U.S. importers are grappling with a complex web of overlapping tariffs that add up to far higher duties than the headline rates publicized by policymakers. Known as “tariff stacking,” this practice occurs when newly imposed levies are applied on top of existing duties enacted under separate trade statutes. For example, a single shipment of hardware from China may now carry a baseline 10 percent “reciprocal” tariff on all trading partners, a 25 percent penalty under Section 301 of the Trade Act of 1974 targeting Chinese digital and industrial goods, and additional duties—ranging from 7.5 to 25 percent—under Section 232 on steel or aluminum content. The cumulative effect can send total duty rates soaring above 50 percent or even 100 percent, squeezing import‑dependent businesses and ultimately driving up prices for American consumers.

Tariff stacking first emerged in earnest during the Trump administration’s trade conflicts. Rather than replacing older levies, each new round of measures was layered atop previous ones, generating confusion among customs brokers and supply‑chain managers. Importers discovered that a reduction in one tariff bracket did not erase others; when the administration announced in May that Chinese goods would face a “unified” 30 percent tariff, many companies found their actual rate remained substantially higher. This multiplicity of duties has turned tariff calculations into a bookkeeping nightmare, requiring granular line‑item assessments for every product based on its composition, country of origin and applicable trade provision.

Operational Headaches for Small and Mid‑Size Firms

For smaller businesses without dedicated trade‑compliance teams, tariff stacking poses an existential threat. Rodgers Wade Manufacturing in Texas sources metal fixtures from Asia and found its 30 percent announced rate ballooned to 70 percent once steel‑specific duties were included. “We thought the picture was simpler, but every time we import a fixture, we face multiple declarations—and multiple bills,” says President John Hamer. The administrative burden of filing detailed certificates of origin and navigating overlapping tariff codes forces many entrepreneurs to hire costly external consultants or to divert scarce resources from core operations.

Similarly, Brooklyn‑based Lalo Baby Products discovered that a popular play table, classified under consumer‑safety tariffs, attracted a 25 percent duty. On top of that, it faced the standard 25 percent Section 301 levy, pushing its total duty to 55 percent. When customs rulings shift, importers scramble to reclassify goods, contest duty determinations, and apply retroactive refunds—often waiting months for resolution. For companies already operating on tight margins, these delays can derail cash‑flow projections and compel preemptive price hikes that deter customers.

Economic and Strategic Implications

Beyond the immediate cost spikes, tariff stacking disrupts long‑term supply‑chain planning and reshoring calculations. Some importers are retooling their procurement strategies—seeking alternative suppliers in Mexico, India or Southeast Asia—to sidestep the highest combined rates on Chinese imports. Yet, establishing new partnerships entails validation of quality standards, renegotiation of contracts, and exposure to fresh logistical challenges. The net result can be only marginal cost savings, offset by transition expenses and potential production slowdowns.

Higher combined tariffs also weaken U.S. competitiveness in global markets. Exporters that rely on imported components find their production costs escalating, eroding margins in international tenders. A recent industry survey found that 62 percent of small manufacturers experienced delayed orders or lost contracts due to sudden increases in import duties. These disruptions ripple through related sectors—transportation, warehousing and retail—magnifying the economic toll of stacked tariffs across the broader economy.

Legal Battles and Policy Responses

Federal courts have questioned the scope of presidential authority to impose tariffs without congressional approval. In several rulings, including one from the U.S. Court of International Trade, judges held that certain proclamations exceeded the limits set by trade statutes. Yet, the administration has appealed these decisions, and existing duties remain in force while legal challenges wind through appellate courts—a process that can take years. Meanwhile, Congress has begun exploring bipartisan legislation to streamline tariff schedules and require that new levies sunset unless explicitly renewed.

Some importers are pursuing exclusion processes, filing petitions to exempt specific product lines from stacked duties. During the previous administration, the U.S. Trade Representative granted thousands of temporary exclusions under Section 301, alleviating hardship for items like medical equipment and specialty chemicals. However, approval rates have dwindled, and the process itself is opaque, with lengthy documentation requirements and tight deadlines that disadvantage smaller firms.

Looking Ahead: Toward Simplification or Further Complexity?

As talks continue with major trading partners—including efforts to negotiate bilateral agreements and revamp World Trade Organization rules—tariff stacking remains a pivotal battleground. Simplifying U.S. import duties could offer relief: proposals include consolidating overlapping tariffs into a single, transparent rate per product category; phasing out punitive levies tied to distinct trade disputes; or instituting a tiered tariff system based on risk and strategic industry designation. Advocates argue that such reform would restore predictability, reduce administrative costs and support domestic manufacturing through secure access to intermediate inputs.

Yet political momentum for such measures is uncertain. Tariffs on Chinese goods retain support among constituencies that view them as leverage over unfair trade practices and intellectual‑property theft. Any move to unwind stacked duties risks reigniting debates over national security exemptions and strategic industrial policy. For U.S. importers, the imperative is clear: companies must deepen their fluency in harmonized tariff schedules, invest in compliance infrastructure, and engage policymakers to advocate for clearer, more coherent trade rules. Only then can they navigate the labyrinth of stacked duties without sacrificing competitiveness or profitability.

(Adapted from MarketScreener.com)

Categories: Economy & Finance, Geopolitics, Regulations & Legal, Strategy