On April 2, 2025, President Donald Trump signed an Executive Order designed to address the threat posed to the United States by trade deficits. To impose the tariffs, President Trump invoked authority under the International Emergency Economic Powers Act ("IEEPA"), the National Emergencies Act ("NEA"), Section 604 of the Trade Act of 1974, and Section 301 of US Code title 3 and declared a national emergency as a result of foreign trade practices resulting in trade deficits and suppressed domestic wages and consumption. As described in greater detail below, the Executive Order imposes a blanket 10% tariff on imports from all countries effective April 5, 2025. For certain trading partners, country-specific reciprocal tariffs will replace the blanket tariff on April 9, 2025. Trading partners not subject to country-specific tariffs will be subject to the 10% blanket tariff (with a few exceptions – addressed below).
Reciprocal Tariff Details
Key elements of the reciprocal tariff package include the following:
- As mentioned above, the Executive Order announces a blanket 10% ad valorem duty on all goods imported into the United States effective April 5, subject to the limitations discussed below.
- On April 9, and subject to the limitations discussed below, all goods imported from countries listed in Annex I will be subject to country-specific reciprocal tariffs. The reciprocal tariff will replace the 10% "base" tariff for Annex I listees.
- Goods in transit on the final mode of transit prior to April 5 will not be subject to the 10% ad valorem duty upon entry into the United States. Similarly, goods otherwise subject to the country-specific reciprocal tariffs loaded for transit on the final mode of transit before April 9, 2025 will not be subject to the country-specific tariff but would be subject to the 10% tariff if loaded for transit after April 5.
- Notably, the tariffs will only apply to the non-US content of imported goods, provided at least 20% of the value of the good is US content.
- Goods listed in Annex II (as described further in Annex III), including, without limitation, steel and aluminum subject to Section 232 tariffs, certain copper products, certain pharmaceutical products, certain semiconductors, certain lumber products, and certain critical minerals, are not subject to either the "base" or country-specific reciprocal tariffs.
- Goods imported from Canada and Mexico meeting USMCA rules of origin are exempt from reciprocal tariffs and goods not qualifying under USMCA remain subject to the previously levied 25% tariffs on Canada and Mexico (10% for certain energy, energy resources, and potash imported from Canada). If, however, these Executive Orders implementing the 25% (or 10% for certain energy products) on Canada and Mexico are terminated or suspended, USMCA-qualifying goods will remain exempt from reciprocal tariffs and non-qualifying goods will be subject to a 12% tariff.
- The reference to the exclusion from the reciprocal tariff for countries subject to "Column 2" rates clarifies that those countries that the US has not granted or has revoked most favored nation status (WTO membership benefits) are not subject to the reciprocal tariffs because those countries are already subject to higher tariffs and an array of sanctions policies. These countries are Russia, North Korea, Iran and Belarus.
Unlike other recent tariff actions, the Executive Order does not include a restriction on duty drawback for the reciprocal tariffs.
Takeaway
The reciprocal tariff program represents a dramatic shift in the United States trade posture. That said, imposition of tariffs is a fluid situation—the Executive Order specifically notes that the President may increase or expand in-scope tariffs targeting trading partners taking retaliatory action and, conversely, decrease or limit in scope tariffs targeting trading partners taking "significant steps to remedy" issues identified in the Executive Order. Interested parties are encouraged to carefully monitor updates from the White House.
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