On April 2, 2025, President Trump signed a new Executive Order (the “Liberation Day EO”) implementing additional tariffs on almost all U.S. trading partners, invoking the International Emergency Economic Powers Act (IEEPA). Citing a lack of reciprocity in the U.S.’s bilateral trade relationships, disparate tariff rates and non-tariff barriers assessed by U.S. trading partners, and concerns over U.S. trading partners’ economic policies, the Liberation Day EO assesses an additional 10 percent baseline ad valorem duty on nearly all imports as of April 5, 2025. On April 9, 2025, these tariffs are set to further increase for over 75 countries and territories, including the People’s Republic of China (China or the PRC), Japan, Vietnam, Malaysia, South Korea, Taiwan, India, Israel, and the European Union member states, to various country-specific reciprocal tariff amounts provided in Annex I to the Liberation Day EO. These new baseline and reciprocal tariffs represent the latest escalation in the trade policies of the Trump administration, which we previously wrote about here. Below we provide a brief overview of these new measures and suggested next steps.
The Liberation Day Tariffs
Who is affected? These measures will affect imports from nearly all countries that export goods to the U.S., with the exception of Canada and Mexico (for whom the earlier February 2025 and March 2025 executive orders remain in effect),1 and countries with which the U.S. does not have “normal trade relations” (including Russia, Belarus, North Korea, and Cuba), and who are already subject to special treatment under applicable U.S. trade law. Notable countries whose goods are currently expected to be subject to additional reciprocal tariff rates under the new Liberation Day EO, and which are in addition to other applicable duties described below, include China (34 percent), Taiwan (32 percent), Japan (24 percent), European Union member states (20 percent), South Korea (26 percent), and Vietnam (46 percent). Other countries affected by the reciprocal tariffs are reflected in Annex I to the order.
What are the measures? An additional ad valorem baseline tariff of 10 percent will apply to the affected countries (as described in the paragraph above). Countries targeted by the reciprocal tariffs will become subject to the rates provided in Annex I in lieu of the baseline tariff. These baseline and reciprocal tariffs are in addition to other applicable tariffs that already apply to a specific item, inclusive of standard Harmonized Tariff Schedule of the United States (HTSUS) duty rates, Section 301 duties, antidumping/countervailing duties, and tariffs on Chinese-origin imports under the earlier and cumulative February 2025 and March 2025 executive orders.
If at least 20 percent of the article’s value originates in the U.S., the ad valorem baseline and reciprocal tariffs outlined in the new Liberation Day EO tariffs will only apply to the “non-U.S. content” of an article. The order also authorizes Customs and Border Protection (CBP) to collect necessary information to verify the value of U.S. content.
Certain goods will not be subject to the baseline and reciprocal tariffs outlined in the order. These goods include: i) items exempted from IEEPA regulation, including information and informational materials, personal communications, personal effects, and humanitarian donations; ii) steel and aluminum articles and their derivatives subject to the Section 232 duties imposed last month; iii) automobiles and auto components subject to the recent Section 232 duties and proclaimed in Proclamation 10908 of March 26, 2025; iv) goods that may in the future become subject to future Section 232 duties; and v) other products, outlined in Annex II of the order, which includes certain pharmaceutical, semiconductor, copper, lumber, mineral, and energy products. Further, Annex III sets out the specific HTSUS codes in Chapter 99 used to implement the various tariff rates and exclusions outlined in the order.
Additionally, the order contemplates an imminent wind down of a key segment of the “de minimis exemption” for imports from affected countries. The current duty exemption for certain low-value goods (up to $800) will no longer be available for many imports, such as direct shipments to U.S. customers from overseas retailers, once CBP is able to establish adequate systems to process and collect the duties for those items. Under a second Executive Order issued on April 2, 2025, that wind down has already begun for low-value shipments from China and Hong Kong shipped through the international postal system. The de minimis exemption for items covered under this second Executive Order will be significantly restricted beginning May 2, 2025. Rather than being subject to standard HTSUS duty rates and the otherwise applicable tariffs discussed above, such articles will instead be subject to either an ad valorem duty of 30 percent of the value of the postal item, or a specific duty of $25 per postal item (increasing to $50 per postal item on June 1, 2025), as determined by the international postal network carrier. In addition, shipments from China and Hong Kong routed through means other than the international postal network also will no longer be eligible for certain de minimis provisions after May 2, 2025, and, instead, will be subject to all other applicable duties based on HTSUS code and country of origin.
When do the measures take effect? The 10 percent baseline ad valorem duty took effect at 12:01 a.m. ET on April 5, 2025. The country-specific reciprocal tariff rates for countries listed in Annex I will take effect at 12:01 a.m. ET on April 9, 2025.
What happens next? As U.S. trading partners continue to digest news regarding the new tariffs, many are evaluating or planning retaliatory measures. On April 4, 2025, the PRC government announced it would impose reciprocal 34 percent tariffs on imports from the U.S. beginning on April 10, 2025, alongside other retaliatory measures. Additional U.S. trading partners are expected to implement planned and new retaliatory measures in the coming weeks.
Additionally, many impacted countries have begun negotiations with the Trump Administration in an effort to reduce the additional tariff burden. According to statements from executive branch officials, approximately 50 countries have already reached out to the White House to discuss the Liberation Day EO tariffs. At this moment, it is unclear whether such negotiations will be fruitful in changing the duties assessed under the new order.
Moreover, while there has already been some bipartisan pushback on the Trump Administration’s tariff policies, it remains to be seen how Congress, U.S. markets, and other parties fully respond to the new tariffs and the evolving economic situation.
What can I do? In the meantime, affected parties can take the following steps to evaluate their exposure to the new tariffs and consider additional actions to mitigate their effects:
- Review your U.S. imports for country of origin (whether imported directly; transshipped from another destination; or withdrawn from a Foreign-Trade Zone).
- Check in with your suppliers to determine how products you source are expected to be impacted by these tariffs and what duty rates apply to the affected items. Even if you are sourcing domestically, your suppliers may be sourcing inputs from these countries that are subject to tariffs that drive up their costs and your prices.
- Review your supplier and sales agreements for any terms that implicate responsibility for payment of tariffs (e.g., Incoterms).
- Consider whether any changes to your supply chain may be advantageous in the long term, recognizing that uncertainty exists about which countries and/or products may be targeted by tariffs in the future.
- Monitor rapidly arriving developments in this area, as the scope and timing of the tariffs are likely to change from the current proposals.
Overview of Tariff-Related Executive Orders Since January 20, 2025
Charlie Schiavo contributed to the preparation of this Wilson Sonsini Alert.
[1]Should the currently effective February 2025 and March 2025 orders imposing duties on imports from Canada and Mexico be terminated or suspended, non-USMCA goods will be subject to a reciprocal tariff of 12 percent under the new order. USMCA-originating goods, energy/energy resources, potash, and articles “eligible for duty-free treatment under USMCA that [are] a part or component of an article substantially finished in the United States” will enter free of duty.
