BlogMarch 19, 2025
Navigating Electronic Component Tariffs in 2025
March 19, 2025
Supply Chaintariff
Disclaimer: The information in this article reflects the latest publicly available details on tariffs and trade policies as of March 19, 2025. Given the current fast-moving nature of global trade regulations, tariff policies are subject to change, and new developments may emerge. We recommend that businesses regularly monitor official government sources and consult with trade and legal professionals for the most up-to-date guidance.
Featured image credit: ©FRESHIDEA – STOCK.ADOBE.COM
Understanding the Shifting Tariff Landscape and Its Impact on Supply Chains
The global trade environment has seen significant shifts in recent months, with new tariffs being introduced on various electronic components. These changes have profound implications for supply chains, particularly for industries that rely on custom-designed Printed Circuit Board Assemblies (PCBAs) and other electronic components with long lead times.
With tariffs playing an increasingly critical role in cost structures, businesses must stay informed and proactive in their supply chain strategies. This blog post provides an overview of recent tariff developments, potential future changes, and key steps businesses can take to mitigate risks.
Recent Tariff Developments and Challenges
Historically, businesses have had months to prepare for tariff changes, allowing time to adjust supply chains and pricing models. For example, the 25% tariff on Chinese semiconductor materials that took effect on September 27, 2024, was announced over four months in advance, on May 14, 2024. Similarly, the decision to increase that tariff to 50% on January 1, 2025, was also pre-announced, providing companies with time to adjust their strategies.
However, more recent tariff announcements have been implemented on much shorter notice, creating unexpected financial burdens.
- February 1, 2025: A 10% tariff on Chinese imports was announced, taking effect just three days later, on February 4. This left businesses with little time to adjust orders or find alternative suppliers.
- February 27, 2025: Another 10% tariff increase was announced, bringing the total China semiconductor tariff to 70%, with just five days’ notice.
For companies dependent on long-lead-time electronics, these rapid changes make financial planning and order fulfillment significantly more challenging.
Beyond China: The Expanding Scope of Tariffs
While China has been the primary focus of recent tariff policies, additional trade measures are being considered that could impact global supply chains:
- Potential Tariffs on Canada and Mexico: The U.S. government has proposed 25% tariffs on certain imports from Canada and Mexico. Although implementation was delayed after initial industry pushback, businesses should remain prepared for possible future enforcement.
- Steel and Aluminum Tariffs: In February 2025, the U.S. government increased tariffs on steel and aluminum to 25%, expanded the Harmonized Tariff Schedule (HTF) scope to include processed metals not just raw metals, and removed negotiated exemptions for dozens of countries. These changes impact manufacturing costs across various industries.
- Potential Tariffs on the European Union: The U.S. government has signaled intentions to impose a 25% tariff on EU goods, though no formal action has been taken. In response, the European Union announced $28 billion in new tariffs on U.S. imports, set to take effect in mid-April.
- Potential Tariffs on Taiwan: The U.S. government has previously mentioned implementing tariffs on semiconductors from Taiwan, with a proposed phased increase from 25% to 100% over the course of a year. While no official policy has been enacted yet, businesses should closely monitor developments, particularly in industries reliant on Taiwanese-manufactured GPUs and CPUs. Recent negotiations with TSMC and other Taiwanese firms may delay or alter implementation of the tariffs but it’s unknown at this time.
As of the publishing of this blog post, the Trump administration has announced plans to implement reciprocal tariffs starting April 2, 2025. These tariffs are designed to match the import duties that other countries impose on U.S. goods, targeting nations with higher average tariff rates on American exports. The specific countries affected and the exact tariff rates have not been officially detailed yet.
How Businesses Can Prepare for Tariff Uncertainty
With the ongoing evolution of trade policies, businesses should take proactive steps to minimize risks and maintain supply chain stability. Here are key strategies to consider:
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Analyze Your Supply Chain by Country of Origin (COO)
- Identify all materials and components in your product lines that originate from countries subject to existing or potential tariffs.
- If multiple sourcing options exist, evaluate alternatives based on cost, quality, and availability.
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Stay Up-to-Date on Tariff Announcements
- Given the rapid nature of recent tariff implementations, businesses should regularly check official tariff schedules and government announcements to ensure accurate pricing and forecasting. The Harmonized Tariff Schedule (HTS) should have the list of current tariffs though it can be confusing to navigate the site effectively and find the information you need.
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Assess Future Risk Areas
- The most pressing concerns for many industries include potential tariffs on Taiwan, Canada, Mexico, and the European Union.
- Businesses should prepare contingency plans for pricing adjustments, alternative sourcing, and inventory management in response to potential changes.
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Evaluate Alternative Sourcing Strategies
- If possible, explore alternate suppliers in tariff-free or lower-tariff regions.
- For long-term contracts, engage with suppliers early to discuss potential pricing adjustments or alternative sourcing strategies in the event of new tariffs.
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Understand the Indirect Impact of Tariffs
- Even if your company does not directly import materials subject to tariffs, domestic suppliers may increase prices due to their own tariff-related costs.
- Engage with key suppliers to understand how their pricing structures might be affected and negotiate terms accordingly. Dig deep and make sure suppliers aren’t using tariffs as a catch-all justification to raise prices.
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Develop a Pricing Strategy for Customers
- Work with finance and sales teams to determine how much tariff-related costs need to be passed on to customers while maintaining competitiveness.
- Transparency with customers regarding supply chain challenges and cost adjustments can help build trust and manage expectations.
Final Thoughts: Adapting to a Changing Trade Landscape
The global tariff environment is shifting rapidly, and businesses must remain agile in their response strategies. By proactively analyzing supply chains, monitoring trade policy developments, and planning for potential future tariffs, companies can reduce financial risks and maintain operational efficiency.
At Systel, we are committed to staying ahead of industry changes to ensure business continuity and supply chain resilience for our customers. We recognize that supply chain security and compliance are mission-critical, particularly for our U.S. military and defense customers, and we prioritize sourcing from U.S. and NDAA and TAA compliant suppliers. However, increased costs as a direct result of newly enacted and planned tariffs are a reality in the current turbulent business environment, and something which we are preparing for and closely working with our suppliers and customers to minimze impact as best as possible. If you have any questions about how these trade policies might impact your projects, please contact us today to discuss potential solutions.
A Timeline of Relevant Tariff Announcements
May 14, 2024
Biden administration announces an upcoming tariff on China semiconductors.
September 27, 2024
Biden administration implements 25% tariff on China semiconductors.
December 16, 2024
At the conclusion of a Section 301 review, President Biden announces a doubling of the China semiconductor tariffs to 50% effective January 1, 2025.
January 1, 2025
China semiconductor tariffs increase to 50%. The Federal register gives details, including that 2025 adjustments begin on January 1 near the top under the “Dates:” heading.
“Tariff increases in 2024 are applicable with respect to products that are entered for consumption, or withdrawn from warehouse for consumption, on or after September 27, 2024. Tariff increases in 2025 and 2026 are applicable with respect to products that are entered for consumption, or withdrawn from warehouse for consumption, on or after January 1 of the corresponding year”
January 27, 2025
President Trump tells the House GOP Issues Conference in Miami, he plans 25-100% tariffs on Taiwanese made chips. Subsequent statements indicate the tariff is likely to begin in April at 25% before gradually increasing through a phased implementation at 50% within 6 months and 100% within a year.
Note: Despite President Trump and TSMC CEO C.C. Wei announcing TSMC would invest $100B more in the U.S. (on top of already committed $65B) on March 3, 2025, President Trump has not rescinded his intention to implement tariffs on Taiwan semiconductors.
February 1, 2025
White House announces broad 10% tariffs on China and 25% tariffs on Canada and Mexico
February 3, 2025
President Trump announces month-long delay in implementing tariffs on Mexico and Canada.
February 4, 2025
10% tariff on China goes into effect. Additionally, de minimis exemption on Chinese goods (giving a tariff exemption to deliveries under $800) was suspended
February 5, 2025
The de minimis aspect of the Feb 1st executive order is temporarily lifted. This decision was made to give the Secretary of Commerce and U.S. Customs and Border Protection (CBP) time to implement adequate systems to fully and expediently process and collect tariff revenue for all Chinese products.
February 10, 2025
President Trump announces 25% tariffs on all raw and worked (machined/stamped unless it is poured in the US) steel and aluminum.
Fact Sheet: President Donald J. Trump Restores Section 232 Tariffs – The White House
February 13, 2025
White House publishes a memo for an investigation into unfair reciprocal trade to be completed within 180 days (Aug 9).
Reciprocal Trade and Tariffs – The White House
February 27, 2025
President Trump announces the previously postponed 25% Mexico and Canada tariffs to be implemented on March 4, plus an additional 10% tariff on Chinese goods (totally 20% across the board, plus HTS code specific tariffs such as the semiconductor tariffs of 50%).
March 4, 2025
Additional 10% tariff on Chinese goods goes into effect.
March 5, 2025
President Trump orders a one-month delay in auto tariffs.
March 6, 2025
President Trump grants temporary (one month) tariff exemptions for Canada/Mexico goods that satisfy USMCA rules of origin.
March 12, 2025
Steel and Aluminum tariffs begin.
March 13, 2025
The European Union announces new tariffs on $28B of U.S. imports, including metals, textiles, appliances, and agricultural goods. This new tariff is to go into effect in mid-April.
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April 2, 2025
The Trump administration plans to implement reciprocal tariffs using an “effective tariff rate”. This is also a likely timeline for the promised semiconductor tariffs to begin.