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Preparing for sector-specific tariffs: Strategies for business resilience

Explore strategies for navigating sector-specific tariffs under Section 232 and Section 301. Learn to assess risks and optimize supply chains for sustainable growth.
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06/10/2025 · 7 minute read

How businesses can prepare for a potential shift to sector-specific tariffs

The global tariff situation continues to fluctuate, creating uncertainty for businesses. The US Court of International Trade (USCIT) on May 28 ruled that tariffs imposed by the US government based on emergency powers on April 2, which introduced a minimum 10% rate on all imports from trade partners, as well as specific levies introduced prior to April 2 against China, Mexico, and Canada, were invalid. The following day, the US Court of Appeals for the Federal Circuit (USCAFC) temporarily stayed the USCIT's injunction, keeping those tariffs in effect during the appellate court review.

Businesses may be wondering where these developments will leave US tariff policy in the long term.

It is important to note that the USCIT’s decision addresses the limits of the US government’s use of the International Emergency Economic Powers Act (IEEPA) and tariffs imposed on an emergency basis; the decision does not affect sector-specific tariffs under Section 232 of the US Trade Expansion Act of 1962. While these currently include steel, aluminum, and autos and auto parts, it is possible that the list of goods under sector-specific tariffs may expand.

If the USCIT’s ruling concerning tariffs imposed under emergency conditions is upheld, the government has other non-emergency powers to take actions supporting its trade policy objectives, such as the aforementioned Section 232 or Section 301 of the Trade Act of 1974. Those powers have different contours, affecting the potential speed of trade policy modifications to come as well as the potential scope of any new levies. 

Given this backdrop, businesses should maintain a proactive approach to managing evolving tariff-related risks and a shifting trade environment. Being prepared can help you identify opportunities that may arise and effectively navigate through the current uncertainty.

Understanding trade objectives to inform decisions

Identifying how changing policy decisions may impact operations and supply chains can equip businesses to respond and adapt. Generally, tariffs in 2025 have fallen under two main objectives of US trade policy: 

  1. Generating revenue and seeking concessions on a range of country-specific trade and non-trade issues. The IEEPA has, so far, been the primary source of authority for the US government’s efforts to implement baseline and reciprocal tariffs, though Section 301 could be used as well.
  2. Protecting and growing strategically important industries. These sector-specific tariffs generally fall under Section 232.

Currently, reviews of several potential Section 232 tariffs are in progress, covering materials (copper and critical minerals), components (electronics), and completed products (trucks, cars, airplanes, and pharmaceuticals). As of March 12 of this year, agreements that previously suspended Section 232 tariffs on steel and aluminum from Argentina, Australia, Brazil, Canada, the EU, Japan, Mexico, South Korea, Ukraine, and the UK were terminated. While Section 232 tariffs for steel, aluminum, and auto and auto parts were initially set at 25%, there is no assurance that future rates will remain the same. As of June 3, tariffs on steel and aluminum imports increased from 25% to 50%, with a temporary exemption for UK exports in this sector.

Why sector-based tariffs may stick

The USCIT found that the tariffs in question, particularly those based on general economic concerns like trade deficits, were not a direct response to the declared emergencies and therefore exceeded the scope of IEEPA's intended use. As noted, the USCIT’s decision does not affect tariffs issued under other sources of legal authority, including Section 232.

Given this developing legal landscape, there is a possibility that the US government may refocus its efforts on Section 232 by implementing additional sectoral tariffs, including on semiconductors and lumber, thereby creating further uncertainty for businesses. For US-based companies, this may result in a preference for domestic suppliers, particularly for materials like steel and aluminum used in infrastructure projects, which could contribute to a period of shortages and potentially higher prices. For Europe-based companies, the chemical (pharmaceutical), automotive, and technology (hardware) sectors are likely to be most affected by current and future sector-based tariffs.

Section 232 tariffs, though, remain subject to potential modifications. For instance, tariffs on auto parts have been adjusted to allow automakers to reclaim 3.75% of the value of US-manufactured vehicles for a one-year period. Additionally, sector-based tariff rates can change as a result of country-level trade agreements or a reassessment of the tariff rate needed to protect US industry, as was the case in early June when the US changed its global tariff rate on steel and aluminum from 25% to 50%.

Section 232 process and exemptions history

Section 232 of the Trade Expansion Act of 1962 generally authorizes the US president to modify imports of goods and services deemed a threat to national security. The process typically begins with an investigation by the US Department of Commerce on a particular import, which has 270 days to present its findings to the president. Following the report, the president has 90 days to take action, which may include imposing tariffs, implementing other import restrictions (such as quotas), or opting for no action at all.

While some members of Congress have raised concerns about the president's authority, the current law does not have a prior congressional approval requirement.

Previous US administrations offered opportunities for importers and countries to seek exemptions from Section 232 tariffs under certain circumstances. For instance, between 2017 and 2021, the US Commerce Department completed seven Section 232 investigations. In all but one investigation, the US Commerce Department found a threat to US national security and tariffs were enacted on these goods. In other instances, certain product and country exemptions were granted or import quotas and tariff rates were reduced.

Generally, there appears to be less appetite at present to grant countries exemptions to Section 232 tariffs.

How risk management solutions can be applied

In 2025, the potential for tariffs to disrupt global trade is greater than in previous years. Between 2015 and 2020, US tariffs affected around US$380 billion in US goods imports, primarily from China. The global costs of this year’s tariffs could affect approximately US$2.3 trillion of US goods imports, or 71% of US goods imports. These figures do not account for shipment delays due to uncertainty around import costs and other factors.

This highlights how seeking to understand and unpack the likely effects of tariffs can be complex, especially given current uncertainties. Strategies to help businesses position themselves for growth despite these conditions include:

  • Performing continuous scenario analysis to assess the implications of policies, allowing for better decision-making. For example, Marsh McLennan’s Sentrisk tool maps supply chains by tier, type of goods, and supplier relationships to help businesses assess risks to various exposures that then allows them to seek to  optimize insurance coverage and risk management investments. Sentrisk’s Tariff Simulator enables companies to quantify the impact of various tariff scenarios in order to better manage their supply chain risk, which can be particularly useful for those facing sector-specific tariffs.
  • Pursuing insurance — including, for example, political risk insurance, trade credit insurance, and business interruption insurance — to mitigate the potential financial impact of trade- and tariff-related risks.
  • Utilizing a risk management framework to help understand and assess policy announcements while establishing a process to address risks. Such a framework encourages proactive consideration of necessary actions and their timing, particularly given today’s uncertainties. By adopting a proactive risk management strategy, organizations can better anticipate, prepare for, and respond to changes.
  • Engaging actively with trade bodies and other stakeholders that can support your and many other organizations’ compliance and advocacy efforts.

Protecting and growing your business

Today’s dynamic trade and tariff environment can impact businesses by disrupting supply chains, increasing costs, and forcing difficult strategic decisions. Stay ahead of these risks by understanding your baseline and sectoral tariff exposures, optimizing your operational efficiency, and deploying insurance solutions to protect your interests.

By taking targeted steps and capitalizing on emerging opportunities, you can position your business for sustainable growth despite the prevailing uncertainty.

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This document and any recommendations, analysis, or advice provided by Marsh (collectively, the “Marsh Analysis”) are not intended to be taken as advice regarding any individual situation and should not be relied upon as such. The information contained herein is based on sources we believe reliable, but we make no representation or warranty as to its accuracy. Marsh shall have no obligation to update the Marsh Analysis and shall have no liability to you or any other party arising out of this publication or any matter contained herein. Any statements concerning actuarial, tax, accounting, or legal matters are based solely on our experience as insurance brokers and risk consultants and are not to be relied upon as actuarial, tax, accounting, or legal advice, for which you should consult your own professional advisors. Any modeling, analytics, or projections are subject to inherent uncertainty, and the Marsh Analysis could be materially affected if any underlying assumptions, conditions, information, or factors are inaccurate or incomplete or should change. Marsh makes no representation or warranty concerning the application of policy wording or the financial condition or solvency of insurers or reinsurers. Marsh makes no assurances regarding the availability, cost, or terms of insurance coverage. Although Marsh may provide advice and recommendations, all decisions regarding the amount, type or terms of coverage are the ultimate responsibility of the insurance purchaser, who must decide on the specific coverage that is appropriate to its particular circumstances and financial position.

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