UPDATED: This blog post has been updated with additional information and links upon the release of the Annexes to the Executive Order. Readers should note that the breadth and depth of this Executive Order and the implementation of these tariffs is unprecedented, thus the situation regarding interpretation and their implementation remains fluid. It is expected that the White House and other relevant agencies (including CBP) will be issuing further guidance. Thompson Hine’s International Trade practice group continues to closely monitor ongoing developments.

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On April 2, 2025, President Donald Trump announced baseline tariffs starting with 10% for all countries beginning on April 5, 2025, and as applicable, this additional duty rate shall increase up to 50% beginning on April 9, 2025 on specific countries with which the United States has the largest trade deficits or that impose non-tariff barriers on U.S. goods. Collectively, these reciprocal tariffs will remain in effect until President Trump determines the threat posed by the trade deficit and underlying nonreciprocal treatment is satisfied, resolved, or mitigated. Excluded from the scope of the reciprocal tariffs are certain goods that have been recently subject to special duties under the President’s America First Trade Policy Memorandum including those relating to fentanyl and migration, steel and aluminum, and the recently implemented automobile tariffs.

In the formal Executive Order (EO), titled “Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits,” the President declared a national emergency under the International Emergency Economic Powers Act (“IEEPA”) caused “by the large and persistent trade deficit that is driven by the absence of reciprocity in our trade relationships and other harmful policies like currency manipulation and exorbitant value-added taxes (VAT) perpetuated by other countries.” The EO states that this large trade deficit is evidenced by: (i) disparate tariff rates and non-tariff barriers that make it harder for U.S. manufacturers to sell their products in foreign markets; and (ii) the economic policies of key U.S. trading partners insofar as they suppress domestic wages and consumption, and thereby demand for U.S. exports, while artificially increasing the competitiveness of their goods in global markets.

Stating that negotiations to address tariff and non-tariff trade barriers have stalled, the EO states that “[t]rading partners have repeatedly blocked multilateral and plurilateral solutions,” and “the persistent decline in U.S. manufacturing output has reduced U.S. manufacturing capacity” thereby compromising U.S. economic and national security. Due to these continuing issues with trading partners, the President determined it was necessary to impose an additional ad valorem duty on all imports from all trading partners.

The 10% Baseline Reciprocal Tariff

A 10% baseline reciprocal tariff will be implemented under this IEEPA emergency authority on imports from all trading partners on goods (except those excluded from the scope of the EO, as provided below) entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. EDT on April 5, 2025. Goods loaded onto a vessel at the port of loading and in transit on the final mode of transit before that date and time will not be subject to the additional duty.

Country-Specific Reciprocal Tariffs

Beginning at 12:01 a.m. EDT on April 9, 2025, all articles from trading partners identified in Annex I to the EO imported into the customs territory of the United States will be subject to the country-specific ad valorem rates of duty specified in the chart. Guidance from the White House has indicated that these higher country-specific tariffs will be inclusive of the “new” 10% reciprocal tariffs (i.e., the importer of record will pay the higher duty rate only as opposed to a cumulative 10% + the country specific rate). Goods loaded onto a vessel at the port of loading and in transit on the final mode of transit before that date and time, will not be subject to such additional duty.

The EO provides that the 10% base reciprocal and country-specific tariff rates “shall apply only to the non-U.S. content of a subject article, provided at least 20 percent of the value of the subject article is U.S. originating.” As a result, importers should determine what goods have at least 20% of the value as U.S. originating, defined as “produced entirely” or “substantially transformed” in the United States. The EO also uses “substantially finished” terminology and it is anticipated that further guidance may resolve whether substantially “finished” remains a lesser standard than “transformed.” Importers that meet the 20% U.S. valuation threshold may mitigate the impact of these tariffs by paying the reciprocal tariffs on only the non-originating content (i.e., less than 80% of the value).

Key Factors of the EO

The EO contains detailed provisions as to what goods will and will not be subject to these additional tariffs. Thompson Hine intends to issue further posts on certain key aspects of the EO, however, in the interim, the following brief summaries are provided.

  • The EO includes a modification provision (i) allowing President Trump to increase the tariffs if trading partners retaliate or, (ii) decrease the tariffs if trading partners act to remedy non-reciprocal trade arrangements and align with the United States on economic and national security matters. As a result, the EO invites countries to negotiate with the United States to resolve these tariffs, a point emphasized by the President during his Rose Garden statement regarding the EO.
  • A number of goods are expressly excluded from the scope of the reciprocal tariffs including goods subject to the recently imposed IEEPA tariffs on Canada and Mexico and a series of current and future tariffs imposed pursuant to Section 232 of the Trade Expansion Act of 1962. With the exception of the fentanyl/migration IEEPA tariffs imposed on China, the result is that the “status quo” tariffs environment remains for these goods recently subjected to tariffs under the Trump Administration (including the automotive and automobile tariffs entering into effect on April 3, 2025) and the “new” reciprocal tariffs will not “stack” on those tariffs. However, the reciprocal tariffs are cumulative with any general or other special duty such as Section 301 (i.e., the “original” China tariffs) and antidumping/countervailing duties. Specifically, excluded from the scope of the reciprocal tariffs are the following: 
    • The existing fentanyl/migration IEEPA tariffs imposed on Canada and Mexico, (see Thompson Hine Updates of March 4, 2025 and March 6, 2025) and the reciprocal tariffs will not “stack” on those recent tariffs. Thus, USMCA originating goods will continue to enter the U.S. under “preferential terms.” Non-USMCA goods will continue to be subject to a 25% tariff under the fentanyl/migration IEEPA EOs, and non-USMCA originating “energy and energy resources” and potash will continue to face a 10% tariff. See further details below on Canada and Mexico.
    • All goods as set forth in Annex II of the EO, classified by the 8-digit Harmonized Tariff Schedule of the United States (HTSUS), are not subject to these additional duties. This includes:
      • Articles and derivatives of steel and aluminum subject to the duties imposed pursuant to Section 232 of the Trade Expansion Act of 1962 (see Thompson Hine Update of March 12, 2025).
      • Automobiles and automobile parts subject to the additional duties imposed pursuant to Section 232 of the Trade Expansion Act of 1962 (see Thompson Hine Update of March 27, 2025). The Trump Administration separately released the Annex of specific automobile and automobile parts under this Section 232 Automobile EO immediately prior to the reciprocal tariff announcement. 
      • Other products that will be likely subject to Section 232 of the Trade Expansion Act of 1962 or other trade actions including copper, pharmaceuticals, semiconductors, lumber articles, certain critical minerals, and energy and energy products.
    • All articles that may become subject to duties pursuant to future actions under Section 232 of the Trade Expansion Act of 1962 are not subject to these additional reciprocal tariffs.
    • All articles from a trading partner subject to the rates set forth in Column 2 (i.e., Belarus, Cuba, North Korea, and Russia) of the HTSUS are not subject to these additional reciprocal tariffs. Interestingly, Annex I also does not include Iran for any reciprocal tariffs, even though trade with this country is minimal.
  • All articles subject to 50 U.S.C. § 1702(b) (i.e., postal and personal communications, donations such as food, clothing and medicine to relieve human suffering, informational materials, and items ordinarily incident to personal travel to or from any country) are excluded from the scope of the reciprocal tariffs.
  • With limited exceptions, set forth in the EO, the rates of duty established by the EO are in addition to any other duties, fees, taxes, exactions, or charges applicable to such imported articles (e.g., general duties and AD/CVD).
  • Any goods entering foreign-trade zones (FTZs) on or after April 9, 2025, must enter under “privileged foreign status” unless otherwise eligible to enter under “domestic status.”
  • Duty-free de minimis treatment under 19 U.S.C. §1321, which largely exempts certain customs requirements for shipments under $800, will remain available for imports of impacted goods until notification by the Secretary of Commerce to the President that adequate systems are in place to fully and expeditiously process and collect duty revenue on such low value shipments. However, the U.S. issued an Executive Order simultaneous with this reciprocal tariffs EO largely removing de minimis treatment for shipments from China and replacing with full filing requirements and payments of duties for all shipments except those through the international postal system. See Thompson Hine Update of April 3, 2025.

In order to establish the duty rates described in this EO, the HTSUS is modified as set forth in the Annex III. This annex sets forth the new HTSUS Chapter 99 (Special Classification Provisions) subheadings to be applied on April 5 and April 9, 2025, applicable to the goods covered by the scope of the EO.

The EO makes no reference to whether duty drawbacks will be available for the duties imposed under these tariffs, nor whether any product exclusion processes are being considered.

Canada and Mexico

As indicated above, the EO continues preferential treatment for USMCA goods. Specifically, USMCA originating goods receive an effective 0% special duty under the fentanyl/migration IEEPA tariffs. Similarly, USMCA certified automobile parts, as listed in the Federal Register notice dated April 2, 2025, receive an effective 0% special duty under the Section 232 automobile parts tariffs and importers of USMCA certified automobiles may elect to seek approval from the Secretary of Commerce to certify the U.S. content and only pay the applicable Section 232 25% duties on the non-originating content. (A USMCA-specific provision does not exist for the Section 232 Steel and Aluminum and Derivatives tariffs.) The reciprocal tariff EO continues the USMCA preference by effectively eliminating the reciprocal tariffs for goods produced in Canada and Mexico. As a result, importers of USMCA certified goods likely only face Section 232 Steel and Aluminum tariffs (if applicable), automobile tariffs on the non-originating content (if applicable and once approved by the Secretary of Commerce) and any other general or special “non-IEEPA” duties (e.g., AD/CVD, Section 301, if ever applicable).

The EO includes a prospective provision regarding the potential termination of the IEEPA fentanyl/migration tariffs, which currently imposes a 25% tariff on most non-USMCA originating goods (10% on certain energy-related non-USMCA originating goods from Canada). In the event termination of the IEEPA fentanyl/migration tariffs occurs, all non-USMCA goods from Canada or Mexico will be subject to a 12% reciprocal tariff rate. However, USMCA-originating goods will continue to receive an effective 0% duty rate, and not be subject to this 12% country-specific reciprocal tariff rate. Similarly, regardless of USMCA status, the reciprocal tariffs will not apply to energy, energy resources, potash nor (using a somewhat unique formula) where parts or components that qualify for USMCA status where the broader good is substantially finished in the U.S. 

Readers should note that the breadth and depth of this EO and the implementation of these tariffs is unprecedented, thus the situation regarding interpretation and their implementation remains fluid. It is expected that the White House and other relevant agencies (including CBP) will be issuing further guidance.