The US tariff landscape changed again with the announcement of Section 338 tariffs on certain Canadian goods, scheduled to take effect Aug. 19. The latest tariff measures reach beyond Canada, increasing pressure on importers to protect margins, cash flow, and supply continuity.

The Office of the US Trade Representative finalized a new Section 301 action imposing 10% or 12.5% tariffs on imports from 60 countries, subject to product and country-specific exemptions.

A separate 25% Section 301 tariff on many Brazil-origin goods became effective July 22. For middle-market importers, the issue is no longer Canada alone. It’s whether any supplier country, product classification, entry date, or customer contract now creates added duty exposure.

Middle-Market Risks

Middle-market companies often depend on fewer suppliers than large multinationals. While the Canada tariffs remain significant for importers of covered goods, the Section 301 tariffs expand potential exposure across nearly every major trading partner, including Canada, Mexico, China, India, Vietnam, the European Union, the United Kingdom, Japan, and South Korea. USTR says the forced-labor action covers the top 60 US trade partners, representing 99.4% of US imports.

Large multinationals may have global supplier networks, internal customs teams, and stronger vendor leverage. Many middle-market companies don’t.

Businesses should evaluate sourcing, transfer pricing, customs methodology, supplier diversification, and tariff compliance in an integrated manner.

Cash-Flow Squeeze

The cash-flow impact may arrive before the income statement impact. Tariffs are generally due when goods enter the US, which means importers may need to pay additional duties before recovering costs from customers, if recovery is possible.

A 10% or 12.5% duty across a broad import base can strain working capital, while a 50% duty on covered Canadian goods or 25% duty on covered Brazil-origin goods can create immediate liquidity pressure. For companies with limited credit access, seasonal sales, or longer customer-payment cycles, tariff exposure can quickly become a liquidity issue.

Other Implications

Tariff-related costs may affect inventory values, landed cost assumptions, margin forecasts, and contractual economics. If costs can’t be passed through to customers, companies may need to reassess pricing, net realizable value, impairment risk, and customer commitments.

Local country transfer pricing rules and tax authority enforcement add complexity, particularly for multinational groups. CBIZ’s existing tariff guidance emphasizes connecting customs planning, transfer pricing, supply-chain decisions, and broader tax strategy.

Customs Planning

Business owners and executives should review customs procedures before assuming every import from a covered country will carry the same cost.

The newest Section 301 action includes different rate structures, with some economies subject to 10%; others to 12.5%; and certain products from the EU, Taiwan, Japan, Korea, and Switzerland using a net-of-most-favored-nation approach rather than a simple add-on duty. Product exemptions also matter, including informational materials, donations, accompanied baggage, Section 232-covered goods, and other products tied to supply availability or economic disruption.

Canadian tariffs are different. They are country-specific Section 338 tariffs, and the White House says the US-Mexico-Canada Agreement origin doesn’t exempt covered goods. Products subject to Section 232, energy, potash, fish, and critical minerals are excluded.

Companies should conduct a product-by-product review that includes classification, origin, valuation, and available trade incentives. Businesses could consider the use of foreign trade zones, duty drawback, and other trade programs as mitigation tools.

Industries Most Affected

Companies in the following industries should review import exposure:

ManufacturingDistributionConstructionConsumer goodsFurnitureTextiles and apparelAutomotive supply chainsElectronicsIndustrial machineryFood and beverageAlcoholDairy

The Canada tariffs are especially relevant for companies importing specified Canadian goods, while the forced-labor Section 301 tariffs create broader exposure for importers sourcing from the 60 covered economies.

The Brazil action adds another layer for companies sourcing Brazil-origin products. The practical takeaway is that exposure depends less on industry classification and more on Harmonized Tariff Schedule classification, country of origin, entry timing, and exemption eligibility.

Steps to Take

Companies shouldn’t wait for certainty. Business leaders should identify affected products by Harmonized Tariff Schedule classification, supplier, and country of origin; quantify exposure by product line; review whether Section 301, Section 338, Brazil-specific tariffs, or Section 232 measures or exemptions apply; and model landed cost under multiple scenarios. They should also review customer and supplier contracts for tariff surcharges, escalation, change-in-law, force majeure, and price-adjustment language.

For shipments already on the move, importers should confirm entry dates and in-transit documentation. For upcoming orders, they should decide whether to accelerate, delay, reroute, or renegotiate purchases based on actual duty exposure. Alternative sourcing should be evaluated, but changes may not be immediate because vendor qualification, quality approvals, logistics capacity, and customer commitments may take longer than the tariff calendar allows.

An Integrated Response

A practical response should align procurement, finance, tax, operations, customs, legal, and sales teams. These teams should coordinate to identify risks and model exposure to determine where pricing or contract changes may be required. Integrated planning, supply-chain scenario modeling, automation, foreign trade zones, duty drawbacks, and coordinated customs and tax planning can improve visibility and reduce unnecessary duty cost.

Time Is Limited

For middle-market companies, the newest tariff announcements are more than trade-policy headlines. Some duties are already effective. The Canada-specific 50% tariffs are days away from being effective, causing a significant impact on businesses.

The best-positioned companies will move quickly from headline review to product-level exposure analysis, quantify cash-flow impact, update pricing assumptions, and make coordinated decisions across key functions.

Companies that wait may find their exposure already embedded in purchase orders, inventory values, and customer commitments.

This article does not necessarily reflect the opinion of Bloomberg Industry Group Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Avinash S. Tukrel is managing director and US west region transfer pricing leader at CBIZ.

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