, where foreign producers sell goods at unfairly low prices to outcompete local businesses. These duties aim to level the playing field for domestic industries.
This is a limit on the quantity of a particular product that can be imported or exported during a given time period. While not a tariff, quotas serve as another form of trade barrier, restricting the flow of goods into or out of a country to protect domestic industries or balance trade.
A trade deficit occurs when a country imports more goods and services than it exports. Tariffs are sometimes used as a tool to reduce a trade deficit by making imports more expensive and encouraging consumers to buy domestic products instead.
This agreement is a treaty between two or more countries to reduce or eliminate trade barriers such as tariffs and quotas. FTAs are designed to encourage economic cooperation and increase the flow of goods and services between the nations involved, fostering more open markets and enhancing global trade.
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