On Wednesday, April 2, 2025, President Donald Trump held a press conference to describe and sign an Executive Order (EO) establishing sweeping “reciprocal tariffs” on nearly all imports to the US, as outlined below.
The full text of the EO, entitled, “Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Trade Deficits,” is available here, and a fact sheet regarding the order can be found here.
President Trump’s authority under the IEEPA
The preamble of the EO largely reflects President Trump’s remarks, which focused on the decline of US manufacturing capabilities due to perceived unfair trade practices by US trading partners in the form of both tariff and non-tariff trade barriers and policies.
In particular, President Trump’s remarks focused on automobile, pharmaceutical, agricultural, and technology manufacturing. According to President Trump, this decline in manufacturing capability constitutes an unusual and extraordinary threat to the US economy and national security, and as such qualifies as a national emergency under the National Emergencies Act (NEA).
President Trump is using the International Emergency Economic Powers Act (IEEPA), which gives the President broad emergency authorities to address national emergencies under the NEA, and therefore to impose the reciprocal tariffs outlined in this EO to correct the trade imbalance.
Reciprocal tariffs imposed
The EO establishes a universal ten-percent reciprocal tariff on all imports from all US trading partners, unless otherwise specified below, effective 12:01 am on April 5, 2025. Effective 12:01 am on April 9, 2025, the reciprocal tariff rates will increase from ten percent to special, individualized rates for the countries listed in Annex I, as referenced in the EO; any countries not listed in Annex I, or otherwise exempted, will continue to be subject to ten-percent reciprocal tariffs. Unless otherwise specified below and in the EO, these reciprocal tariffs will apply in addition to any existing tariffs, duties, or taxes.
Annex I lists 56 countries and customs territories and includes reciprocal tariff rates ranging from 11 percent for the Democratic Republic of the Congo to 50 percent for Lesotho. During his press conference remarks, President Trump suggested the additional reciprocal tariffs for Annex I countries represent 50 percent of the rate these countries charge the US, based on findings by the Trump Administration that include both tariff and non-tariff policies like Value Added Taxes, monetary policy, and regulatory regimes.
This was implemented by calculating each country’s goods trade deficit with the US as a share of its total exports to the US, and then dividing by two to get the tariff rate the US will now impose. Notably, the list includes 34-percent tariffs on China (including Hong Kong and Macau), which will be in addition to the existing 20-percent tariffs imposed in February and March on imports from China, for a total of 54 percent of tariffs on all non-exempted imports from China, plus any other applicable tariffs (eg, Section 301 tariffs, antidumping and countervailing duties, and most-favored nation (MFN) tariffs).
Other notable rates include 20 percent for the European Union, 46 percent for Vietnam, 49 percent for Cambodia, 48 percent for Laos, 37 percent for Thailand, and 32 percent for Taiwan.
Exceptions
These tariffs apply to all goods from the listed countries with the exception of: (1) goods subject to Section 232 steel/aluminum tariffs, Section 232 automobiles and automobile parts tariffs, and any future Section 232 tariffs; (2) certain goods including copper, pharmaceuticals, semiconductors, lumber articles, certain critical minerals, and energy and energy products (listed here); and (3) any goods from countries that do not have Normal Trade Relations (NTR) with the US.
Additionally, for goods with at least 20 percent of their value generated from US content, reciprocal tariffs will only apply to the non-US origin content of the good. For goods in which US content value is not at least 20 percent, the reciprocal tariffs will apply to the total value of the good. For purposes of the EO, “U.S. content” refers to “the value of an article attributable to the components produced entirely, or substantially transformed in, the U.S.” US Customs and Border Protection (CBP) will be responsible for evaluating claims related to US content.
President Trump also signed a second EO directing CBP to end the general $800 duty-free de minimis treatment imports from the People’s Republic of China and Hong Kong. Beginning May 2, 2025, all shipments that are not sent through the international postal network will be subject to all tariffs regularly applicable to China-origin goods.
All shipments that are sent through the internal postal network will be subject to a 30-percent ad valorum tariff or a USD25 tariff per postal item that will be increased to USD50 beginning June 1. These alternative tariffs for shipments sent through the internal postal network will be charged in lieu of all tariffs regularly applicable to China-origin goods in order to allow for the continued orderly flow of international mail.
Canada and Mexico
The EO does not affect the existing IEEPA orders and negotiated arrangements between the US and Canada, and the US and Mexico. As such, imports from Mexico or Canada to the US that would qualify for preferential treatment under the US-Mexico-Canada Agreement (USMCA) continue to be exempt from any tariffs.
Those goods that do not qualify for preferential treatment under the USMCA will continue to be subject to a 25-percent tariff, with nonconforming energy goods from Canada and potash from Canada and Mexico subject to a 10-percent tariff. The EO states that if the existing tariff arrangements between the US and Canada and the US and Mexico were to end, imports that qualify for preferential treatment under the USMCA would not be subject to reciprocal tariffs, and imports that do not qualify for such USMCA treatment would be subject to a 12-percent reciprocal tariff.
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