New Reciprocal Tariff Information
- IFF, inc.
- Apr 3
- 3 min read
On April 2, 2025, President Donald J. Trump issued an executive order titled "Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits." This order aims to address significant U.S. trade deficits by implementing reciprocal tariffs to promote fair trade practices and bolster national economic security.
Declaration of National Emergency
The executive order declares a national emergency under the International Emergency Economic Powers Act (IEEPA) and the National Emergencies Act (NEA), citing that persistent trade deficits, resulting from unfair and non-reciprocal trade practices, pose a threat to the nation's security and economic well-being.
Key Findings Supporting the Order
Trade Deficits: The U.S. has experienced ongoing trade deficits, leading to industrial decline, weakened supply chains, and increased reliance on foreign nations for defense-related goods.
Lack of Reciprocity: Many trading partners maintain higher tariffs and trade barriers than the U.S., limiting market access for American manufacturers.
Unfair Economic Policies: Certain countries employ policies that suppress wages and limit domestic consumption, reducing demand for U.S. exports and enhancing their own global competitiveness.
Implementation of Reciprocal Tariffs
Baseline Tariff: A universal baseline tariff of 10% is applied to imports from all countries, effective at 12:01a on April 5, 2025.
except that goods loaded onto a vessel at the port of loading and in transit on the final mode of transit before 12:01 a.m. ET on April 5 and entered for consumption or withdrawn from warehouse for consumption after 12:01 a.m. ET on April 5 shall not be subject to such additional duty.
Targeted Reciprocal Tariffs: shortly thereafter, the additional tariffs shall increase, ranging from 10% to 50%, on 60 countries with significant trade deficits with the U.S. These tariffs are applied to imports from listed in Annex I (see link below), effective at 12:01a on April 9, 2025.
Except that goods loaded onto a vessel at the port of loading and in transit on the final mode of transit before 12:01 a.m. ET on April 9 and entered for consumption or withdrawn from warehouse for consumption after 12:01 a.m. ET on April 9 shall not be subject to these country-specific ad valorem rates of duty.
Exemptions from Tariffs
Certain goods are exempt from the tariffs as specified in Annex II of the order, including:
National Security-Related Goods: Items protected under 50 U.S.C. 1702(b).
Steel and Aluminum Products: Goods already subject to Section 232 tariffs under prior proclamations.
Automobiles and Auto Parts: Covered under the March 26, 2025, Section 232 tariffs.
Critical Goods: Such as copper, pharmaceuticals, semiconductors, lumber, critical minerals, and energy products.
Goods from Specific Countries: Items from nations subject to "Column 2" HTSUS tariff rates.
Future National Security Tariffs: Potential Section 232 actions.
Special Tariffs on Canada and Mexico
Canadian Goods: Additional tariffs are imposed to counter illicit drug flows across the northern border, enacted under Executive Orders 14193, 14197, and 14231 (2025).
Mexican Goods: Additional tariffs address illegal drug trafficking and migration at the southern border, enacted under Executive Orders 14194, 14198, and 14227 (2025).
Impact on USMCA-Eligible Goods
USMCA-Originating Goods: Retain preferential tariff treatment under General Note 11 of HTSUS.
Non-USMCA-Originating Goods: Subject to a 25% tariff, except for energy, energy resources, and potash from Canada, which are subject to a 10% tariff.
Future Adjustments to Tariffs
If border emergency tariffs are lifted:
USMCA-Originating Goods: Will not face additional tariffs.
Non-USMCA-Originating Goods: Will be subject to a 12% tariff, with exceptions for energy, energy resources, potash, and USMCA-eligible parts or components of U.S.-assembled products.
U.S. Content Requirement for Tariffs
Tariffs apply only to the non-U.S. content of an imported item if at least 20% of its total value originates from the U.S.
Definition of U.S. Content: Items entirely produced or substantially transformed in the United States.
Customs Verification: U.S. Customs and Border Protection (CBP) is authorized to collect documentation to verify the U.S. content value and whether the product was substantially finished in the U.S.
Tariffs on Chinese Goods and Transshipment Prevention
The April 2, 2025, Executive Order on low-value Chinese imports related to the synthetic opioid supply chain remains in effect.
In addition to the latest reciprocal tariffs, goods from China and Hong Kong will continue to be subject to the 20% tariffs implemented in February and March pursuant to the President’s IEEPA authority as well as (for most products from China) existing Section 301 tariffs of 25%
Transshipment Prevention: Tariffs related to China also apply to goods from Hong Kong and Macau to prevent tariff evasion.
Links to the Order and Annexes
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