Introduction
President Donald Trump’s latest trade policies and tariff measures are reshaping global supply chains, directly impacting businesses looking to sell to the U.S. government. With new tariffs on imports from Mexico, Canada, and China, federal contractors face rising costs, procurement delays, and shifting trade regulations.
For businesses seeking to win government contracts, staying informed on these policy changes is essential. This blog explores how Trump’s “America First” agenda affects federal procurement and provides actionable strategies to help businesses adapt.
1. New Tariffs & Their Immediate Impact on Government Suppliers
On February 1, 2025, the Trump administration announced sweeping tariffs on key trading partners:
- 25% tariff on imports from Mexico & Canada – affecting auto parts, steel, and agricultural goods.
- 10% tariff on all imports from China – impacting electronics, industrial equipment, and textiles.
- 10% tariff on energy resources from Canada – covering crude oil, natural gas, and uranium.
These tariffs drive up costs for federal contractors sourcing materials from these countries. While a 30-day negotiation pause is in place for Mexican tariffs, businesses must prepare for long-term trade barriers that could impact pricing and supply chain logistics.
2. Rising Costs & Supply Chain Challenges
For businesses selling to the federal government, these tariffs introduce new financial and operational hurdles:
- Higher Material Costs – Increased tariffs mean rising prices for raw materials, manufacturing components, and finished products.
- Supply Chain Disruptions – Customs delays and international trade disputes could lead to procurement setbacks.
- Contract Pricing Constraints – Businesses with fixed-price contracts may struggle to absorb additional tariff-related expenses.
Small and mid-sized government contractors, in particular, may face greater difficulties in adjusting to these cost fluctuations.
3. Trade Agreement Reviews & Future Tariff Uncertainty
The Trump administration is also reviewing U.S. trade agreements, potentially leading to additional tariff adjustments. Key areas to watch include:
- Potential renegotiation of the U.S.-Mexico-Canada Agreement (USMCA).
- Possible new tariffs on European imports, including metals, pharmaceuticals, and semiconductors.
- Long-term trade restrictions, especially amid ongoing U.S.-China tensions.
Businesses must stay informed and agile to respond effectively to these evolving trade policies.
4. How Business Owners Can Adapt & Stay Competitive
Despite these trade disruptions, businesses aiming to secure government contracts can implement proactive strategies:
✅ Diversify Suppliers – Reduce reliance on high-tariff imports by sourcing from domestic or alternative international suppliers.
✅ Monitor Trade Policy Updates – Stay ahead of tariff negotiations and exemptions to control procurement costs.
✅ Leverage Domestic Manufacturing – Federal agencies are prioritizing “Buy American” initiatives, opening new opportunities for U.S.-based businesses.
✅ Adjust Pricing Strategies – Consider tariff-adjusted pricing models to maintain profitability while staying competitive in government contracts.
5. Get a GSA Contract to Boost Government Sales
As federal agencies prioritize domestic suppliers, securing a GSA Schedule Contract is a strategic move for businesses looking to sell to the government.
A GSA Contract can help your business:
- Gain direct access to government buyers actively seeking approved vendors.
- Secure long-term federal contracts with stable pricing structures.
- Stand out as a preferred vendor in a highly competitive procurement marketplace.
