On April 2, 2025, President Donald Trump issued an executive order (EO) on tariffs called "Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits," which applies a baseline tariff of 10% on all imports into the United State (Global Tariffs EO). Additionally, the Global Tariffs EO imposes 11–50% tariff rates, on top of the 10% baseline, against 57 countries listed in the appendix below.
The basis for the Global Tariffs EO is the International Emergency Economic Powers Act (IEEPA), a national security authority typically used for sanctions, which requires less regulatory process and affords the administration more foreign policy deference, compared to traditional tariff authorities. For example, unlike other tariff frameworks, the Global Tariffs EO does not provide for a public hearing or notice-and-comment process or an individual product-exclusion mechanism.
The Global Tariffs EO contains certain limited exclusions:
- Annex II of the Global Tariffs EO lists specific goods that are exempt from the tariffs, such as certain semiconductor products, minerals, and pharmaceuticals, although the administration has discussed imposing separate tariffs on these categories of goods.
- Imports eligible under the United States-Mexico-Canada Agreement (USMCA) will not be subject to the Global Tariffs EO, although imports from those countries that are not duty-free under USMCA will remain subject to the 25% tariffs already imposed under IEEPA.
- Products subject to tariffs under § 232 of the Trade Expansion Act of 1962 (Section 232 Tariffs), i.e., automobiles, steel, and aluminum, are exempt.
- For goods with at least 20% U.S.-origin content, the tariffs will only apply to the non-U.S. content.
- As required by IEEPA, information and informational materials such as publications, books, and films are excluded.
- The standard U.S. customs de minimis exemption still appears to apply for goods valued at or below $800, except for goods originating from the People’s Republic of China (PRC) and Hong Kong.
While some countries impose value added taxes and customs duties on imports of intangible software, services, and technology, the standard U.S. customs rules, as reflected in the scope of the Global Tariffs EO, only apply to imports of goods. That said, there is both nuance and complexity in how an article imported into the United States may be characterized, valued, or assigned a country of origin, due to the incorporation of software, provision of intellectual property and other assistance, and performance of manufacturing services. As a result, companies that previously imported goods duty free now need to consider these factors when evaluating their impact under the Global Tariffs EO.
Below, we summarize the current state of play with respect to tariff actions that have already been imposed, those anticipated to come, and potential retaliatory measures by U.S. trading partners. We also address mitigation measures that companies can consider.
Current State of Play
Trump has already taken several major tariff actions in these opening months of the administration. Although initial tariff actions focused on three of the United States’ biggest trading partners (Canada, Mexico, and the PRC), recent tariff actions cover all U.S. trading partners. The situation remains fluid, but the recent tariff actions have reverberated through the markets, called into question free trade agreements with U.S. trading partners, and provoked retaliatory responses.
To date, the Trump administration has imposed the following tariffs (that will be implemented in addition to any other duties, fees, extractions, or charges applicable to such imported articles), subject to certain limited exceptions:
- Aluminum: All imported aluminum is subject to an additional 25% ad valorem rate of duty.
- Automobiles: All imported automobiles (with certain limited exceptions) are subject to an additional 25% ad valorem rate of duty.
- Canada: All products of Canada that do not satisfy USMCA rules of origin are subject to an additional 25% ad valorem rate of duty, but it does not apply to “energy or energy resources” (defined to mean crude oil, natural gas, lease condensates, natural gas liquids, refined petroleum products, uranium, coal, biofuels, geothermal heat, the kinetic movement of flowing water, and critical minerals as designated by the U.S. Secretary of the Interior), which are subject to a separate additional 10% ad valorem rate of duty.
- Mexico: All articles that are products of Mexico that do not satisfy USMCA rules of origin are subject to an additional 25% ad valorem rate of duty.
- PRC: All products of the PRC are subject to an additional 20% ad valorem rate of duty, which is in addition to the 7.5–25% additional ad valorem rate of duty already imposed on the PRC pursuant to § 301 of the Tariff Act of 1974 (Section 301 Tariffs) and the new reciprocal tariffs under the Global Tariffs EO (as described below).
- Reciprocal: All articles (with certain limited exceptions) imported into the United States are subject to an additional 10% ad valorem rate of duty as a baseline, with higher additional ad valorem rates of duty for the following countries and trading blocs as listed the appendix below. Of note, with limited exceptions, these tariffs apply on top of other tariffs (e.g., Section 232 Tariffs or Section 302 Tariffs). This means that, when considering existing Section 301 Tariffs and the 20% opioid tariffs against the PRC, plus the new reciprocal tariffs, certain articles that are products of the PRC are subject to cumulative tariffs of up to 79%.
- Steel: All imported steel is subject to an additional 25% ad valorem rate of duty.
Upcoming U.S. Tariff Actions
- Copper: Trump has ordered the Secretary of Commerce to investigate whether the United States should impose tariffs on copper. He initially suggested an additional 25% ad valorem rate of duty on copper.
- Digital Services Tax Discrimination: Trump has directed the United States Trade Representative (USTR) to renew the Digital Services Taxes (DST) investigation under § 301 that were initiated during Trump's first term in 2019, and to investigate countries that use DST to “discriminate against U.S. companies.”
- The initial § 301 investigation targeted DST from France, Austria, Italy, Spain, Turkey, and the United Kingdom.
- The USTR is also directed to determine (in consultation with the Secretary of the Treasury) whether to pursue a panel under USMCA on the DST imposed by Canada and whether an investigation of such DST is necessary.
- The USTR and Treasury Secretary are also directed to examine the actions of any countries that “discriminate against, disproportionately affect, or otherwise undermine the global competitiveness or intended operation of U.S. companies, in the digital economy and more generally.”
- The Trump administration will impose tariffs on imported goods and “other responsive actions” necessary to mitigate the harm or DST imposed on U.S. companies.
- Semiconductors: In December 2024, the USTR began investigating PRC acts, policies, and practices related to targeting of the semiconductor industry. The investigation has continued under the Trump administration and will likely result in the imposition of tariff actions against PRC semiconductors imported into the United States.
- Pharmaceuticals: Although pharmaceutical products have thus far been exempted from the Trump administration’s tariff actions (including most recently the specific exemption under the Global Tariffs EO), Trump has indicated that reprieve may be short lived. The administration is considering an additional ad valorem rate of duty of 25% or higher for imports of pharmaceutical products.
Retaliatory Actions
In response to the tariffs imposed by the Trump administration, certain countermeasures have been enacted by the following countries:
Canada has imposed:
- Two rounds announcing 25% tariff on certain U.S. imported goods (e.g., orange juice, peanut butter, wine, spirits, beer, coffee, appliances, apparel, footwear, motorcycles, cosmetics, pulp and paper, certain fruits and vegetables, beef, pork, dairy, tools, computers and servers, display monitors, sport equipment, and cast-iron products)
- A 25% tariff on non-USMCA-compliant vehicles and vehicle content imported from the United States
The PRC has taken a number of retaliatory actions, including:
- Imposing a 10–15% tariff on agricultural products imported from the United States, a 34% tariff on all U.S. imported goods (in addition to the 10–15% tariffs already imposed on agricultural products), and suspending imports from certain major U.S. poultry producers.
- Imposing more restrictive export controls on certain rare earth materials (e.g., samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium)
- Adding 16 U.S. entities (including entities in the defense and aerospace industries) to its export control list (which is similar to the Entity List maintained by the Department of Commerce Bureau of Industry and Security and prohibits the export of dual-use items to the listed entities), and 11 U.S. entities to its unreliable entity list (which allows the PRC government to take punitive actions against the listed entities)
- Filing a lawsuit with the World Trade Organization, alleging that the U.S. tariff actions are a “unilateral bullying practice that endangers the stability of the global economic and trade order”
Thus far, Mexico has not imposed any retaliatory tariff actions against the United States, despite initially threatening to do so.
The European Union is currently evaluating retaliatory actions as well, although the bloc has not yet determined the path forward. In addition to retaliatory tariffs, such actions could include the following:
- Imposing stricter regulations on U.S. businesses operating in Europe (particularly with respect to technology, such as SaaS offerings)
- Delaying the issuance of business licenses for U.S. firms
- Limiting U.S. companies’ access to public contracts
- Prohibiting U.S. companies’ investments in the European Union
U.S. trading partners could also increase DST that are imposed on U.S. businesses that offer digital services (such as SaaS offerings) in their countries. This is a highly fluid situation, with additional retaliatory measures likely.
Mitigation Measures
U.S. companies should consider the following measures to help mitigate the recent trade actions (or preemptively help mitigate any anticipated trade actions that may affect their business):
- Review contract terms to understand and potentially renegotiate tariff payment obligations (i.e., which party is responsible for the payment of any additional ad valorem rates of duty upon the import of affected goods)
- Review global supply chains to consider the feasibility of shifting manufacturing and/or supply chains out of high-tariff jurisdictions into lower-tariff jurisdictions
- Participate in ongoing or upcoming § 301 investigations to advocate for specific exclusions from the impending tariff actions
- Join industry associations that can develop industry-wide strategies, initiate legal challenges to the Trump administration’s actions, and engage in lobbying campaigns
Companies should also continue to monitor this developing situation; the landscape is constantly evolving.
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