“The bell on a tiger’s neck can only be untied by the person who tied it.”
– China’s Ministry of Commerce
Tensions between the US and China are escalating once again. Both countries have recently imposed steep tariffs on each other’s imports — in some cases, as high as 125%, with certain Chinese goods now facing levies of up to 145%.
While electronics like smartphones and laptops have been temporarily spared from the steepest US tariffs, they’re not off the hook just yet – a new “national security” tariff is expected to hit these goods within the next two months, with the US justifying that critical tech must be manufactured in America.
At this point, it just seemed like a war of numbers, but what do they actually mean for business owners – especially those crossing paths with the US and China? In this blog, we unpack what’s covered by the latest tariffs, who’s most at risk, and what your business can do to stay ahead in an increasingly fragmented trading environment.
What’s in the Crosshairs Now?
From the U.S. side, current tariffs now cover a wide range of Chinese goods, including:
- Textiles and apparel – key components for construction and manufacturing
- Industrial machinery – critical for manufacturing and construction
- Home appliances – refrigerators, washing machines, microwaves
And there’s more to come. US Commerce Secretary Howard Lutnick has flagged that a new set of national security tariffs will soon target electronics, aimed at encouraging domestic production of strategically important tech.
While US tariffs aim to shield American industries, the reality is far more complicated. In today’s economy, a product is rarely entirely manufactured in a single country; it’s typically designed with parts from across the globe, including the U.S.
Take smartphones, for example: they might use U.S.-designed chips, Chinese assembly, and parts sourced from Europe or Southeast Asia. A 125% tariff on the final product disrupts every stage of that chain — hitting margins, delaying production, and increasing end prices for consumers.
Moreover, while relocating production to the U.S. may provide a solution for some companies, it’s not a quick fix. Labour costs are higher than in China. Energy is more expensive. And setting up new factories doesn’t happen overnight.
China, in response, has imposed its own 125% tariffs, striking back at core U.S. exports:
- Agriculture – soybeans, pork, wheat, dairy, seafood
- Automotive – American-made vehicles and parts
- Technology – semiconductors, telecommunications equipment
- Energy – LNG and crude oil exports
These industries are not randomly targeted – they are sectors critical to the US economy. By targeting these sectors, China is turning up the heat on American policymakers.
Three Ways These Tariffs Could Hit Your Business
1. Supply Chain Disruptions
If your business relies on parts, raw materials, or finished goods from either country — or from suppliers that do, brace for impact.
As companies scramble to shift production or sourcing to alternative manufacturing hubs like Vietnam, Mexico, India, or elsewhere, demand is outpacing supply. That means longer lead times, higher costs, and more uncertainty. For firms heavily dependent on lean inventories or just-in-time logistics, even minor delays can lead to severe backlogs. One of my colleagues runs a business that includes semiconductors as component parts. He says,
My primary concern is damage to the global supply chains. I still have nightmares from the days post [COVID-19] pandemic when certain semiconductors we relied upon went from 3 weeks to 52 or more. It nearly killed the business.
2. Margin Pressure and Pricing Dilemmas
With higher import costs, businesses are facing a tough choice: absorb the extra cost, or pass it on to customers.
For Micro, Small, and Medium Enterprises (MSMEs), neither option is ideal. On one hand, they don’t have the luxury to cushion these costs, which can squeeze margins to the point where growth stalls—or reverses. On the other hand, raising prices could make you less competitive, especially in price-sensitive markets.
3. Forced Strategic Repositioning
With the U.S.-China trade dynamic shifting so dramatically, many businesses are reassessing their global strategies.
We’re seeing a rise in:
- Nearshoring – relocating production closer to home
- Supplier diversification – reducing dependency on any single country
- Market reorientation – exploring regions with favourable trade deals and fewer barriers (FTAs)
Looking Ahead: A More Fractured Trade Landscape
With no sign of a de-escalation between the U.S. and China, these tariffs might not just be a phase. If anything, the introduction of national security tariffs signals a deeper ideological shift in US trade policy – one that prioritises domestic manufacturing and economic self-sufficiency.
For businesses operating internationally, this is a wake-up call. It’s no longer just about cost-cutting or chasing the biggest market. Success now depends on building supply chain resilience and a robust international blueprint.
At Dearin & Associates, we specialise in helping MSMEs navigate complex global environments. Whether you’re reviewing your supply chain, exploring new export markets, or adapting your growth strategy to meet today’s challenges, we’re here to help.
Book a complimentary strategy session with one of our international business advisors to explore how we can help fortify your business against external shocks.
Enjoyed this article? You might also like my piece, “Why April 2 Wasn’t a Shock – If You’ve Been Paying Attention?”. It unpacks how the US has historically used tariffs as a strategic tool — and its impact on the global economy.
