Ryan: Welcome to the April edition of the Robinson Roundup. My name's Ryan Hammett, and I'm joined as always by my colleague, Mat Leo. Mat, well, we've hit a new record. First time ever that you and I are talking about the same topic for three straight months, and no surprises, that topic is tariffs. I was at an event last week where I was talking with a group of shippers who all still have other goals that they have to hit this year around cost savings, process improvement, and sustainability, but it just feels like the tariff situation has consumed all of the focus and the energy.

Mat: Oh, absolutely. And it's because navigating tariff complexity and changes is a huge challenge. And it's definitely changing supply chain and transportation strategies on a regular basis. And there's no way to really avoid the impact that they're having. So we thought we'd lean into it this month and talk through the latest. 

I think the best place to start is at the very top, which is what are the goals that the administration is trying to achieve through leveraging tariffs? And there are clear goals, particularly if you read through the executive orders being released related to tariffs and various ongoing investigations. Now, if I tackle these in reverse order of priority, the first one is for leverage on other issues. And the administration has declared a state of emergency and is using tariffs to help achieve outcomes related to that state of emergency, which is what we've seen with topics like immigration and drugs. 

Now the second is to drive manufacturing and related jobs back to the U.S.

The third, but probably the most critical to the administration, is to prohibit the use of U.S. dollars being used to fund the expansion of the Chinese military. And that's a critical one to understand as we've seen less flexibility and more heightened pressure related to China, but also is one that has put many U.S. businesses right in the middle of a really challenging situation. 

Ryan: Yeah, and that's not to say that there aren't other goals beyond those three. There is also a governmental funding mechanism with tariffs being considered as a tool to generate revenue and a way to offset the lowered income taxes that the administration is currently working with Congress to achieve later this year.

So this is a multifaceted plan, but it's moving really quickly and has proven to be quite dynamic. I think it's also critical for everyone to remember. This type of negotiations, exclusions, and policymaking, well, this has always occurred. The difference is that the current administration prefers to hold those discussions publicly instead of privately.

It kind of reminds me of like when my teenager told me that applying for college was way more complicated than he thought it would be. Well, the process itself hasn't changed. It's just that he's now aware of all the steps that go into it. Instead of holding talks behind closed doors, as traditionally has happened, these discussions are in the public eye, which means everyone, all of us, we have to be able to evaluate everything we hear for whether it's a point of discussion, negotiation, or implementation. And only once it shows up published on a government website is it official. 

We saw that recently with the surprise Friday night exemption of smartphones and computers from China. The world learned of it when it hit one of the official websites for implementation.

We've shown you this slide before, but it's a good reminder that these here on the list are the tools that Congress has given the President through which he can utilize tariffs. And if you read the executive orders that are released by the White House, they will make clear mention of which tool they're using to implement that tariff. 

For example, Section 232 is being used for the steel and aluminum tariffs, as well as the automotive tariffs. Further down this list, we see our new favorite word, IEEPA. This is the first time IEEPA has been invoked for tariffs, and the national emergency designation by the administration has seen IEEPA be used for topics like reciprocal tariffs, de minimis, and the specific tariffs on China targeting fentanyl.

Mat: Yeah, and I'll actually show you a quick example of just what you're talking about. This is the language from the Federal Register filed specific to tariffs on finished automobiles and auto parts. Now, I've highlighted on these two pages the amount of times that national emergency or one of these authorities is mentioned, along with the dates and timing. 

Now, this is the level of detail that you will find when you use information directly from the government sources, as opposed to social media or through the grapevine. And note that any time that we send out one of our client advisories on trade or tariffs, we'll also link these official documents to help provide you with the details.

So as we look ahead, we expect to see continued changes related to trade policy. And beyond the 10% baseline reciprocal tariffs for all countries and the mounting tariffs on China, any further reciprocal tariff implementation by the U.S. is on hold for a 90-day period to allow time for countries to negotiate.

But many U.S. exporters are being hit with their own retaliatory tariffs, notably those exporting to China. The automotive industry is closely watching developments as they are currently, or there are currently tariffs on finished vehicle imports and expected tariffs on automobiles or parts beginning in May. But as of the recording of this video, there are talks to delay those to give automakers a chance to make plans. 

Ryan: Agreed. We recently, in the last few weeks, held a summit for some of our larger automotive customers. And a quick poll of the room was that production can't actually be moved from one factory to another existing factory in less than nine months, with most in the room saying it would take a year. And that's just when a production facility exists in the United States. If you're talking building a new factory, it's three to five years. So the automotive industry is asking for more time to make those adjustments. We also continue to monitor the plan to eliminate the de minimis exclusion on Chinese goods.

This is scheduled to go into effect on May 2nd, but there are still questions about implementation that need to be answered. And other products that are likely still ahead that we may see announcements in the coming weeks and months include lumber, pharmaceuticals, and copper. 

Now, we don't just want to report the news for you. There's plenty of that going around. We wanted to give you some actionable strategies you can consider. So Mat, what are some areas that supply chain professionals should be investigating right now? 

Mat: The highest priority now is to manage cash flows. And not only your own cash flow as a shipper, but also the cash flow of your customs broker as they are having to outlay dollar amounts much higher than they have in the past to pay for these tariffs. You know, your team needs to be actively calculating the impact of these new tariffs, and working with your CFO and finance teams to ensure that you have enough cash on hand to pay these tariffs.

Which includes making sure cash is in the account if you have automatic ACH withdrawals from customs, because you don't want penalties on top of these tariffs, right? In similar fashion, make sure that your customs bonds are up to date, which, you know, is the guarantee that you're providing the U.S. Customs and Border Protection that you can pay these duties that you owe.

You know, having the right documentation is still critical. The government is very aware of the temptation to, we'll say, find creative ways around paying tariffs. So they're actively monitoring things like country of origin. And beyond that, understanding the origin and the amount of things like steel or aluminum within your product is important to calculate the right amount of tariffs to be paying.

Ryan: Exactly. I had a conversation with an automotive company last week that was describing the complexity of detailing out every single part of an assembly to understand where that individual component originated and what it was made of. So many automotive assemblies are made-up of materials and parts from multiple countries and vendors. It's so complex. 

And I'll even add on that it's definitely worth considering if you can qualify your products under the U.S.-Mexico-Canada Free Trade Agreement, or USMCA, as we call it in the States, to avoid the 25% U.S. tariff on goods from Mexico and Canada that aren't covered under USMCA right now. 

And I'm going to add one more on here at the end of our list, and that's doing an internal assessment of all of your internal processes. The reality is that every company is looking for ways to offset costs right now. And if you look at your purchase order management, your freight transportation processes, you will likely find ways to save money. You probably have known about these opportunities for years, but it was always just easier to overlook them and seek cost savings in other places because it was just easier to apply pressure to a vendor than it would be to make that internal process change. But now may likely be the time to look at order aggregation, order quantities, lead times, loading practices, data consistency, or automation. So there's a lot to consider internal as well for opportunities. 

Well, Mat, as we wrap up, any other notable news specific to transportation we should know about? 

Mat: Yeah, I'd say from a U.S. dry van truckload perspective, we still expect April to be that low point in 2025 spot rates, but produce season and road check week are quickly approaching and that should bring spot prices upwards. Obviously, the demand environment is very inconsistent at the moment. So there are many factors that we are watching to see where the market would be going in the weeks ahead.

And we continue to see carrier supply decrease, which will put pressure on the market as those seasonal events approach. Speaking of produce season, as that continues to ramp up, more produce is shipped from Mexico to the U.S., we'll likely see increased dwell times at the border caused not only from that increased congestion, but in tandem with the tightened security measures at the border. 

Ocean freight volumes are down, which is putting pressure on prices in a downward direction with some port congestion, adverse weather in Asia, Latin America, and continued implementation of new carrier alliances. We've also seen ocean carrier schedule reliability drop a little in the last few months. 

And finally, for U.S. LTL, we encourage shippers to continue to prepare for the upcoming NMFC freight class changes that will occur in July. So if you haven't begun that process to accurately determine your density, you should start doing that now. 

Ryan: Well, thanks for joining us for this month's Roundup. Remember, no other provider has the full picture of global transportation challenges like C.H. Robinson. We go further than anyone else to support you with achieving your supply chain goals. Reference our freight market insights report on the website or reach out to your account team with any questions.