Specifically, the Reciprocal Tariff Executive Order issued on April 2 imposed a 10% baseline tariff on imports from all countries effective April 5, 2025 at 12:01 a.m. EST. Additionally, larger country-specific tariffs apply to 57 countries effective April 9, 2025 at 12:01 am EST, which as noted above have now been paused for the most part. The country-specific tariffs were purportedly calculated based on the cumulative rates of all tariff and non-tariff trade barriers on US goods and discounted by half for each individual US trading partner. However, according to the Office of the US Trade Representative’s website, the US’s trade deficit with each country was the predominant factor in the calculation of the tariff rates.
The country-specific tariffs, were they to come into effect, would greatly impact trade with many of the US’s top trading partners, including tariffs of 34% on China (now 84%), 20% on the EU, 46% on Vietnam, 32% on Taiwan, 24% on Japan, 26% on India, and 25% on South Korea (full list found here). Unless otherwise specified, these reciprocal tariffs are added onto any other duties or fees already in place. For example, all Chinese goods are now subject to at least a 104% tariff due to the 20% tariff imposed on March 3, 2025 combined with the additional 84% tariff imposed in the April 8 amendment to the Reciprocal Tariff Executive Order.
Importantly, the baseline 10% tariff would not be added to the country-specific tariff rates, so countries listed in Annex I of the order are not subject to an additional 10% rate. In addition, the new duty rates imposed under the Order apply only to the non- US content of a subject article, provided at least 20% of the value of the subject article is US originating.
As set forth in Annex II of the Reciprocal Tariffs Executive Order, certain goods would not be subject to the new tariffs under the Order, including many goods already subject to tariffs. These include the following:
- Steel/aluminum articles already subject to Section 232 tariffs
- Autos/auto parts already subject to Section 232 tariffs
- Copper, pharmaceuticals, semiconductors, and lumber articles
- Energy and other certain minerals that are not available in the United States
- Bullion
- Personal mail and other articles subject to 50 USC 1702(b)
- Articles from North Korea, Cuba, Russia, or Belarus that are on Column 2 of the Harmonized Tariff Schedule (higher rates), and
- Any articles that may become subject to future Section 232 tariffs
However, these exceptions may be modified in the near future. For example, President Trump is expected to introduce phased-in tariffs on pharmaceuticals, potentially amounting to as much as 25%. This potential action would greatly impact countries such as India and Ireland, both of which are major exporters of pharmaceutical products to the United States.
The Order seeks to deter retaliation by other countries by affording the President the authority, pursuant to the International Emergency Economic Powers Act (IEEPA), to increase tariffs if any country retaliates with its own reciprocal tariffs or impose any other trade-related barrier. Significantly, the Order declares that the President may also increase tariffs if “US manufacturing capacity and output continue to worsen,” thus purporting to give the President broad authority to impose or reconsider tariffs even where there is no foreign trade barrier threat. On the other hand, tariffs may be reduced or removed if countries “take significant steps to remedy non-reciprocal trade arrangements and align sufficiently with the United States on economic and national security matters.”
The Canada and Mexico tariffs previously announced by the Administration set a 25% tariff on non-USMSCA compliant goods, 10% on energy and energy resources from Canada, and 10% on non-USMCA compliant potash from both countries. The Order states that if the prior tariffs on Canada and Mexico are removed, qualifying USMCA goods will maintain their duty-free status, but non-USMCA goods will be subject to a 12% tariff.
Eliminating de minimis treatment for low-value imports from China (De Minimis Executive Order)
Under 19 USC. § 1321(a)(2)(A)-(C), the US provides low-value imports with duty-free status. Generally, this includes all goods valued at or under $800. The initial De Minimis Executive Order eliminates the duty free exemption for low-value imports from China and imposes a duty rate of either 30% of the value of qualifying goods or $25 per item, increasing to $50 per item after June 1, 2025. The US has since amended this initial Order in response to China’s retaliatory measures and increased the 30% rate to a 90% rate and the $25 per item rate to 75$ per item increasing to $150 per item after June 1, 2025. The duties imposed on the items previously receiving de minimis treatment are in lieu of the existing 20% duty rates and any other duties to which the shipments would otherwise be subject. The order may also be extended to include packages from Macau and additional countries based on the recommendation of the Secretary of Commerce.
Reactions and Countermeasures
While much of the Order is on pause for now, the future shape of US tariff arrangements with our trading partners will be the subject of ongoing negotiations and retaliatory actions. While the President has indicated some willingness to negotiate reduced rates with countries on a case-by-case basis, others in the Administration have suggested otherwise—indicating that tariffs are likely to stay in place in some form to incentivize US manufacturing.
Countries have adopted different responses to the US imposition of broad tariffs.
- Some countries are willing to take steps needed to “remedy non-reciprocal trade arrangements,” as the new US policy has sought. For example, Israel, subject to a 17% tariff under the new order, has announced it will remove all tariffs on US imports—with the goal of having the US remove its tariffs.
- Prior to announcing the pause, top Administration officials claim that some 70 countries have reached out to negotiate with the United States. India has apparently held a series of discussions with the United States (commencing before the imposition of tariffs), and Vietnam and South Korea have recently reached out and indicated a willingness to engage in negotiations with meetings forthcoming.
- In contrast, China initially responded with a symmetrical 34% tariff on all US imports that will take effect beginning on April 10. The US responded by replacing its initial 34% tariff with an 84% tariff, bringing China’s aggregate tariff rate to 104% as of April 9. China has retaliated by bringing its aggregate tariff rate on US goods to 84%. Subsequently, on April 9, the United States has now announced an increase in tariff rates to 125% on China—and may possibly seek to build a multilateral campaign around China’s alleged unfair trade practices.
- The EU has expressed a willingness to negotiate, proposing a “zero-for-zero” tariff agreement on industrial goods, including cars, which would require the mutual elimination of tariffs on select goods with the United States. However, at the same time EU leaders have been preparing and, at this writing, before the 90 day pause was announced, appear ready to impose initial countermeasures, which, if they go forward, could be promulgated imminently and in turn trigger an additional US response.
Litigation
Meanwhile, some parties have sought to challenge the President’s imposition of tariffs basis under the International Emergency Economic Powers Act (IEEPA), with several expert analyses arguing against the legal authority under which the President has imposed tariffs and at least one lawsuit filed in federal court arguing the same.
Such challenges are based on the proposition that Congress did not delegate to the President broad authority to issue across the board tariffs under IEEPA. IEEPA grants the President the authority to declare a “national emergency” to address “an unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States…” In response to such an emergency, IEEPA authorizes the President to utilize various tools in the trade toolbox, including the regulation of “any… importation… of… any property in which any foreign country or a national thereof has any interest by any person… subject to the jurisdiction of the United States.”
Challenging a Presidential determination of emergency under the IEEPA or related legislation is difficult, as such inherently discretionary presidential actions typically are considered non-justiciable. Parties may have more success with claims that Congress, which has the authority to impose tariffs under its powers under Article I of the Constitution, did not delegate the authority to the President to impose such broad tariffs across virtually all major US trading partners. In other words, had Congress sought to empower the President to take such a blanket action, it would have said so explicitly.
A Possible Roadmap and Potential Outcomes
What will be the ultimate outcome of this broad imposition of tariffs, the most significant change in US trade policy in a generation?
One possible scenario, among others, is as follows:
- A number of actual or pending tariffs are in areas where longstanding trade disputes have existed over apparent unfair trade practices—practices for which US industries have long sought relief. These product areas include steel, aluminum, copper, and softwood lumber. In a number of these cases, it is reasonable to expect that tariffs close to the “sweet spot” of these historic unfair trade practices will likely continue to remain in effect unless some alternative agreements (e.g., agreements to restrict imports, capacity or the like) are agreed upon.
- Smaller countries are likely to either take actions unilaterally to remove the tariffs and other alleged barriers that gave rise to the US tariffs or to seek negotiations with the US that result in lower tariff arrangements.
- Finally, larger trading partners, such as China and the EU, are likely to fight the US tariffs through retaliatory measures, with the prospect of negotiations and the outcome uncertain at this point.
Implications for Participants in the Trading System
Importers and other parties engaged in international trade transactions should evaluate how the new tariffs would affect their risk profile and consider what, if any actions, to take to adjust their supply chains. In the short term, firms engaged in trade should review their contractual obligations to suppliers and customers. Some importers or other suppliers may consider invoking force majeure or “change of law” clauses to avoid obligations that have now become uneconomic under existing contractual commitments. Considering the current uncertainties, a prudent approach for the long term is to avoid costly changes in business and trading relationships until circumstances become clearer.
Exemptions and Other Carve Outs
There will undoubtedly be a range of industries seeking additional exemptions to the various tariff actions. For example, the tariffs upend many years of duty-free treatment for aircraft and aircraft parts under the WTO Agreement on Civil Aircraft that have for many years accrued to the benefit of leading US aircraft exporters. Whether and to what degree exceptions to the tariffs will be adopted for such pre-existing regimes depends on the outcome of ongoing proceedings and negotiations.
