Date Issued: February 1, 2025
Government Next Steps: New tariffs took effect on February 4, 2025, with respect to China. March 4, 2025, with respect to Canada and Mexico. Trade negotiations are expected to follow.
Anticipated Outcomes: Increased costs for U.S. businesses, potential trade retaliation, and supply chain disruptions.
Executive Order Overview
President Trump signed a series of executive orders imposing a 10% tariff on Chinese imports and a 25% tariff on goods from Canada (energy resources from Canada will be subject to a lower 10% tariff) and Mexico – goods exempted from these tariffs include: postal or other personal communications, informational materials, travel-related transactions and donations by U.S. persons intended to relieve human suffering. The tariffs will have impacts on manufacturers, retailers, and importers and were put in place to address the threats posed by China, Canada, and Mexico with regard to "illegal aliens and drugs*" entering the U.S.
Key Legal Considerations for In-House Counsel
- Assess Supply Chain Vulnerabilities: Identify critical imports affected by tariffs.
- Review Pricing & Contractual Adjustments: Negotiate price adjustments with suppliers to mitigate the effects of the tariffs.
- Evaluate Alternative Sourcing Strategies: Explore non-tariffed markets.
- Monitor Retaliatory Tariffs: Some countries may impose countermeasures in addition to the countermeasures already imposed by China, Canada, and Mexico, respectively.
- Advocate for Industry Exemptions: Engage with trade associations lobbying for tariff relief.
Ways to Leverage LinkSquares for Tariff Impact Tracking
- Flag and categorize contracts with specific tariffs leveraging Smart Values, Custom Smart Values, and Tags within Analyze, including:
- Contracts with direct import provisions;
- Contracts with price adjustment clauses;
- Long-term supply agreements are potentially impacted by tariff changes.
- Develop automated alerts via task creation in Analyze for contracts requiring renegotiation or potential termination due to tariff-related cost increases
- Create systematic Finalize workflows for contract amendments and supplier communications specific to tariff impacts;
- Establish a real-time dashboard within Analyze tracking tariff-related contractual risks and mitigation strategies.
Next Steps for Businesses
- Review import/export contracts for cost-passing provisions.
- Communicate potential price changes with leadership and customers.
- Develop contingency plans for disrupted trade flows.
- Implement CLM tracking for tariff impacts.
*cited in the Fact Sheet: President Donald J. Trump Imposes Tariffs on Imports from Canada, Mexico and China on whitehouse.gov.