One year of tariffs: How US tariffs have changed the way businesses operate

It’s exactly one year since the United States (US) government announced its ‘Liberation Day’ tariff policies and in the 365 days since, businesses have navigated hundreds of new levies and changing consumer demand, as well as price uncertainty.

The US government collected over $287 billion in customs duties in 2025, a 192% increase from 2024. And, as a sign of strength of US consumer demand, US goods imports continued to outpace its exports, propelling the trade deficit to a new high.

In this blog, we’ll uncover how tariff rates have changed since 2 April 2025, who has felt the impact of new policies, how the levies have affected movements in the US dollar (USD) and more.

What are tariffs?

The US Trade Administration defines tariffs as a tax levied by governments on the value of imported products. In practice, this means that if the US has a 10% tariff on imported goods from the UK and a US business imports supplies from the UK at a cost of £1,000, the tariff will be an additional £100 charged to the importer.

What happened on 2 April 2025?

On 2 April 2025, dubbed ‘Liberation Day’ by the US administration, the government announced sweeping tariff legislation covering nearly every country. In addition to a baseline 10% tariff, 60 countries were met with higher, country-specific tariff rates. These taxes followed the administration's earlier enactment of a 25% tariff on auto imports and a 25% tariff on all steel and aluminum imports to the US.

However, in the year since this announcement, tariff policy has changed on a sometimes daily basis.

How have businesses been impacted by tariffs over the past 12 months?

As the tariffs are unprecedented, officials have faced a variety of different challenges when managing their impact on countries, business and consumers in the US and elsewhere. This is partially due to numerous macroeconomic factors, shipment delays and fast-changing policies.

At a high-level, the average effective tariff rate (the actual, weighted-average percentage tax paid on imports) rose from 2.4% in 2024 to 9.6% by late 2025 — an 80-year high. But the effective tariff rate was at some points only half of the rates the government intended to apply. This is in part due to fast changing levies. The tariff rate that applies to a vessel shipment is set at the time it begins transit and at times, these shipments can take weeks or months to complete. By the time the shipment reaches the US, its country of origin could technically face a higher levy, but the shipment is still received under the original, lower rate.

Still, it’s difficult to overstate the impact tariffs have had on businesses nationally and internationally. While the stated intention of the levies was to support domestic businesses, by making it more expensive for overseas businesses to ship into the US, the Federal Reserve Bank of New York found that 90%-94% of the tariff cost (also known as the pass through rate) has been paid by US businesses, not international exporters.

This high-pass through rate is in part due to the fact that ‘final goods’ represent less than half of all trade in the US today. Many products imported to the US are used by American businesses to produce and sell goods and these imported products are subject to tariffs. As an example, data suggests that imports accounted for 23% of the value of production of US heavy duty trucks and about a quarter of these parts come from China, Japan and the “rest of Asia.” Tariffs on these parts from China increased by an estimated 40% in 2025, making them 40% more expensive to purchase for US businesses — who still needed to assemble and produce the trucks in the US.

As a result of the need to import parts and components from around the world, some US companies have lost a significant amount of money paying import tariffs. Among these businesses include John Deere, who has claimed some $600M lost in tariff-related costs last year and Ford, who recorded a $2B tariff burden in 2025.

Other companies, particularly those within tariff-exempt industries, benefitted from deals made with the US government to contain rates. Among these include businesses in trade-deal countries like the UK (where a 10% rate prevailed), businesses that committed to investing heavily in US manufacturing, including Eli LIlly (who committed $27B), Meta (who committed $600B), Samsung (who committed $280M) and Toyota (who committed $10B), and businesses producing semiconductors or pharmaceuticals that benefitted from exemptions.

Contrastingly, some domestic US businesses benefited significantly from tariffs, particularly domestic steel and aluminium producers. Among these businesses include Nucor, which entered 2026 with historic order backlogs, up nearly 40% from 2025 in the steel mill segment and up 15% in its steel products segment. And David’s Bridal who owns nearly 40 manufacturing facilities globally and was able to turn their diversified supply chain into a new revenue stream. The company penned nearly a dozen deals with competitive businesses seeking to produce goods in David’s Bridal factories located in countries with lower tariff rates.

The rise of ‘China Plus One’

Perhaps the most significant and lasting impact of the tariffs however is its disruption of supply chains. To manage the fallout of the new levies, several companies scrambled to rearrange their manufacturing arrangments, oftentimes away from China (which experienced the highest tariff rates — peaking at 145%) but not necessarily toward the US. This trend has been dubbed ‘China Plus One’: a strategy in which companies diversify their manufacturing into other countries while maintaining a presence in China.

For China and its manufacturers, this strategy has led to a significant decrease in the share of US imports. In 2017, China had a 22% share of this market, down to 12% in 2024 and just 8% by September 2025.

Following the tariff announcement, the US administration requested that technology companies, including Apple, produce their products domestically. Many experts, however, questioned whether Apple could create an iPhone in the US. In addition to a lack of skilled workers (in comparison to their factories in China), Apple had already ventured to produce some of its products (albeit in far less demand) in Texas and ran into significant manufacturing obstacles.

Beyond manufacturing, the end product would also be significantly more expensive to produce. In fact, experts have estimated that consumers would have to pay anything from $3,500 - $100,000 for a US-made iPhone —far more than the current $799 starting point for the iPhone 17. A testament to the company’s reliance on overseas manufacturing, Apple reportedly transported roughly 1.5 million units of iPhones from India in cargo planes to the US to avoid levies following the 2 April tariff announcement.

In the months that have followed, we’ve seen businesses shift their supply chains to more cost-effective locations — and among the main beneficiaries have been Vietnam, India and Mexico. India saw its iPhone production jump 53% in 2025 and Mexico recorded a 10.8% increase in Foreign Direct Investment.

Vietnam in particular has benefitted, in part because of its geographic proximity to China, competitive labour costs and more favourable tariff rates. Vietnam’s trade deficit with the US reached a record $178 billion in 2025 before recording the largest trade surplus with the US in January 2026.

These shifts, in conjunction with the heightened levies on China, culminated in a 30% drop in overall US–China trade in 2025. As a result, ‘China Plus One’ has evolved from being a ‘nice-to-have’ strategy to something essential to business survival in a post-tariff era. After all, being able to produce in a country besides China has enabled some businesses to avoid tariff rates over 100%.

Save money paying overseas suppliers with Wise Business

The fall of de-minimis and changing consumer habits

In August 2025, the US administration ended the ‘de minimis’ loophole, which previously allowed packages under $800 to enter the US duty-free. In 2024, when de minimis was still active, some 1.36 billion shipments came to the US under the exemption. Immediately following its reversal, the Universal Postal Union reported a whopping 81% drop in parcel volumes entering the country.

Closing this loophole disrupted businesses like Temu and Shein, which relied fundamentally on shipping low-cost items to the US duty-free. These packages now face charges of sometimes over 100% of the product value and as a result, have forced the businesses to reconsider how they ship their products and where they ship them from.

Have businesses raised their prices?

In response to tariffs and higher prices on importing supplies and materials, many businesses have raised their prices. Overall, studies show that tariffs have increased the Consumer Price Index (CPI) slightly by 0.7%, while retail prices on imported goods have risen by about 7% and domestic goods by 4.8%.

How have exchange rates been impacted?

Typically, tariffs are associated with currency appreciation. Enacted to reduce demand for foreign goods, tariffs should decrease the demand for foreign currency and increase demand for the domestic currency. This past year however, due to wider macroeconomic conditions, the US dollar did not follow this trend until March 2026.

In the first half of 2025, USD dropped 11% — marking the sharpest first-half decline since since 1973. The dollar has continued to slide into 2026, down 0.7% through 4 February, marking a four-year low. In context, USD is down 1.16% YTD against CNY but up 2.06% YTD to EUR (accurate as of 2pm on 31 March 2026).

Currency movements can have significant implications for businesses. FX risk — also known as currency exchange risk or exchange rate risk — is the potential loss of money due to currency exchange rate fluctuations in international financial transactions. As the value of the dollar falls, businesses that are getting less for their money than they would have a year ago.

In real terms, a US based business that purchases supplies in CNY will pay more today than they would have a year ago for the same order. For the same $100,000 purchase, the business would be paying around $1,173 more, simply as a result of FX movements.

Convert money at the mid-market rate

This depreciation in USD may be caused by a range of macroeconomic factors, including uncertainty surrounding tariff rates and how quickly they could change, concerns over increased federal bank intervention and a growing ‘de-dollarisation’ trend among central banks, businesses and governments globally. In the past year, central bank FX reserves’ share of USD slid to a two-decade low. In addition to gold, much of the reallocation of FX reserves has gone to CNY and other currencies. Still, USD and EUR dominate reserves globally.

In March, USD rebounded slightly as investors continued to see it as a ‘safe-haven’ currency amid ongoing conflict in the Middle East. You can learn more about how currencies have responded from Wise’s FX Lead, Nathan Solomon on our blog, here.

Where do tariffs stand now?

On 20 February 2026, the US Supreme Court ruled that many of the government’s tariffs were unconstitutional. The 6-3 decision found that the International Emergency Economic Powers Act (IEEPA) that the administration used to apply the tariffs fell short of granting it with the “power to unilaterally impose tariffs of unlimited amount, duration, and scope.”

As a result of the court ruling, many of the tariffs applied since 2 April 2025 were halted on 24 February 2026. Industry-specific tariffs on products like steel, aluminium, lumber and automotives — which were enacted under section 232 of the Trade Expansion Act of 1962 — are still in place.

In immediate response to the ruling, the administration imposed a global tariff of 10%, before saying they would increase it to 15%, on all trading partners. This new global levy will expire after 150 days on 24 July 2026.

You can learn more about the current state of tariffs and whether or not businesses will be refunded for their tariff expenditure in our blog, here.

Are any trade deals in place?

In the weeks and months after the initial tariff announcements, many countries entered into trade agreements with the US. Following the February Supreme Court decision however, the status of these deals remains unclear.

Among these include:

Uncertainty surrounding the legality of tariffs has given US trading partners some leverage to push back on the rates and reconsider their existing deals, especially if their rates are above the 15% global levy.

How to deal with ongoing uncertainty

365 days later, it's still as important as ever for businesses to remain informed and proactive about managing FX risk in their operating currencies as well as taking steps to navigate shifting supply chains and global customer demand.

The Wise Business account is designed to make managing your business finances as easy as possible. Create local account details in 9+ currencies, including USD, EUR and GBP, to improve flexibility and reduce the risk of funds lost in the conversion process amid currency fluctuations. If you do need to exchange currencies, you can set up Auto-Conversions to automatically convert your money between two currencies once they reach your desired exchange rate. If you change vendors or suppliers, it’s easy to pay them via direct debits in 40+ currencies at low, competitive fees — all from one account.

As legislation continues to shift, it’s important to manage your exposure to tariffs and where possible, adjust your finances and multi-currency holdings to protect your bottom line. Ready to get started?

Create a Wise Business account