The impact of tariffs on sourcing decisions 

The Trump Administration has imposed new tariffs on imports to the United States as of February 2025. During his 2024 presidential campaign, President Trump stated he would impose a new tax of 10 or 20 percent on all imports to the United States regardless of their origin and has threatened tariffs on European Union member countries if they do not increase their imports of U.S. goods.

Already, President Trump has implemented tariffs on steel and aluminum imports and stated that he will impose further tariffs on all products from Mexico and Canada (Canadian oil and energy exports may be taxed at a lower rate) to pressure those countries to stop the flow of migrants to the United States. He has also increased tariffs on imported goods from China.

Although the administration’s exact plans are still coming to light, business and government leaders are preparing for new tariffs that will significantly impact global trade and the economy. 

Economists and tax experts have raised concerns around the risks of supply chain disruptions and retaliatory tariffs against U.S. goods, which Canada and Mexico are already preparing to levy. Additionally, if factories relocate to the United States, they may face challenges given existing labor shortages and threats of mass deportation against migrant workers.

Significant increases in tariffs also may cause harm to workers globally, particularly those employed in manufacturing, if companies start to shift sourcing by significantly curtailing or ceasing sourcing and production. For example, when a company abruptly changes its sourcing profile by changing its orders or exiting factories and farms, workers may lose wages or lose their jobs. 

Companies sourcing from countries that are impacted by new tariffs must take measures to protect workers in their supply chains. As they consider the impacts of new tariffs on sourcing or production of goods, companies should prioritize implementing FLA’s guidance on responsible sourcing and responsible production to ensure that any changes made in their sourcing and production minimize negative impacts on workers.