On April 2, 2025, President Donald Trump signed an executive order imposing a variety of reciprocal tariffs. According to the order, the tariffs are in response to a “lack of reciprocity in our bilateral trade relationships.” The Trump Administration determined a rate based on an analysis of several factors including: tariffs imposed by a country, non-monetary barriers, and other payments (e.g., VAT) on the importation of goods. The accompanying fact sheet to the order provides a summary of its provisions:
- The President is invoking authority under the International Emergency Economic Powers Act of 1977 to impose the tariffs.
- Imposition of a 10% baseline tariff on all countries effective April 5, 2025, at 12:01am EDT.
- Individualized reciprocal tariffs on countries with which the U.S. has the highest trade deficits will take effect April 9, 2025, at 12:01am EDT. More than 180 countries will be affected including: China (34%)1, European Union (20%), India (26%), Japan (24%), Taiwan (32%) and United Kingdom (10%).
- The President may increase tariffs in response to retaliation measures or decrease them if remedies to non-reciprocal arrangements are made by trading partners.
- Exceptions for certain goods include steel, aluminum, automobiles, and automobiles parts that are already subject to tariffs. Additionally, certain products are not subject to this order and include copper, pharmaceuticals, semiconductors, lumber, bullion, energy, and certain minerals not available in the U.S.
- This order does not affect existing tariffs for Canada and Mexico, including: 0% tariffs on goods under the United States-Mexico-Canada Agreement (USMCA), 25% tariff on non-USMCA goods, and 10% tariffs on non-USMCA energy and potash.
A second executive order was also signed yesterday, eliminating de minimis treatment for low value imports from China and implementing a 30% ad valorem duty beginning May 2, 2025 at 12:01am EDT. A specific duty of $25 per item was implemented between May 2 and June 1, 2025, turning to $50 on June 1, 2025. The de minimis exemption, which does not impose duties on goods valued at or under $800, remains in effect for other countries.
Additionally, the Office of the U.S. Trade Representative has proposed action against “China’s targeting of the maritime, logistics, and shipbuilding sectors for dominance.” A couple of the potential actions include:
- $1 million fee on Chinese vessel operators per entrance to a U.S. port.
- Up to $1.5 million fee per entrance to a U.S. port based on the percentage of Chinese-built vessels in the operator’s fleet.
Furthermore, the proclamation of a 25% tariff on automobile imports went into effect at midnight last night.
Additional Resources
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- 1This 34% tariff is in addition to the 20% tariff already imposed on goods from China.