'They're Building the Plane In-Flight:' Lawyers Predict Uncertainty Around Tariffs

"Our key message, at least, number one, is don't take the bait," said Lenny Feldman, managing partner of Sandler, Travis & Rosenberg. "It's very easy to read a tweet, to read an email, to read something in the news that says the tariffs are coming. It's going to be 25% by February 1. It's possible, but don't take that bait until we actually see what happens."

Feldman’s comments came one day before Trump announced plans to place 25% tariffs on Canada and Mexico starting Feb. 1 (see 2501300003).

He went on to say that even if the Trump administration wants rapid tariff action, there is going to be a lag time before any duties are actually enacted. "If this is to occur February 1, it's not going to be able to be ready for prime time on February 1," he said, speaking about Trump's warning of tariffs on Mexico and Canada by Feb. 1. "There's no way. I'm going to be speaking right after this webinar to an executive with customs. And I have a feeling if I ask, ‘Hey, have you gotten the tariff numbers or what you need to do for 25%?' I'm sure he’s going to tell me off the record, no, we haven't seen any. They’re not ready. There’s about a two- to three-week lag time, from what I understand, for the administration to say, let's get those tariffs in place for that country, or those programs, appropriately, it takes about two weeks to go through the process."

However, Luis Arandia, a partner at Barnes & Thornburg had a different message when it comes to tariffs enacted through the International Emergency Economic Powers Act: "The main takeaway is that there’s no timelines, there's no ramp up period, it is completely at the discretion of the President."

He said that tariffs "can come as quickly as the White House Office of General Counsel can draft the orders and then work with Customs and Border Protection to set up a process to start that tariff action, but again, completely at the discretion of the President in terms of how he would want to do that."

Matthew Morgan, a partner at Barnes & Thornburg, who previously served as general counsel for Vice President Mike Pence, predicted that IEEPA will be used as a bargaining tool but that tariffs might not be long-lasting so long as countries are willing to deescalate with Trump: "if you see tariffs implemented, and you see countries kind of resisting in a different way, not getting off the escalation planner, that's a cue that that country could be a target for IEEPA tariffs."

He also speculated that there would not be any multilateral free trade agreements in the near future. "When I was in the Trump 45 administration, the preference was on bilateral trade agreements as opposed to multi-party agreements," he said, adding that with the need to pass a budget and confirm Cabinet appoints there might not be political capital to spend on FTAs. "I don't think there's any immediate desire other than maybe renegotiating parts of USMCA to bringing any type of free trade agreements through Congress."

Amidst all the uncertainty about the future of tariffs, Feldman offered this advice to importers: "Diversify your portfolio, at least explore, see what your options are and how you can get in and out of certain areas. But also look at your classifications ... and make sure you're doing it right, because if you are not, you may have a rude awakening when you see some of these [tariffs]. Do your homework, see what your options are, but don't make any really drastic moves yet."

Colleen Clarke, senior vice president of Roanoke Insurance Group, echoed his statements when it comes to predicting bond payments for these potential tariffs: "importers really need to be cognizant of looking at their future orders. What do they plan for the next 12 months or the next year, or two years to determine what their duties and taxes may be?" Her advice for making sure that companies are prepared for bond payments is, "Round up. Always round up."