U.S. tariffs reroute global trade

Tariffs are no longer just a story about higher prices at the U.S. border. They are now a story about trade routes getting redrawn in real time. One year after the big tariff shock of 2025, global trade has not frozen. It has shifted. Factories, freight flows, and sourcing plans are moving toward countries that can still reach the U.S. market with fewer penalties, while Washington tries to rebuild its legal case for keeping broad import taxes in place. (coface.com) ### If trade did not collapse, what changed? The simplest answer is rerouting. Companies that used to buy more directly from China have been pushing orders through Vietnam, Thailand, Mexico, and other alternative production hubs instead. Coface’s latest review says the shock has disrupted trade patterns sharply, but has not overturned global commerce outright. Basically, the world did not stop trading with the U.S. It started finding different doors into the U.S. market. (coface.com) ### Why are those countries gaining? Because tariffs change relative costs, not just absolute costs. If Chinese goods get hit harder, then a Vietnamese, Thai, or Mexican supplier does not need to be cheap in every way. That supplier just needs to be cheaper after tariffs, delays, and compliance costs are added in. This is why tariff policy often moves supply chains sideways before it moves them home. Building a new U.S. factory takes years. Switching to a different foreign supplier can happen much faster. (coface.com) ### What changed in Washington this week? The legal machinery moved. USTR held public hearings on April 28 and April 29, 2026, for Section 301 investigations covering 60 economies over failures to block imports made with forced labor. That matters because Section 301 is a more traditional trade-law path to tariffs. It gives the administration a way to replace some of the broader duties that were knocked out earlier this year with a narrower, more defensible framework. (ustr.gov) ### Why is the White House rebuilding tariffs at all? Because the Supreme Court took away one of Trump’s favorite tools in February. After that ruling, the administration pivoted fast to Section 122 of the Trade Act of 1974, which allows temporary import surcharges for up to 150 days. The catch is that Section 122 is a bridge, not a permanent structure. So the administration is pairing those temporary taxes with longer-running trade cases that could keep duties alive through other statutes. (usnews.com) ### Why is Canada suddenly in the middle of this? Because this is no longer just a China fight. Jamieson Greer has been signaling that Canada is not getting treated as an automatic exception, and he has said tariffs will remain part of any future trade arrangement with Ottawa. At the same time, Canada is trying to avoid getting swept into the new forced-labor tariff push. That is a real break from the old North American assumption that allies would get softer handling than strategic rivals. (ici.radio-canada.ca) ### Does this mean tariffs are working? Depends on the goal. If the goal was to shut down imports, not really. Trade adapted. If the goal was to force companies to rethink supply chains, then yes — that is happening. But the rerouting story also shows the limit of tariffs as an industrial policy shortcut. A lot of production is not coming back to the U.S. It is moving to third countries instead. (coface.com) ### Who is paying right now? A big share of the cost is still being absorbed by U.S. companies rather than fully passed through into a giant inflation spike. That helps explain why the tariff shock has been painful without producing the kind of immediate consumer-price blowout many people expected. But absorbed costs are still costs. They show up in margins, investment decisions, and where companies choose to expand next. (coface.com) ### So what is the real story here? The real story is not “trade stopped.” It is “trade rerouted, and Washington kept escalating.” The U.S. is trying to turn temporary tariffs into a more durable system through Section 301 and other laws, while companies keep treating tariffs like water treats a rock — not by stopping, but by flowing around them. (ustr.gov)