On April 2, 2025, President Trump issued Executive Order (EO 14257), Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits. In this EO, the President declares a national emergency due to persistent U.S. trade deficits and imposes substantial new tariffs on imports from key trading partners. This alert provides an overview of the key provisions, potential implications, and relevant considerations.
Overview of Tariffs Imposed in EO 14257
The Executive Order implements a reciprocal tariff policy, initially imposing a 10% ad valorem baseline duty on all imports. Additional individualized, country-specific tariffs were slated to be enacted on April 9, 2025, for 57 nations listed in Annex I of the EO. Among the nations listed are some of the United States’ key trading partners:
- People’s Republic of China: 34%
- European Union: 20%
- India: 26%
- Vietnam: 46%
- Japan: 24%
- South Korea: 25%
- Taiwan: 32%
These tariffs will be in addition to existing duties, including a 20% tax President Trump announced on all Chinese imports earlier this year, citing China’s failure to take appropriate measures to address the fentanyl crisis.
This EO addresses the treatment of goods under the United States-Mexico-Canada Agreement (USMCA). Goods qualifying as originating under USMCA rules continue to receive preferential treatment and can enter the United States duty-free. However, goods from Canada and Mexico that do not meet USMCA origin requirements are subject to a 25% tariff with specific exceptions for energy and potash products, which are subject to a 10% duty. President Trump indicated the 25% tariff on non-USMCA-originating goods could be reduced if the two countries satisfy his demands on immigration and drug trafficking, and if he rescinds the previously issued EOs addressing problems at both the northern and southern borders.
According to the EO, the tariffs will remain in effect until the President determines that trade imbalances have been resolved. President Trump retained authority to adjust tariffs in response to retaliation, improvements in trade practices, or a continued decline in U.S. manufacturing.
The Tsunami Continues
In the days since EO 14257 was issued, President Trump has exercised this modification authority. China responded to the EO by announcing a 34% tariff on all goods imported from the U.S., effective April 10, 2025. As a result, President Trump issued a new Executive Order, an Amendment to Reciprocal Tariffs and Updated Duties as Applied to Low-Value Imports from the People’s Republic of China, on April 8, 2025, increasing the tariff on Chinese goods from 34% to 84%. This EO also increased the ad valorem duty on “de minimis” low-value shipments from China.
As of 5:00 p.m. on April 9, 2025, President Trump announced he was pausing the reciprocal tariffs outlined in EO 14257 for 90 days for all countries except China. Based on this announcement, most countries will face a blanket tariff of 10% until July. As for China’s plans to retaliate and hike tariffs on U.S. goods to 84%, President Trump indicated he would immediately raise tariffs on Chinese goods to 125%.
Presidential Authority for EO 14257
President Trump has invoked the International Emergency Economic Powers Act (IEEPA), the National Emergencies Act, and Section 604 of the Trade Act of 1974 as the legal bases for imposing these tariffs. These statutes grant the President broad authority to regulate international trade in response to national emergencies and unfair trade practices. Declaring a national emergency due to trade deficits is a novel application of IEEPA, and its legal validity has already been challenged.
A complaint filed in the case of Emily Ley Paper, Inc. v. Trump, No. 3:25-cv-00464, on April 3, 2025, in the Northern District of Florida, challenges President Trump's use of the IEEPA to impose tariffs on imports from China. The plaintiff is a small, Florida-based business selling premium planners and organizational tools that sources supplies from China. The plaintiff argues that these tariffs are unlawful and unconstitutional, claiming the IEEPA does not authorize the President to impose tariffs; the tariffs lack a "necessary" connection to the stated emergency (the opioid crisis); and the tariffs violate the nondelegation doctrine. The lawsuit seeks declaratory and injunctive relief to overturn the Executive Orders and related modifications to the Harmonized Tariff Schedule of the United States (HTSUS).
Potential Impacts and Recommendations
These tariffs have the potential to disrupt supply chains significantly, increase costs for importers and consumers, and trigger retaliatory measures from affected trading partners. The international trade landscape is evolving rapidly. President Trump’s 90-day pause on reciprocal tariffs for all countries except China signals the potential for further modifications to these trade policies.
