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Since reassuming office in January 2025, US President Donald Trump has introduced trade tariffs on goods imported into the US from many other countries, with the stipulated aims of bolstering American manufacturing and industry, protecting American jobs, increasing investment in American businesses, and generating more revenue from taxes. These tariffs have been placed on certain imported products, mainly those generated by industry, e.g. metals and cars, and at different rates for different countries. In addition, Trump wishes to decrease what he has termed the ‘trade deficit’, namely the disparity between the cost of what the US sells to other countries and the cost of what it buys from them, as he sees this as currently inequitable. In this article, we will look at what goods the principal trade tariffs apply to, how the tariffs differ between countries, and why the tariffs are relevant to legal practitioners.
Put simply, tariffs are a form of taxation governments impose on goods emanating from foreign countries, and are usually calculated as a percentage of the price of these. In general, these are put in place to increase revenue for a government, safeguard and boost domestic manufacturing and industries at risk of being undermined by cheaper foreign competition, and to help a government to gain political leverage. In the case of the tariffs introduced this year by the US, President Trump has declared that some, particularly in the case of those imposed on China, Mexico and India, are to pressure these countries to combat the trade in illicit drugs and illegal immigration. He has also introduced tariffs for companies trading with Russia, and on products from China and Hong Kong, reportedly to prevent cheaper clothes and everyday items undermining domestically produced equivalents. The tariffs President Trump has introduced differ considerably from country to country, and are even changing day by day as negotiations are still ongoing, but we outline below some of the established ones and the effects they are having on business and the law.
To date, the US has imposed trade tariffs on more than 90 countries, ranging from 10% (the UK) to 50% (Brazil), and has announced a 10% ‘baseline tariff’ as a minimum on countries, but matters aren’t somewhat more complex than that. In many cases, the tariffs apply only to certain goods coming from these countries, and at certain times, for example a 50% tariff on aluminium, copper and steel imports, and a 25% tariff on cars and car parts, but the 10% UK tariff applies to only the first 100,000 cars coming from Britain, which then increases to 25% once that number has been exceeded. Furthermore, pre-existing or newly established trade agreements exempt some countries from some tariffs on some products, for example the US–Mexico–Canada trade agreement allows these countries to import agricultural, automotive and industrial goods at either a reduced or tariff-free rate. Likewise, as part of the UK’s negotiated 10% tariff, the UK and US can trade beef with each other without incurring tariffs, and the UK has agreed to the US selling 1.4 billion litres of ethanol to the UK without tariffs being imposed. From this, it’s evidently an intricate and ever-changing picture, and one which is subject to additions and subtractions as negotiations continue. But what of the effects the tariffs are having on business and the law?
From a legal perspective, knowing about tariffs is hugely important as they now affect a considerable number of contracts that govern trade and supply chains. Since coming into effect, tariffs have caused many contracted parties to reconsider the economic viability of their agreements, and whether renegotiation or even rescission are possibilities. With such reappraisals come the risk of litigation, for example if respective parties cannot agree who should bear the cost of the tariffs, and potential jurisdictional disputes arising from increased scrutiny by customs and where goods are originating from. As an aspiring lawyer, it would be a good idea to have a working knowledge of the validity of the tariffs under international law, how different jurisdictions treat tariffs, and what the tariffs mean for international trade in the long term.
Other aspects of contract law to consider in light of the tariffs are terms (e.g. price adjustment mechanisms and who bears the costs), variation (scope for potential renegotiation), force majeure (arguing that the tariffs constitute an even beyond reasonable control), and termination (one party may wish to end the contract if unwilling to bear the extra costs). A final factor to be aware of is the likely increase in protective clauses being incorporated into contracts that will safeguard parties against changes in the law.
The legal angle aside, another effect that tariffs have is the increase in demand for domestic products over their imported foreign equivalents. With this increase in demand can come the expansion of domestic industries, increased production, and more jobs made available to meet these effects. Conversely, domestic industries, e.g. the automotive industry in some countries, often rely on global supply chains to provide components that are either not made in that country or are cheaper to source abroad. If these components are now subject to tariffs, that extra cost may be passed onto the consumer, meaning domestically produced goods will increase in price. Similarly, tariffs can work both ways, and testament to the continually developing landscape of American tariffs is the proposed (currently suspended) tariffs the EU was due to place on American goods in response to the 15% tariff imposed on EU countries.
Aside from the practical aspects of the law that will become more pertinent in light of the tariffs, as mentioned above, there are also broader legal issues that they give rise to. It will come as no surprise that countries have not accepted the recent tariffs lightly, and some have forecasted a surge in litigation and disputes aimed not only at clarifying contractual rights and obligations, but also questioning the very legitimacy of the tariffs themselves. Law firms across the world have already seen a significant increase in their caseloads as companies and individual litigants seek to challenge and renegotiate extant agreements, and countries, including Canada and China, have appealed to the World Trade Organisation (WTO) to investigate the legitimacy of President Trump’s tariffs. This boost to business, however, may be short-lived. Lawyers should be aware that, as tariffs and retaliatory tariffs hit businesses hard across the US and the rest of the world into the foreseeable future, law firms will likely begin to consider pay scales, bonuses, and reducing workforces and international footprints to compensate for a potential drop in transactional demand in the longer term.
For further information about the US tariffs, and to keep up to date with their changes, you can consult the website of the US International Trade Administration that allows you to search for relevant tariffs in many different ways. If you’d like information and support relating to studying law, practising law, legal career advice, or to explore more articles of current relevance to the law, take a look at The Lawyer Portal website https://www.thelawyerportal.com), which is host to a wealth of information relating to your legal career and more!
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