U.S. Reciprocal Tariff Executive Order, explained

On April 2, 2025, President Trump signed an Executive Order imposing substantial new tariffs on global imports. This short explainer seeks to clarify actions taken and exceptions available.

1. Global Base Tariff: A 10% additional duty on all imports entering the United States, effective April 5, 2025. The administration invoked the International Emergency Economic Powers Act (IEEPA), declaring a national emergency stemming from what it terms "atrophy of domestic production capacity" due to persistent trade deficits.
   
   
2. Country-Specific Additional Duties: Beyond the base 10% tariff, additional duties on imports from 57 jurisdictions take effect April 9, 2025. These rates appear formula-based and are designed to "rebalance global trade."
3. Suspension of Duties: Higher country-specific duties were suspended on April 10, 2025, until the end of July, except for China. China-specific duties were initially suspended until August 12, 2025, and later suspended again in August 2025, extending the suspension until November 10, 2025. During the suspension period, these jurisdictions were subject to the global base tariff of 10%.
4. Modification of Reciprocal Duties: Once the suspensions ended on July 31, 2025, the U.S. modified reciprocal duties. As a result, tariff rates for 69 jurisdictions, including the European Union (EU), were increased from the global baseline tariff of 10%. For the EU, a special tariff arrangement was introduced, with additional duties of up to 15% depending on the MFN tariff.

The Executive Order grants the President authority to modify these rates based on trading partners’ remedial actions or ongoing concerns about manufacturing capacity.

Country-level Exceptions

Two sets of trading partners are excluded from reciprocal tariffs:

1. USMCA partners (Canada and Mexico): Imports qualifying as originating under USMCA remain exempt, though non-originating goods face separate duties under previous border-focused Executive Orders
2. Countries subject to HTS Column 2 rates: Belarus, Cuba, North Korea, and Russia

In addition, countries that enter into a trade deal with the United States are granted certain exceptions from reciprocal tariffs. To date, the United Kingdom and the European Union have been granted exceptions for some of their imports.

Product-Level Exclusions

1. EO Annex II exceptions covering 1,039 specified product categories (at 8-digit HS code level)

2. IEEPA statutory exceptions covering 38 HS codes

3. "Semiconductor" exceptions covering 57 HS codes

4. Products already subject to other trade actions:

   1. Steel, aluminum, and derivative products (652 HS codes) covered by Section 232 tariffs

   2. Automobiles and parts (247 HS codes) covered by a separate Section 232 action

   3. Copper and derivative products (40 HS codes) covered by a separate Section 232 action

Notably, for steel, aluminium, copper, and their derivative products covered by Section 232 tariffs, the exclusion applies only to the metal content, while the non-metal content remains subject to reciprocal tariffs.