CHPS Podcast Episode 4: Tariffs and Trade Impact

In Episode 4 of CHPS of Insight, host Chris White and Kelsey Christensen explore the ongoing complexities of tariffs and trade policies that continue to shape global commerce and economic policy. Chris and Kelsey provide a thorough examination of the legal, economic, and strategic dimensions of U.S. tariff implementation, offering valuable insight for businesses enduring today’s shifting trade environment.

Tariffs 101: Definitions, Origins, and Legal Authority

The episode opens with a foundational overview of tariffs, government-imposed duties on imported goods as they enter the United States. Kelsey, an International Trade attorney at Clark Hill, outlines how tariff rates vary depending on the product type and country of origin, influencing product pricing and market competitiveness within the U.S. She explains that tariff authority originates from the U.S. Constitution, which grants Congress the power to regulate commerce with foreign nations. Over time, however, significant discretion has shifted to the executive branch. The discussion outlines how modern administrations have used this authority expansively, often through executive action, to respond to economic and geopolitical developments.

Executive Power and the Use of Section 232

A key focus of the episode is the increasing reliance on Section 232 of the Trade Expansion Act to impose tariffs justified by national security concerns. This authority has been used to apply duties on imports of steel, aluminum, and related products. These measures extend beyond raw materials to include finished goods that incorporate these inputs, illustrating the far-reaching impact of executive-led trade policy. Chris and Kelsey also examine how national emergencies, such as the fentanyl crisis, have prompted further tariff implementations targeting countries including China, Mexico, and Canada. These examples highlight the broad and expanding scope of executive action in trade regulation.

Strategic Tariffs and Trade Negotiations

The conversation then turns to the use of reciprocal tariffs as a strategic tool in trade negotiations. These tariffs are designed to create parity between the duties imposed by the U.S. and its trading partners. Kelsey explains how this approach has been applied most notably in the U.S.-China trade relationship, with tariff rates increasing from 34% to as high as 125% on certain goods. Such actions aim to serve economic interests and broader diplomatic goals. By leveraging tariffs in negotiations, the U.S. aims to pressure trading partners into concessions while signaling a firm stance on trade fairness.

Foreign Trade Zones and Regulatory Shifts

Historically, Foreign Trade Zones (FTZs) have provided companies with opportunities to reduce tariff exposure by allowing imported components to undergo manufacturing processes within the U.S. before duties are assessed. This framework helped domestic manufacturers maintain cost-efficiency while remaining competitive. However, recent changes suggest that duties may now apply upon entry into an FTZ, regardless of whether the product is further processed. These developments introduce new layers of regulatory complexity, requiring companies to reevaluate their use of FTZs and related compliance strategies.

Read the Clark Hill International Trade group’s news alert on FTZ, Death of foreign trade zones? (published May 5, 2025).

Impact on Global Supply Chains

The ripple effects of these evolving trade policies extend to global supply chains. Businesses are contending with a dynamic regulatory environment that demands continuous adaptation. Sourcing strategies, vendor relationships, and manufacturing footprints are all being reassessed in light of changing tariff structures and enforcement practices. While some companies are taking a cautious approach, waiting to see how policies stabilize, others are proactively exploring new markets and alternative supply routes to mitigate exposure. The uncertainty reinforces the need for agile supply chain management and legal guidance.

The Road Ahead: New Investigations and Tariff Expansion

Looking forward, Kelsey shares the potential future developments she is keeping an eye on, including upcoming Section 232 investigations that could lead to new tariffs on imports such as copper and pharmaceuticals. These inquiries reflect the growing intersection of trade policy and national security, a theme that is likely to persist regardless of political shifts. As policy continues to evolve, businesses should anticipate further trade actions and prepare for both direct and downstream effects across their operations.

Recent Developments: U.S.–UK Deal and U.S.–China Tariff Pause

In a timely update, Kelsey also discusses recent headline developments. On May 8, 2025, the United States and the United Kingdom announced a new trade deal targeting key sectors including autos, ethanol, and beef. Central to the agreement are tariff rate quotas: a two-tiered system where lower tariff rates apply up to a defined import volume, after which higher rates may be imposed. For instance, under this deal, the U.S. will allow up to 100,000 UK-manufactured vehicles to enter under a 10% tariff rate. Volumes exceeding that threshold may be subject to increased duties. Similarly, the U.S. extended a quota for UK beef imports, while the UK reciprocated with a quota for U.S. ethanol exports.

The agreement also emphasizes cooperation on national security concerns, particularly in sectors like steel and aluminum that have been frequent targets of Section 232 tariffs. This signals a growing trend toward integrating security considerations into trade discussions, with the potential to shape upcoming deals with other allies.

Additionally, the U.S. and China have agreed to a 90-day pause on reciprocal tariffs, offering both nations a temporary reprieve to renegotiate terms. While not a formal trade agreement, the pause represents a de-escalation aimed at promoting dialogue. Both countries reduced tariffs by 115% during this period. For the U.S., the current baseline tariff on Chinese goods is approximately 30%, comprised of a 10% reciprocal rate and an additional 20% tied to national emergency measures such as the fentanyl-related International Emergency Economic Powers Act (IEEPA) tariffs.

These fast-moving developments underscore how fluid the trade environment remains and the importance of staying vigilant as more updates are expected in the months ahead.

Final Insights: Staying Informed and Proactive

In this comprehensive episode, Chris and Kelsey emphasize the importance of understanding tariff structures, executive authority, and the strategic considerations that shape international trade. For companies engaged in cross-border commerce, maintaining up-to-date knowledge and engaging with experienced legal advisors is no longer optional: it’s essential.

CHPS of Insight will continue to deliver expert commentary and timely updates on the trade and policy developments shaping today’s global economy.

This publication is intended for general informational purposes only and does not constitute legal advice or a solicitation to provide legal services. The information in this publication is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. Readers should not act upon this information without seeking professional legal counsel. The views and opinions expressed herein represent those of the individual author only and are not necessarily the views of Clark Hill PLC. Although we attempt to ensure that postings on our website are complete, accurate, and up to date, we assume no responsibility for their completeness, accuracy, or timeliness.