Trump Administration’s Sweeping Reciprocal Tariffs – What Companies Need to Know

An update to our ongoing insights into the Trump administration’s broad tariffs on imports from Canada, Mexico and China.

On April 2, 2025, President Trump unveiled a new so-called “reciprocal” tariff regime. The administration has indicated that these tariffs are intended to reciprocate other countries’ tariffs and trade barriers.

The new U.S. regime consists of a universal 10% tariff rate on almost all trading partners and higher (up to 50%) country-specific tariff rates on almost 60 countries with which the United States has its largest trade deficits.

With certain exceptions highlighted below, the new tariffs will generally be in addition to any other applicable duties or tariffs – for example, China-origin goods generally face a 54% cumulative tariff rate after combining the newly announced 34% rate with the 20% rate imposed in February 2025.

As with the tariffs announced on February 1, President Trump referenced the International Emergency Economic Powers Act as authority for the new tariffs. He issued an executive order declaring a national emergency due to an observed asymmetry in U.S. trade relationships with other countries and to “rebalance the flow of imports into the United States.”

Companies’ exposure resulting from the new tariffs will depend on the country of origin, value, and tariff classification of their imports. Companies should monitor for developments such as newly created exemptions for, or further tariff increases targeting, trading partners based on these countries’ responses to the new tariff regime.

New Reciprocal Tariffs and Effective Dates

• The universal 10% tariff will apply to imports of most goods from almost all countries beginning April 5, 2025.
• Additionally, country-specific higher tariff rates will, beginning on April 9, 2025, apply to imports of most goods from almost 60 countries that maintain trade surpluses with the United States.
  
  For example, for the jurisdictions below, on April 9 the universal 10% tariff rate will increase to the total country-specific reciprocal tariff rates shown below:
  
  

  China	34%
  European Union	20%
  Japan	24%
  Korea	25%
  Taiwan	32%
  Vietnam	46%
  India	26%

Exceptions

1. Canada and Mexico

The new tariffs will not cover imports from Canada and Mexico. Tariffs imposed on these countries in early March (described in our prior alert) will continue to apply.  Goods that qualify as Canada-origin and Mexico-origin and therefore qualify for duty-free treatment under the U.S.-Mexico-Canada Agreement (USMCA) will continue to be exempt. The USMCA exemption that was set to expire on April 2 has been extended indefinitely. Non-USMCA-qualified goods from Canada and Mexico will continue to face a 25% tariff, while energy and potash from Canada will continue to face a 10% tariff rate. 

Under the executive order, if the 25% tariff imposed on non-USMCA-qualified goods from Canada and Mexico is suspended or terminated in the future, a 12% reciprocal tariff would apply.

2. Specifically Excluded Imports

The reciprocal tariffs will not apply to goods already subject to Section 232 (national security-related) tariffs, such as steel and aluminum and their derivative articles, and automobiles and automobile parts. The reciprocal tariffs will no longer apply to an item that becomes subject to Section 232 tariffs in the future.

Other exclusions cover, to the extent specified, copper, pharmaceuticals, semiconductors, lumber, energy and energy products and certain critical minerals.

3. U.S. Content Value

For imported items containing at least 20% U.S.-origin content (by value), the reciprocal tariffs will apply only to the value of non-U.S. content in the imported items. For these purposes, “U.S.-origin content” is defined as content produced or substantially transformed in the United States.

4. De Minimis Treatment

For imports from all countries other than China and Hong Kong, duty-free de minimis treatment under Section 321 will remain available until the U.S. Secretary of Commerce confirms that “adequate systems are in place to fully and expeditiously process and collect tariff revenue applicable pursuant to imports of merchandise eligible for de minimis treatment.” Section 321 allows duty-free entry of shipments into the United States if their aggregate fair retail value does not exceed $800.

With respect to imports from China and Hong Kong, President Trump is eliminating, effective May 2, 2025, duty-free de minimis treatment. Goods that would otherwise qualify for the de minimis exemption will be subject to all applicable duties or, for goods sent through the international postal network, to a duty rate of either 30% of their value or $25 (increasing to $50 starting on June 1, 2025) per item.

5. Savings Clause

Imported goods that otherwise would be subject to the reciprocal tariffs will be exempted from the tariffs if the goods are loaded onto a vessel at the port of loading and in transit to the United States on the final mode of transit prior to the effective date of the tariffs (either April 5 for the 10% tariff or April 9 for the higher, country-specific tariffs).

Duty Drawback

The President’s action described above does not address duty drawback (a refund or remission of tariff-based duties, fees, and taxes paid on imported goods that are later exported or destroyed). It appears that duty drawback will still be possible with respect to the new reciprocal tariffs.

Retaliation

Trading partners are announcing retaliatory measures. For example, China reportedly will impose a 34% tariff on all imported U.S. goods beginning on April 10, among other measures. Canada has announced retaliatory 25% tariffs on all non-USMCA compliant U.S. autos (but not auto parts), the United Kingdom has published a 417-page list of products that could face retaliatory import taxes, and Brazil’s congress passed a bill that would allow the country to retaliate against tariffs on Brazilian goods. The European Union and Mexico, among others, have indicated that they are considering potential responses.

The executive order provides that any retaliation from a trading partner may lead to an increase in the reciprocal tariff rate associated with the retaliating country. The President also may decrease the reciprocal duties that apply to a trading partner if it takes significant steps to remedy alleged problems underlying its trading relationship with the United States.