The global trade arena is always in constant flux, but now the ground beneath us is significantly shifting. One day, a country is a reliable trading partner; the next, it’s hit with a 50% tariff. This sudden, high-stakes volatility is not only reshaping supply chains, but forcing companies to make critical decisions.

We’re going to break down the dramatic changes in the U.S. tariff landscape, from the unexpected wins that have made countries like Pakistan a new manufacturing powerhouse, to the tough new realities facing nations like India. 

Some History

In order to understand what is happening, let’s break it down. First, what is a tariff?

The classic definition is that “a tariff is a tax imposed by a government on imported goods or services.” (Hahn)

Tariffs can be applied in several ways, such as a percentage of the item’s value or as a fixed amount per unit. Tariffs have long been a fundamental element of international trade, initially serving as a simple revenue-generating tool. Over time, however, their purpose has expanded to encompass complex economic and political objectives.

Beyond just revenue generation, tariffs are now a powerful instrument in trade negotiations, allowing a country to exert leverage over its trading partners. Tariffs are now also used to safeguard national security by restricting the import of goods from countries that are considered a threat

General Economic Impact

Tariffs are a major way a country can enact a policy of protectionism to shield its own industries from foreign competition. By increasing the cost of imports, tariffs make domestically produced goods relatively cheaper, and, all things being equal, more appealing to consumers and businesses. This can stimulate local production, lead to increased output, and, in theory, more job opportunities within the country.

However, this comes with potential drawbacks. The higher prices for imported goods can translate to increased input costs for domestic manufacturers who rely on imports for raw materials or components. These costs may then be passed on to consumers, leading to inflation, or absorbed in the form of lower business profits. Further, tariffs can also lead to decreases in choices for consumers, as imported products may become unaffordable or simply unavailable.

Changes to U.S. Trade Policy: Tariffs 1.0

In the period beginning 2016, the U.S. presidential election served as a major turning point in U.S. trade policy. For the first time in a long time, tariffs were a central economic theme of the presidential campaign. Likewise, significant changes to tariff policy were implemented in 2018. 

These tariffs, aimed at protecting U.S. domestic producers, ignited a series of retaliatory tariffs and measures from other major trading partners, including China. This escalation marked the beginning of what came to be known as the U.S.-China trade war, and it dramatically altered the global trade landscape, leading to widespread economic uncertainty.

Navigating the Tariff Fallout: Tariff Breakdown 2.0

In early April 2025, widespread confusion surrounding the initial tariff implementation created panic across many industries. This ambiguity, especially regarding financial implications, was a major concern for businesses as companies couldn’t simply change their supply chains overnight, a reality observed across various sectors. Retaliatory tariffs and counter measures, coupled with steep financial market losses led to a 90-day “negotiation” period. This was crucial, as it gave businesses time to adapt and get a sense of where things were headed. As such, as of now, here are the implications –

For the Suppliers/ Trading Companies (China, South Korea, Japan, Pakistan, India, etc.):

• Can expect price stability; prices will remain unchanged despite the implementation of new tariff laws in the U.S. To simplify this, supplier prices are unchanging. 

For the Distributors/ Importers/ Wholesalers/ Retailer (U.S.):

• Will face increased costs due to changes in customs duties. For example, previously, the duty rate for quilting cotton fabric (HS Code: 5208.52.30) was approx. 6%, (Harmonized tariff schedule) but it has now risen to a different number based on regional tariff increases.