United States Reciprocal Tariffs and Their Impact on Trade
UPDATED: April 7, 2025
ADDED: U.S. Customs and Border Protection bulletin CSMS # 64649265 – GUIDANCE โ Reciprocal Tariffs
Below is a summary of the guidance recently provided by U.S. Customs and Border Protection (CBP) on the additional duties due on imported merchandise as mandated by the Executive Order. the review the full guidance document, please click on the link below:
CSMS # 64649265 – GUIDANCE โ Reciprocal Tariffs
GUIDANCE
CHAPTER 99 SECONDARY CLASSIFICATION REQUIRED
- Effective Date: Starting April 5, 2025, new reporting requirements will be enforced for importers.
- Reporting Requirement: Filers must report at least one Harmonized Tariff Schedule of the United States (HTSUS) Chapter 99 secondary classification.
- Reciprocal Tariffs: All imported merchandise must be reported with:
- The HTSUS classification applicable to the reciprocal tariff.
- One of the HTSUS classifications under which the merchandise is exempt from the reciprocal tariff.
- Importance for Importers: This change is crucial for importers to ensure compliance and avoid potential penalties. Understanding these classifications is vital for smooth operations in international trade.
APPLICATION OF ADDITIONAL DUTY RATES
- Effective Date: All imported goods, except those identified as exceptions, will be subject to new tariff regulations starting April 5, 2025, at 12:01 a.m. EDT.
- Duty Rate: A 10% additional ad valorem duty rate will be applied under the Harmonized Tariff Schedule of the United States (HTSUS) classification 9903.01.25.
- Additional Charges: This additional duty is in addition to any other existing duties, taxes, fees, or charges that apply to imported articles.
EXCEPTIONS
Until further notice, for all imported merchandise that is entered for consumption, or withdrawn from warehouse for consumption on or after 12:01 a.m. EDT on April 5, 2025, and for which an HTSUS classification is required to be declared, if the secondary classification under heading 9903.01.25 is not declared, then one of the following HTSUS secondary classifications must be declared, to specify the particular exception pursuant to which the reciprocal tariff in heading 9903.01.25 does not apply to the imported articles that are excluded from the additional ad valorem duties:
- 9903.01.26
- 9903.01.27
- 9903.01.28
- 9903.01.29
- 9903.01.30
- 9903.01.31
- 9903.01.32
- 9903.01.33
- 9903.01.34
CHAPTER 98
- Additional duties specified do not apply to certain goods entered under chapter 98 of HTSUS when approved by U.S. Customs and Border Protection (CBP).
- Exceptions:
- Goods entered under heading 9802.00.80 and subheadings 9802.00.40, 9802.00.50, and 9802.00.60 are exceptions to these additional duties.
- Specifics on Subheadings:
- For subheadings 9802.00.40, 9802.00.50, and 9802.00.60, additional duties are applicable to the value of repairs, alterations, or processing performed.
- For heading 9802.00.80, the additional duties apply to the value of the article assembled abroad, minus the cost or value of U.S. products involved.
FOREIGN TRADE ZONE
- Subject Articles: Articles admitted into a U.S. foreign trade zone after April 9, 2025, must be designated as “privileged foreign status.”
- Exclusions: Articles excluded from this requirement are those covered under 50 U.S.C. 1702(b) and those eligible for admission under “domestic status” as per 19 CFR 146.43.
- Duties on Admission: Upon entry for consumption, these articles will be subject to duties as imposed by the relevant order, which are based on the classification under the applicable HTSUS subheading at the time of admission.
- Important Dates: The regulation takes effect for articles admitted into foreign trade zones starting from 12:01 a.m. EDT on April 9, 2025.
DRAWBACK
Drawback is available with respect to the additional duties imposed pursuant to the Executive Order.
DE MINIMIS
- Administrative Exemption: The de minimis exemption from duty and certain taxes remains in effect until further notice, as outlined in the April 2, 2025 Executive Order.
- Scope of the Exemption: This exemption applies specifically to articles covered by headings 9903.01.25, which are eligible for the exemption.
- International Postal Network: Eligible articles sent to the United States through the international postal network are included under this exemption.
- Important Note: The exemption is subject to change as per future directives, so it’s crucial for importers to stay informed.
REPORTING
- Duty Association with HTSUS Numbers: When reporting entry summary lines that include multiple HTSUS numbers, it’s essential to associate the duty accurately with the correct HTSUS. For instance, if an entry falls under 9903.01.25, the 10% duty must be linked to that specific HTSUS both in the ACE transmission and on the printed 7501 form.
- No Combination of Duties: Duties reported on different HTSUS numbers cannot be combined. Each duty must be reported separately, ensuring compliance with CBP regulations.
- Reporting for U.S. Content: Articles with a U.S. content of at least 20% and subject to 9903.01.34 must be reported on two separate entry summary lines. This helps accurately reflect the applicable duty rate and ensures that the reciprocal tariff additional duty is based on the non-U.S. content.
Original Post:
Executive Order: April 2, 2025
Fact Sheet: April 2, 2025
President Trump has issued a comprehensive Executive Order and Fact Sheet detailing the U.S. government’s roll out of its reciprocal tariff program. Below is a summary of the Executive Order & Fact Sheet. To review the complete documents, please click on the links below:
Background
National Emergency Declared: President Donald J. Trump has declared a national emergency regarding trade deficits, citing them as a significant threat to the U.S. economy and national security.
Key Issues Identified:
- Lack of reciprocity in bilateral trade relationships.
- Disparate tariff rates and non-tariff barriers.
- Economic policies of trading partners suppressing domestic wages and consumption.
Investigation Initiated: On January 20, 2025, Trump directed his administration to investigate the root causes of persistent trade deficits and assess their implications for national security.
Presidential Memoranda Issued
Reciprocal Trade and Tariffs:
A memorandum signed on February 13, 2025, emphasized the need
to review non-reciprocal trading practices and their connection to the trade deficit.
Final Results and Actions: On April 1, 2025, the final results of the investigations were received, prompting immediate actions based on these findings to address the identified threats.
Section 1. National Emergency
- National Emergency Declared: The President has declared a national emergency due to significant U.S. goods trade deficits, which have surged by over 40% in the last five years, reaching $1.2 trillion in 2024.
- Impact on Domestic Production: These trade deficits indicate asymmetries in trade relationships that weaken the U.S. manufacturing and defense-industrial base, leading to a decline in domestic production capacity.
- Challenges for U.S. Producers: U.S. producers face non-reciprocal tariff rates and extensive non-tariff barriers imposed by foreign partners, which diminish the competitiveness of American exports while boosting foreign goods.
- Consequences on Employment: The imbalances have resulted in resource transfer from domestic producers to foreign firms, causing a loss of manufacturing jobs and reduced capacity in critical sectors, including defense.
- Economic Vulnerability: The lack of sufficient domestic manufacturing capacity in essential sectors compromises U.S. economic resilience against supply chain disruptions, jeopardizing national security.
- Military Readiness at Risk: The persistent trade deficits threaten military readiness, especially amid rising global conflicts, necessitating immediate corrective actions to rebalance import flows.
- Call to Action: The President urges both public and private sectors to collaborate in strengthening the international economic position of the United States, emphasizing the urgency of addressing these challenges for national security and economic stability.
Section 2. Reciprocal Tariff Policy
- U.S. Trade Policy Objective: The United States aims to rebalance global trade flows.
- Implementation of Duties: An additional ad valorem duty will be imposed on all imports from trading partners.
- Initial Rate: The duty will start at 10 percent.
- Subsequent Increases: The duty will increase for specific trading partners listed in Annex I.
- Duration of Duties: These duties will remain in effect until the conditions for their removal are determined to be satisfied, resolved, or mitigated.
Section 3. Implementation
Subsection 3(a)
- New Import Duty Regulations: Effective April 5, 2025, all imported articles into the United States will incur an additional ad valorem duty of 10%.
- Implementation Dates:
- The new duty applies to goods entered for consumption or withdrawn from warehouses after 12:01 a.m. EDT on April 5, 2025.
- Goods in transit before this time are exempt.
- Country-Specific Rates: Starting April 9, 2025, articles from specified trading partners will be subject to designated country-specific ad valorem rates detailed in Annex I of the order.
- Exemptions: Similar to the previous duty, goods loaded onto a vessel before the implementation date and in transit will not be subject to the new rates if they are entered for consumption after the stated times.
- Trade Agreements: These duties apply to articles imported under existing U.S. trade agreements, with exceptions noted in the order.
Subsection 3(b)
The following goods as set forth in Annex II to this order, consistent with law, shall not be subject to the ad valorem rates of duty under this order:
- Legal References: Articles encompassed by 50 U.S.C. 1702(b)
- Steel and Aluminum: Goods and derivatives of steel and aluminum are subject to duties under section 232 of the Trade Expansion Act of 1962, as outlined in various proclamations
- Automobiles and Parts: Additional duties apply to automobiles and automotive parts as per section 232 and Proclamation 10908 from March 2025.
- Other Products: The order includes a range of products listed in Annex II, such as copper, pharmaceuticals, semiconductors, lumber articles, critical minerals, and energy products.
- Harmonized Tariff Schedule: all articles from a trading partner subject to the rates set forth in Column 2 of the Harmonized Tariff Schedule of the United States (HTSUS)
- Future Duties: all articles that may become subject to duties pursuant to future actions under section 232 of the Trade Expansion Act of 1962.
Subsection 3(c)
The rates of duty established by this order are in addition to any other duties, fees, taxes, exactions, or charges applicable to such imported articles, except as provided in subsections (d) and (e) of this section below.
Subsection 3(d)
- Imposition of Additional Duties: The U.S. government has enacted additional tariffs on certain goods from Canada and Mexico due to national emergencies linked to drug trafficking and illegal migration.
- Executive Orders:
- Canada:
- Executive Order 14193 (Feb 1, 2025): Initiated duties addressing drug flow across the northern border.
- Amendments: Executive Orders 14197 (Feb 3, 2025) and 14231 (Mar 2, 2025) provided updates on the situation.
- Mexico:
- Executive Order 14194 (Feb 1, 2025): Duties imposed due to drug and migration issues at the southern border.
- Amendments: Executive Orders 14198 (Feb 3, 2025) and 14227 (Mar 2, 2025) updated the status.
- Canada:
- Trade Implications:
- Goods from both countries that meet the USMCA qualifications remain eligible for preferential entry into the U.S. market.
- Non-qualifying goods from Canada and Mexico face increased ad valorem duties:
- 25% on most goods.
- 10% on energy resources and potash from Canada not qualifying under USMCA.
Subsection 3(e)
- Ad Valorem Duty on Imports: The ad valorem rate of duty on articles imported from Canada or Mexico will not be cumulative with existing duties outlined in subsection (d).
- USMCA Originating Items: Articles qualifying as originating under the USMCA will not incur an additional ad valorem duty if the orders in subsection (d) are terminated or suspended.
- Non-Originating Articles: Items that do not qualify under the USMCA will face a 12% ad valorem rate of duty.
- Exemptions: The ad valorem rates do not apply to energy resources, potash, or any article eligible for duty-free treatment under USMCA that is a component of a product substantially finished in the U.S.
Subsection 3(f)
- Ad Valorem Rates of Duty: the ad valorem rates of duty set forth in this order 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
- Definition of U.S. Content: Refers to the value of an article derived from components that are either produced entirely or substantially transformed in the United States.
- Role of U.S. Customs and Border Protection (CBP): CBP is authorized to require documentation and information regarding imported articles to verify both the U.S. content value and whether the article is substantially finished in the U.S.
- Documentation Requirement: Importers must provide necessary information with their entry filings to assist CBP in ascertaining the U.S. content and compliance with the duty rates.
Subsection 3(g)
Subject articles, except those eligible for admission under โdomestic statusโ as defined in 19 CFR 146.43, which are subject to the duty specified in section 2 of this order and are admitted into a foreign trade zone on or after 12:01 a.m. eastern daylight time on April 9, 2025, must be admitted as โprivileged foreign statusโ as defined in 19 CFR 146.41.
Subsection 3(h)
- Duty-free de minimis treatment is available under 19 U.S.C. 1321(a)(2)(A)-(B) for specified articles.
- This treatment allows for certain goods to enter the U.S. without incurring duties, simplifying the import process.
- Under 19 U.S.C. 1321(a)(2)(C), this duty-free treatment will continue until the Secretary of Commerce notifies the President that adequate systems are in place for processing and collecting applicable duty revenue.
- Once such notification is made, the duty-free de minimis treatment under 19 U.S.C. 1321(a)(2)(C) will no longer be available for the articles mentioned.
- This regulation aims to balance ease of trade with the need for effective revenue collection.
Subsection 3(i)
The Executive Order of April 2, 2025 (Further Amendment to Duties Addressing the Synthetic Opioid Supply Chain in the Peopleโs Republic of China as Applied to Low-Value Imports), regarding low-value imports from China is not affected by this order, and all duties and fees with respect to covered articles shall be collected as required and detailed therein.
Subsection 3(j)
To reduce the risk of transshipment and evasion, all ad valorem rates of duty imposed by this order or any successor orders with respect to articles of China shall apply equally to articles of both the Hong Kong Special Administrative Region and the Macau Special Administrative Region.
Subsection 3(k)
In order to establish the duty rates described in this order, the HTSUS is modified as set forth in the Annexe to this order. These modifications shall enter into effect on the dates set forth in the Annexes to this order.
Subsection 3(l)
Unless specifically noted herein, any prior Presidential Proclamation, Executive Order, or other
Presidential directive or guidance related to trade with foreign trading partners that is inconsistent with the direction in this order is hereby terminated, suspended, or modified to the extent necessary to give full effect to this order.
Section 4. Modification Authority
Subsection 4(a)
- The Secretary of Commerce, in collaboration with other key government officials, is tasked with recommending additional actions to address emergency economic conditions affecting the United States.
- This action is prompted by an increase in the overall trade deficit and the expansion of non-reciprocal trade arrangements by U.S. trading partners.
- Key Officials Involved:
- Secretary of Commerce
- United States Trade Representative
- Secretary of State
- Secretary of the Treasury
- Secretary of Homeland Security
- Assistant to the President for Economic Policy
- Senior Counselor for Trade and Manufacturing
- Assistant to the President for National Security Affairs
- Objective: To protect the economic and national security interests of the United States by evaluating the effectiveness of current measures and proposing further actions if necessary.
- Importance: This initiative underscores the government’s proactive approach to mitigating trade-related challenges and ensuring economic stability.
Subsection 4(b)
Should any trading partner retaliate against the United States in response to this action through import duties on U.S. exports or other measures, I may further modify the HTSUS to increase or expand in scope the duties imposed under this order to ensure the efficacy of this action.
Subsection 4(c)
Should any trading partner take significant steps to remedy non-reciprocal trade arrangements and
align sufficiently with the United States on economic and national security matters, I may further modify the HTSUS to decrease or limit in scope the duties imposed under this order.
Subsection 4(d)
Should U.S. manufacturing capacity and output continue to worsen, I may further modify the HTSUS to increase duties under this order.
Section 5. Implementation Authority
- The Secretary of Commerce and the United States Trade Representative, along with other key officials, are authorized to use powers granted by IEEPA to implement this order.
- This includes consultation with:
- Secretary of State
- Secretary of the Treasury
- Secretary of Homeland Security
- Assistant to the President for Economic Policy
- Senior Counselor for Trade and Manufacturing
- Assistant to the President for National Security Affairs
- Chair of the International Trade Commission
- Each executive department and agency must take appropriate measures within their authority to enforce this order effectively.
Section 6. Reporting Requirements
- The United States Trade Representative is authorized to submit reports to Congress regarding a declared national emergency.
- This action is taken in consultation with several key officials, including the Secretary of State and Secretary of the Treasury.
- The reports will be consistent with specific sections of the National Emergencies Act (NEA) and the International Emergency Economic Powers Act (IEEPA).
- The purpose of these reports is to keep Congress informed about the status and implications of the national emergency.
Section 7. General Provisions
(a) Nothing in this order shall be construed to impair or otherwise affect:
(i) the authority granted by law to an executive department, agency, or the head thereof; or
(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.
(b) This order shall be implemented consistent with applicable law and subject to the availability of
appropriations.
(c) This order is not intended to, and does not, create any right or benefit, substantive or procedural,
enforceable at law or in equity by any party against the United States, its departments, agencies, or
entities, its officers, employees, or agents, or any other person.
Fact Sheet: President Donald J. Trump Declares National Emergency to Increase our Competitive Edge, Protect our Sovereignty, and Strengthen our National and Economic Security
PURSUING RECIPROCITY TO REBUILD THE ECONOMY AND RESTORE NATIONAL AND ECONOMIC SECURITY:
- Main Declaration: President Donald J. Trump has declared a national emergency due to foreign trade practices, imposing tariffs to bolster the U.S. economy and protect American workers.
- Tariff Implementation:
- A 10% tariff will be applied to all countries starting April 5, 2025.
- Countries with the largest trade deficits will face individualized higher tariffs effective April 9, 2025.
- Rationale:
- The U.S. has experienced large and persistent trade deficits, leading to a weakened manufacturing base and dependence on foreign supply chains.
- The tariffs aim to address nonreciprocal trade practices, including currency manipulation and high value-added taxes from other nations.
- Modification Authority: President Trump can adjust tariffs based on trading partners’ responsesโeither increasing them if retaliatory actions are taken or decreasing them if significant steps are made to improve trade relations.
- Exemptions: Certain goods will be excluded from these tariffs, including:
- Articles under 50 USC 1702(b).
- Steel, aluminum, autos, pharmaceuticals, semiconductors, and specific minerals not available in the U.S.
- Impact on Canada and Mexico: Existing orders regarding fentanyl and migration remain unchanged. Goods compliant with the USMCA will maintain a 0% tariff, while non-compliant goods will face a 25% tariff.
TAKING BACK OUR ECONOMIC SOVEREIGNTY:
- President Trump’s Trade Policy: Emphasizes the importance of tariffs to protect American workers and ensure fair trade, viewing it as an emergency measure.
- Historical Context: He is recognized as the first President in modern history to prioritize American interests in trade negotiations, advocating for the principle of reciprocity.
- Economic Impact: U.S. companies face a significant financial burden, paying over $200 billion annually in value-added taxes to foreign governments, creating an unfair competitive landscape.
- Trade Deficit Concerns: The U.S. trade deficit in goods exceeded $1.2 trillion in 2024, a crisis that has been overlooked by previous administrations.
- Counterfeit Goods: The annual cost of counterfeit products and intellectual property theft ranges between $225 billion and $600 billion, posing risks to American health and safety.
- Agricultural Trade Deficit: Under President Biden, the agricultural trade surplus has turned into a projected $49 billion deficit, marking a stark contrast to previous gains.
- Reciprocal Trade Agenda: This approach aims to re-shore manufacturing, create better-paying American jobs, and strengthen national security by ensuring that trade practices are fair.
- Call to Action: The tariffs are designed to rectify the injustices of global trade, incentivizing foreign partners to rebalance their trade relationships with the U.S. and support American economic growth.
REPRIORITIZING U.S. MANUFACTURING:
- U.S. Manufacturing and National Security: President Trump emphasizes that boosting domestic manufacturing is essential for the national security of the United States.
- Declining Output: In 2023, U.S. manufacturing output represented only 17.4% of global manufacturing, a significant drop from 28.4% in 2001.
- Job Losses: The U.S. has lost approximately 5 million manufacturing jobs from 1997 to 2024, marking one of the most substantial declines in manufacturing employment in history.
- Critical Sectors: The urgent need for a resilient manufacturing capacity is particularly evident in advanced sectors such as:
- Autos
- Shipbuilding
- Pharmaceuticals
- Transport equipment
- Technology products
- Machine tools
- Basic and fabricated metals
- Vulnerabilities Exposed: The reliance on foreign producers has left the U.S. supply chain vulnerable to geopolitical disruptions and supply shocks, as highlighted during the COVID-19 pandemic and Houthi attacks on Middle Eastern shipping.
- Military Stockpiles: Current U.S. stockpiles of military goods are insufficient to meet national defense interests, underscoring the need for a robust upstream manufacturing ecosystem.
- Future Focus: To support defense needs, the U.S. must invest in developing new manufacturing technologies in critical areas such as bio-manufacturing, batteries, and microelectronics.
In conclusion, to maintain an effective security umbrella for its citizens and allies, the U.S. must prioritize rebuilding its manufacturing capabilities and ensuring a resilient domestic supply chain.
ADDRESSING TRADE IMBALANCES:
- President Trump’s Initiative: Aiming to level the playing field for American businesses by confronting unfair tariff disparities and non-tariff barriers from other countries.
- Tariff Disparities:
- Passenger Vehicles: U.S. tariff at 2.5% vs. EU (10%) and India (70%).
- Networking Equipment: U.S. has 0% tariff; India imposes 10-20%.
- Ethanol: U.S. at 2.5%, while Brazil (18%) and Indonesia (30%) are higher.
- Rice: U.S. tariff is 2.7% compared to India (80%), Malaysia (40%), and Turkey (31%).
- Apples: Duty-free in the U.S. but taxed heavily in Turkey (60.3%) and India (50%).
- Non-Tariff Barriers:
- China: Non-market policies have led to the loss of 3.7 million U.S. jobs from 2001 to 2018, increasing reliance on foreign supply chains.
- India: Burdensome testing requirements could boost U.S. exports by $5.3 billion annually if removed.
- Argentina: Banned imports of U.S. live cattle since 2002, leading to a $223 million trade deficit in beef products.
- South Africa: Imposes unjustified restrictions on U.S. pork, causing a 78% decline in exports.
- Impact on U.S. Industry: Non-reciprocal practices are estimated to cost the U.S. automotive industry $13.5 billion annually in exports to Japan.
These trade barriers not only hinder U.S. competitiveness but also threaten economic and national security by limiting access to critical markets and resources.
THE GOLDEN RULE FOR OUR GOLDEN AGE:
- Reciprocal Trade Principle: The U.S. is advocating for other countries to treat it as it treats them, embodying the Golden Rule for international trade.
- Market Access: Access to the American market is framed as a privilege, with President Trump emphasizing that the U.S. will no longer prioritize international trade at the expense of its own interests.
- Tariff Strategy: The introduction of reciprocal tariffs is a key aspect of Trumpโs economic agenda, aligning with promises made during his campaign, which played a significant role in his election victory.
- Economic Recovery Plan: These tariffs are part of a broader strategy to reverse economic damage perceived to have been caused by previous administrations, aiming to usher in a new period of prosperity.
- Focus on American Industries: The agenda includes enhancing energy competitiveness, implementing tax cuts, and reducing regulations to bolster American economic growth.
- Trade Barriers: U.S. industries, particularly pork and poultry, face unjustified restrictions from countries like South Africa, leading to significant declines in exports.
- Automotive Industry Challenges: U.S. automakers encounter non-tariff barriers in Japan and Korea, resulting in substantial losses in potential exports and market share.
- Protecting American Workers: The use of both monetary and non-monetary tariffs is aimed at safeguarding American jobs and industries from unfair international practices.
TARIFFS WORK:
- Tariffs as a National Security Tool: Studies indicate that tariffs can effectively reduce threats to U.S. national security while achieving important economic and strategic goals.
- Positive Economic Impact: A 2024 study revealed that President Trumpโs tariffs during his first term strengthened the U.S. economy and led to significant reshoring in manufacturing and steel production.
- Import Reduction: A 2023 report from the U.S. International Trade Commission analyzed over $300 billion in U.S. imports, concluding that tariffs successfully reduced imports from China and stimulated domestic production of affected goods with minimal price impact.
- Inflation Correlation: According to the Economic Policy Institute, Trump’s tariffs showed no correlation with inflation, having only a temporary effect on overall price levels.
- Consumer Behavior: An analysis by the Atlantic Council suggested that tariffs incentivize U.S. consumers to purchase domestically made products.
- Expert Opinions: Janet Yellen, former Treasury Secretary under Biden, stated that tariffs do not significantly raise consumer prices, reassuring the public about their affordability.
- Projected Economic Growth: A 2024 economic analysis predicted that a global 10% tariff could boost the economy by $728 billion, create 2.8 million jobs, and increase real household incomes by 5.7%.
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