Tariffs and Trade Impacts

Tariffs and Trade Impacts

_{Published: April 9, 2025}

As you may be aware, additional “reciprocal” tariffs were scheduled to go into place April 9, 2025, which would have put significant burden on products coming from overseas.  President Trump has announced a 90-day pause on those reciprocal tariffs,  along with an increase to tariffs on Chinese exports to 125%.  As we navigate the fluidity of our current state, we have put together, in partnership with our Customs Broker, things to consider for the following:

Options to Reduce Duties:

For orders ready to ship:

1. Renegotiate purchase price to cost share the tariff impact.

• Common with retail items; suppliers may qualify for subsidies in home country (e.g. Japan, so appropriate for them to take on a share of the tariff)

2. Explore whether U.S. seller can be the Importer of Record, or potentially leverage the 1^st Sale Provision.

• Qualify for a duty exemption if no equivalent instrument is manufactured in the USA and if that exemption type is valid for IEEPA (still to be confirmed for Annex I, found here, origin items). The following steps are necessary to complete this process. Please contact the PCMO and/or Baker Logistics Consulting Services to start the process.
  • Submit an application to Customs and Border Protection (CBP). Provide justification for buying a foreign made product. For example, no US instrument of equivalent scientific value is available.
  • Provide backup documentation of the effort made to search for a domestic product.
    • If approved, receive sign off by CBP and International Trade Administration Form/Dept. of Commerce with publication in Federal Register.

****This process can take a minimum of 90 days to complete.****

Additional Actions to Consider:

Short-Term –

1. For all new purchases, expressly confirm with the vendor where the item will be shipping from, and consider tariff impacts accordingly.
2. Assess the cost impact of the changes to the department.
   • Review reports of open purchase orders and identify items ready to ship within the next 90 days.
   • Department should run an analysis of all open purchase orders by dollar value, origin, commodity, department, and ready date.

Medium & Long Term –

1. Consider freezing “non-essential” purchases.
2. Look for domestic sources and ensure that they are not shipping from abroad or reliant upon international supply chain.
3. Consider developing formal process and standing team to assess and navigate tariff impacts
4. Consult with the PCMO prior to purchasing more expensive orders that won’t qualify for duty free admission.
   • Consider cost sharing negotiations with potential vendors for large ticket procurements.
5. Ensure duty costs are factored into price evaluations.

Top 4 Categories Most Impacted:

1. Laboratory Supplies
2. IT Hardware
3. Medical Equipment
4. Construction

Risk Mitigation:

1. Supply Chain Diversification:
   • Conduct supplier surveys to identify country of origin for products and components.
   • Develop alternative sources and establish relationships with domestic vendors/manufacturers if available.
2. Contract Protections:
   • Negotiate price protection periods with vendors.
   • Utilize existing contracted vendors (IPHEC & Master Contracts).
   • Include provisions for sharing tariff costs between university and suppliers.
3. Inventory Management:
   • Identify critical items with high tariff exposure.
   • Establish strategic inventory for high-risk items (I.e., buy in bulk).
     • Create buffer stock levels based on criticality and lead time.
   • Develop alternative product specifications where possible.

De Minimis Changes:

On the same day, President Trump signed another executive order that eliminates de minimis treatment for shipments from China and Hong Kong, effective May 2. After that date, goods valued at less than $800 from China and Hong Kong will be assessed a tariff of 30% of the goods value plus a $25 fee. The fee will double to $50 on June 1^st.

The Reciprocal Tariffs Executive Order provides that de minimis treatment for goods from other countries will be eliminated once the Secretary of Commerce notifies the President that “adequate systems are in place” to process and collect duties from such shipments. 

Contact
If you have any questions or need assistance, please feel free to contact your Purchasing and Contract Management Office at:

UIUC: UIUC Purchasing and Contract Management Office at urbanapurchasing@uillinois.edu or 217-333-3505

UIC: UIC Purchasing and Contract Management at uicpurchasing@uillinois.edu or (312) 996-2850

UIS: UIS Purchasing and Contract Management Office at uispurchasing@uillinois.edu or (217) 206-6651

System: System Purchasing & Support Services at procurement@uillinois.edu or (217) 333-9BUY (9289)