Trump’s reciprocal tariff program

This marks the second instance in its history that IEEPA has been used to impose tariffs,¹  and further builds on President Trump’s invocation of executive authority to impose tariffs on imported goods, which we discuss in greater depth in separate articles “Trump administration's tariffs targeting China, Canada and Mexico” and “Trump’s steel and aluminum tariffs.”

The additional tariff duty rates in the Reciprocal Tariff EO have been introduced to address current and historic U.S. goods trade deficits.  At a high level, the Reciprocal Tariff EO details the following tariff actions undertaken by the Trump Administration:

• Any article imported into the United States will be subject to a 10% ad valorem duty (subject to certain limited exceptions);
• Articles imported into the United States from any country identified in Annex I of the forthcoming Federal Register publication of the Reciprocal Tariff EO will be subject to additional country-specific duty rates;
• Certain articles already subject to tariffs under Section 232 of the Trade Expansion Act of 1962 (Section 232) such as steel, aluminum, and automobiles, are excluded from the duties imposed under the Reciprocal Tariff EO;
• Other specific categories of articles identified in Annex II of the forthcoming Federal Register publication of the Reciprocal Tariff EO also will be excluded from the tariffs imposed thereunder, including copper, pharmaceuticals, semiconductors, lumber articles, certain critical minerals, and energy and energy products; and
• For certain articles deriving 20% or more of their value from U.S.-origin content, the relevant duty rates will only be applied to the articles’ non-U.S. origin content.

The blanket 10% duty applicable to imported articles from all jurisdictions will come into effect at 12:01 AM eastern daylight time on April 5, 2025.  Country-specific additional tariff rates will come into effect at 12:01 AM eastern daylight time on April 9, 2025.  The relevant rates will be applied to all goods entered for consumption, or withdrawn from warehouse for consumption, in the United States after 12:01 AM eastern daylight time on the corresponding implementation date, except for goods loaded onto a vessel at the port of loading and in transit “on the final mode of transit” before 12:01 AM eastern daylight time of the relevant date (which will not be subject to the relevant duties imposed under the Reciprocal Tariff EO).

The importer of record for affected goods will need to pay the above-noted tariffs to Customs and Border Protection (CBP), evaluated as a percentage of the goods’ customs values.²

Scope of reciprocal tariffs

Below we highlight the key elements of the Reciprocal Tariff EO:

What is subject to reciprocal tariff duties?

• All “articles” (i.e., goods, merchandise, tangible products) imported into the United States.
• These rates apply to the entire value of non-U.S. articles imported into the United States unless 20% or more of the value of the subject article is “U.S. originating.”  In such cases, the duty is applied only to the value of the non-U.S. originating content.  For example:
  • Wholly ex-U.S. articles = duty applied to total value of product;
  • Ex-U.S. articles with <20% of value originating from U.S. origin content = duty applied to total value of product; and
  • Ex-U.S. articles with >20% of value originating from U.S. origin content = duty applied only to non-U.S. origin content.

Impact on Canada and Mexico IEEPA tariffs

• The tariffs imposed under the Reciprocal Tariff EO generally do not impact the IEEPA tariffs currently targeting articles imported from Canada or Mexico.
• Tariffs imposed under the Reciprocal Tariff EO shall not apply in addition to the tariff duties imposed on Canadian or Mexican articles under the existing IEEPA executive orders (i.e., generally a 25% duty rate on most Canadian/Mexican articles, with a 10% duty rate for Canadian energy and potash, unless such goods “originate” under the United States-Mexico-Canada Agreement of 2018, or USMCA).
• However, if the existing IEEPA tariffs targeting Canada and/or Mexico are terminated or suspended:
  • All items of Canada and Mexico that qualify as originating under USMCA shall not be subject to an additional ad valorem rate of duty under the Reciprocal Tariff EO; and
  • Articles not qualifying as originating under USMCA shall be subject to an ad valorem rate of duty of 12% under the Reciprocal Tariff EO.  Such duty rates shall not apply to energy or energy resources, to potash, or to an article eligible for duty-free treatment under USMCA that is a part or component of an article “substantially finished” in the United States.

Existing IEEPA tariffs on China

• The Reciprocal Tariff EO does not alter or amend, and are in addition to, the tariffs President Trump imposed on imported Chinese articles pursuant to IEEPA in February 2025.  However, President Trump separately has eliminated (as of April 2, 2025) duty free de minimis treatment for low-value articles imported from China (see “Further Amendment to Duties Addressing the Synthetic Opioid Supply Chain in the People’s Republic of China as Applied to Low-Value Imports”).
• All duties imposed under the Reciprocal Tariff EO with respect to China apply equally to articles of the Hong Kong Special Administrative Region and the Macau Special Administrative Region.

Duty-free de minimis treatment

• Duty-free de minimis treatment for articles affected by the Reciprocal Tariff EO shall remain available until notification by the Secretary of the U.S. Department of Commerce to the president that adequate systems are in place to fully and expeditiously process and collect duty revenue applicable to articles impacted by the Reciprocal Tariff EO.
• After such notification, duty-free de minimis treatment shall not be available for the affected articles.

Subject to revision:

The president reserves the right under the Reciprocal Tariff EO to increase, decrease, or eliminate duty rates established by the Reciprocal Tariff EO, including if other countries impose retaliatory trade measures or restrictions.

Looking forward

As discussed, President Trump’s invocation of IEEPA to rapidly and unilaterally impose tariffs is a novel use of the authority and is a matter of first impression.  President Trump’s recent imposition of tariffs under IEEPA targeting articles imported from China, Canada, and Mexico indicates that the implementation and maintenance of such measures may be a fluid and/or iterative process.  In the interim, companies should continue to monitor and review their global supply chains to ensure that they can quantify and track potential changes in their input costs, and evaluate and adjust their procurement strategies appropriately.

*Tariffs issued pursuant to IEEPA may evolve rapidly and unpredictably, with new requirements potentially taking effect with little or no prior notice and immediate effect.  The information in this alert is subject to change as developments unfold.

Footnotes

1. Traditionally an authority used by the U.S. Government to impose economic, financial, and trade sanctions laws, embargoes, and restrictive measures, IEEPA has not (until Trump’s tariffs of February 2025 specifically targeting China, Canada, and Mexico) been used as an authority to impose tariffs on U.S. trade partners.
2. Customs value is generally the value of the product as per invoicing or other purchase records, but can be adjusted to incorporate other costs (e.g., shipping or insurance) if these are not included in invoice value.  If no invoice value exists, CBP may determine customs value based on evaluation of the goods in question, including by comparing the goods to comparable other imports.