The Dust Is Settling on Tariffs

By Leslie Meredith

As uncertainty over tariffs eases, project planners are finding a more predictable environment. We explore what this shifting landscape means for procurement teams.

From Issue 5, 2025 of Breakbulk Magazine

(5-minute read)

The dust is finally settling on tariffs. We know a lot more today than we did back in April. While there are still details to resolve, some of the rampant uncertainty that has frozen project decisions has lifted, giving procurement specialists a clearer picture of pricing for project materials.

With less “wait-and-see” sentiment, expect more decisions to be made.

With clarity, comes additional complexity. “The reality is that in 2025, the tariffs and the laws that implement them change regularly, sometimes on a daily basis,” says Jay Acayan, managing partner at Roberts & Kehagiaras, and a speaker at Breakbulk Americas’ session on tariffs. “Previously, companies dealing in multi-year projects could comfortably budget around a single risk analysis and a primary country from which to source components. Not so anymore.”

Tariffs reflect trade relationships as much as economics, and that means that America’s biggest trading partners and their respective tariffs have the most impact on pricing, including Canada, Mexico, China and to a lesser extent Vietnam, Taiwan and Germany. However, when we focus on the main components for project construction and handling such as steel, heavy machinery, power equipment, pipes, and LNG and refining equipment, other countries enter the mix.

When President Trump first announced his tariff plans, many partners were left reeling from shockingly high rates. As financial markets unraveled, a three-month stay was put into place that turned into four months, allowing time for countries to make their deals with America. A few were made, several were postponed and the rest became subject to new tariffs.

Let’s Make a Deal

So which countries struck deals that matter most for project cargo?

At the start of the dealmaking window, Trump imposed a universal tariff of 10%. Countries with a trade surplus or balanced trade with the U.S. maintain the universal rate. Countries that run a trade deficit with the U.S. are subject to reciprocal tariffs that replace the universal tariff. These reciprocal tariffs run from 15% to 50% or more as in the case of China.

Countries had until Aug. 1 to negotiate better deals. So far, the only carve-outs (exceptions to the assigned tariffs) have been for steel. Herein lies the opportunity: procurement specialists can take advantage of varying tariffs as they weigh their sourcing options.

United Kingdom

The UK was the first to successfully agree to a framework for a new trade deal, which included most favored nation tariff rates at 10% across the board with an exception for steel, which will be subject to a quota system at a far lower rate than its current negotiated one of 25% if certain criteria are met. Yet, quotas involve risk.

“Quota systems, as trade remedies, are effective and for importers, a good legal way to avoid payment of duties. But quotas are rife with pitfalls,” Acayan says. “For companies to fully realize the savings that quotas present, they must be knowledgeable of the entire quota system from filing, to evaluation, to corrections when needed.”

European Union

The EU secured a framework deal with a 15% baseline tariff but steel still faces the 50% rate for now. Further, the EU has said it will remove tariffs on U.S. industrial goods including machinery and manufactured products in exchange for a 12.5% cut on vehicle tariffs. Discussions are ongoing about implementing a quota system like the UK’s on steel, aluminum and copper.

But the big concession by the EU was agreeing to massive investment in the U.S.: it will buy US$750 billion worth of energy products from the U.S. through 2028 and invest US$600 billion in America’s industrial sectors including advanced manufacturing, AI and technology, automotive, aerospace, infrastructure and defense.

Canada & Mexico

Under the USMCA, most imports from Canada and Mexico of industrial goods including heavy machinery, power equipment, oil and gas pipes, and other tubular products as well as LNG and refining equipment are exempt from tariffs as long as they comply with USMCA origin rules demanding they are made or sufficiently transformed in North America.

This is nothing new, but the rules for qualifying as originating under USMCA have become more complicated for steel. To qualify, the shipper must verify that the steel, whether it is a steel product like plates or coils or steel used in manufactured goods, was melted and poured in North America. This is designed to block the tariff-free reexport of Chinese or non-North American steel through Canada or Mexico.

The most recent negotiations ended with no final new deals. Canada continues to negotiate while Mexico received an extension on a deal until the end of October.

In the meantime, U.S. Customs and Border Protection is cracking down on noncompliance. “CBP has already ramped up its investigations of 232 quota violations, and melt/ pour investigations are just around the corner. As such, importers should be prepared for strict scrutiny of their MTRs, that can potentially balloon into enforcement actions,” Acayan warns.

China

China, America’s third largest trading partner behind Mexico and Canada based on 2024 imports, received the stiffest penalties. Because of escalating tensions between the two, this is no ordinary trade deal; it has been dubbed a trade truce deal. The U.S. tariffs on Chinese goods are currently capped at around 55% while China has imposed reciprocal tariffs at 10%. In August, President Trump extended the tariff truce by 90 days to Nov. 10 to allow more time for negotiations.

“Should talks fall apart, importers can expect an immediate 24% rise in tariffs on Chinese goods, plus the potential for additional punitive tariffs from both the U.S. and China.,” Acayan says. “As such, until a formal U.S.-China agreement is in place, I would consider this to be a highly fluid situation.”

Japan & South Korea

For project cargo, Japan and South Korea are also important partners, particularly for components used in power plants, LNG facilities and refineries, including large fabricated modules as well as pipes and other tubular goods. Both countries receive most favored nation tariff rates of 10%, except for steel, which carries a higher 50% rate.

Sourcing Strategy Before and After

With tariff rates now settling into place, procurement teams are moving from uncertainty to action. Instead of waiting on the sidelines, buyers can weigh the impact of tariffs on each component and adjust sourcing accordingly.

Take cryogenic storage tanks for LNG projects. Because steel makes up so much of their construction including plates, frames and supports, higher steel tariffs directly drive up costs when sourcing from countries like South Korea. By contrast, suppliers in Mexico or Canada can offer more competitive pricing under USMCA exemptions, making them increasingly attractive in today’s environment.

Before the 2025 tariff increases, companies relied on a wide and balanced global network. Europe, especially Italy, Germany and the UK, supplied much of the heavy equipment for LNG projects, while Japan and South Korea were trusted sources for cryogenic tanks and specialized fabricated parts.

U.S. suppliers handled modular assembly and labor-intensive work, and China provided a growing stream of low-cost structural materials and standard components. Long-term contracts gave procurement specialists confidence that global sourcing could be stable and affordable.

That confidence has been shaken. After the tariff hikes, procurement teams are finding that sourcing options are fewer and schedules are harder to secure.

“Sourcing globally is a challenge as major components for capital projects can only be sourced in a few countries with varying tariffs, and the qualifying fabricators may not have shop space to contract for new orders,” says John Amos, president of Amos Logistics and former head of global traffic and logistics at Bechtel. He adds that procurement must remain closely tied to project management, since client restrictions can further narrow sourcing choices.

Domestic suppliers are gaining a larger share, especially for steel and fabricated parts, as Section 232 tariffs make imports up to 50% more expensive. Canada and Mexico remain critical under USMCA exemptions, the UK offers limited relief through quotas, and Italy and Germany still lead in high-tech machinery. Japan and South Korea are now reserved for specialized items that cannot be produced elsewhere.

To cope with the added complexity, Amos points to contracts as a key tool. “Contracts need language that allow negotiations to address potential cost changes due to added tariffs,” he says. Multi-year agreements with manufacturers and fabricators can also steady pricing across projects that stretch over several years.

China, meanwhile, has been pushed to the margins, with sourcing limited to non-tariff-sensitive items or situations where cost savings clearly outweigh the risks. Companies are also leaning on tools such as Foreign Trade Zones, tariff engineering, and project restructuring to take advantage of more favorable tariff positions.

What once felt unpredictable has become part of the planning process, with tariffs guiding choices on suppliers and locations alongside price and reliability. Tariffs are no longer a shock but part of the new normal for procurement strategy.

Heading to Breakbulk Americas? Don’t miss Ask the Experts: The Real Impact of Trade Tariffs on Project Logistics — a fast-paced Q&A with a panel of top trade and logistics experts. Join us on the main stage, Wednesday, October 1, 2:45–3:15 PM and get your questions answered.

PHOTO: Atlas Heavy