The July 24 expiry date on the temporary 10% surcharge introduced earlier this year by President Donald Trump under Section 122 of the Trade Act of 1974 brings an important question regarding tariffs: What next?
As the global tariff surcharge expires, its replacement is still unsettled, says Steve Blough, chief supply chain strategist at supply chain technology vendor Infios.
The flat 10% global Section 122 surcharge can’t be extended without approval from Congress, Blough points out, and in the meantime, any fresh tariffs are likely to add more complexity to what is already a mosaic of exceptions and country-, product- and industry-specific workarounds such as quotas. “Importers used recent hearings to push for exclusions, particularly on textiles and apparel, where USTR has floated a reduced-rate quota tied to purchases of U.S.-produced textiles and cotton,” says Blough.
Apart from special pleading, many importers accelerated their sourcing of goods to beat the expiration, bringing on a peak shipping season two months early, according to freight market data and analysis firm Xeneta. “Shippers should plan that the sourcing economics will hold through the third and fourth quarters,” Blough advises. “The best way to manage this is to build plans around multiple sourcing requirements and model the total landed cost under several tariff outcomes. Even though it is getting late, modifying transportation modes to accelerate deliveries may make sense based on the origin, the goods, and expected impact.”
But don’t get tempted into going too far, warns Greg Schwartz, founder of Overstock Trader, an inventory liquidation service provider.
“What we’re seeing directly: Tariff fears have caused many brands to over-order, purchasing ahead of anticipated price increases rather than in response to actual customer demand. That gap between fear-driven ordering and real demand is exactly what produces the excess inventory that ends up needing a home outside traditional retail. Each new deadline or Section 301 announcement tends to trigger another round of this,”’ Schwartz commented. “It’s much harder to plan this far out of fear, rather than actual demand.”
Get used to it, says Rathna Sharad, CEO and founder of FlavorCloud, a cross-border e-commerce and shipping platform.
“Over the coming year, tariffs will look less like a temporary disruption and more like a permanent layer of supply-chain management,” says Sharad. “We should expect more targeted measures by country, product and strategic sector, alongside negotiated exemptions and sudden policy changes. The headline tariff rate will matter, but the greater challenge for businesses will be the speed at which the rules change and whether they can adjust sourcing, pricing and fulfillment before margins are lost.”
According to The Economist, all this uncertainty is weighing on investment, with 52% of business leaders surveyed by accounting firm KPMG reporting low confidence in carrying out their investment plans.
The Trump administration, for now, is holding firm. Testifying before the Senate Finance Committee on July 22, U.S. Trade Representative Jamieson Greer told Congress that an ongoing “national emergency” on trade made it imperative that the administration under Donald Trump stick to its guns when it comes to levying punitive tariffs on allies and foes alike.
The stated goals of Trump’s tariff policy include bringing manufacturing back to the U.S., and Treasury Secretary Scott Bessent recently declared that America is “having a manufacturing renaissance.” On the face of it, the figures seem to back him up. The Institute for Supply Management’s purchasing manager index rose to 54 in May, its highest in a year, and manufacturing output grew at an annualized rate of 4.6% in the second quarter, its fastest pace since 2021.
But outside of the advanced manufacturing sector, largely driven by demand for artificial intelligence infrastructure, growth in manufacturing in the U.S. has stalled, and manufacturing jobs have dropped by about 75,000 so far during Trump’s second term.
Worse, spending on factory construction has fallen by almost a third, from an annualized peak of nearly $250 billion in 2024 to $175 billion in May, The Economist notes, and much of the new capacity reflects investments made before Trump’s re-election.
Meanwhile, the everyday impact on the American public is rising. The Harvard Business School Pricing Lab reckons tariffs have increased consumer prices by about 0.8%, with more cost pressures likely to come. Research from the Federal Reserve Bank of New York finds that nearly half of firms paying tariffs still expect to pass more costs forward to their customers. It remains to be seen how much voter disapproval regarding tariffs President Trump can bear.