Trump finally announced today his plans for Reciprocal Tariffs. You can read the Executive Order as well as the Fact Sheet for details.
The information below is based on our initial interpretation of the Executive Order. There may be corrections/additional clarification in the coming days.
What is the Reciprocal Tariff Rate?
50 countries were given individually designated reciprocal tariff rate. They are as follows:
Countries that are not listed on this list will be assessed a Reciprocal Tariff rate of 10%.
The reciprocal tariffs are in addition to any tariffs that are already being assessed. Therefore if a product from China is already subject to the Section 301 tariff and IEEPA 20% tariff, this Reciprocal Tariff is in addition to the Section 301 and IEEPA 20% tariff.
When are the Reciprocal Tariffs effective?
There is a two part implementation timeline:
Part 1) On 12:01 Eastern Daylight time on April 5, 2025, shipments from ALL countries will initially be subject to a 10% reciprocal tariff.
There is an important exception. Shipments that are loaded onto a vessel at the port of loading and in transit on the final mode of transit before12:01 Eastern Daylight time on April 5, 2025 will be exempted from the reciprocal tariff.
Part 2) On 12:01 Eastern Daylight time on April 9, 2025, shipments from countries with designated higher reciprocal tariffs will be subject to their country-specific tariff. For example, if a shipment is from China, the Reciprocal Tariff will be assessed as the listed 34% rate starting on April 9, 2025. The exception again applies to shipments that are loaded onto a vessel at the port of loading and in transit on the final mode of transit before 12:01 Eastern Daylight time April, 9, 2025. Our understanding is that if the shipment departs between April 5, 2025 and April 9, 2025, the would be assessed the 10% Reciprocal Tariff rate instead of the country designated rate.
Are there ANY exemptions from the Reciprocal Tariff?
The are a few categories of products exempted from the Reciprocal Tariff. They are as follows:
- Articles subject to the Section 232 tariff covering steel and aluminum tariff. What is odd is that the steel and aluminum tariff is 25%, which is actually lower than the Reciprocal Tariff for some countries. Furthermore, we are uncertain how this exemption would be applied to derivative articles that are practically made out of steel or aluminum and on the Section 232 steel or aluminum lists. We are trying to get clarification from CBP on this matter.
- Articles subject to the Section 232 tariff covering automobiles and auto parts.
- Certain articles of copper, pharmaceuticals, semiconductors, lumber articles, critical minerals, and energy and energy products that will be further defined in an Annex II that has yet to be published. We are waiting for this list and will publish this list as soon as we receive it. Note that a number of these products are either currently already subject to or will soon be subject to a separate Section 232 investigation.
Special partial exemption for products containing U.S. content
If at least 20% of the value of the product is U.S. originating, there will be an exemption for the portion of the product that has U.S. content. In this case “U.S. content” is defined as components produced entirely or substantially transformed in the United States. If an importer plans to use this partial exemption, please be aware that CBP is authorized to obtain proof from the importer to ascertain not only the value of the content but also whether the article truly qualifies as “U.S. content.” Importers should be very careful to have adequate supporting documentation to back up their claim of U.S. content.
What about shipments from Canada and Mexico?
If the shipment from Canada/Mexico qualifies for entry under the USMCA, they will currently still be exempt from the Reciprocal tariff. If the shipment does not qualify under the USMCA, the product will be assessed a 25% IEEPA tariff.
IMPORTANT additional Tariff News
Automobile and Auto Parts Section 232 tariff
As mentioned last week, the Section 232 tariff for automobiles will begin on April 3, 2025. All new automobiles will be subject to a 25% tariff.
The U.S. government finally published the list of auto parts that will be subject to the 25% section 232 tariff. The auto parts are supposed to cover engines, engine parts, transmissions and powertrains parts, and electrical components. We highly recommend you review this tariff list closely to confirm if your auto part is on this tariff list. Note that the section 232 tariff for auto parts will not be applied until May 3, 2025. One interesting question is whether the Reciprocal tariff will apply for these auto parts in the interim?
End of De-Minimis for products from China
Trump finally is ending the use of De Minimis entries (Type 86 / Section 321) entries for products from China (including Hong Kong). Products made in China or Hong Kong entering on or after 12:01 AM Eastern Daylight time on May 2, 2025 will no longer be able to enter duty free under the De Minimis exemption for products that are value under $800.
We know importers have lots of questions. We will try to answer these questions to the best of our abilities. We are also doing our best to get clarification from CBP on certain gray areas.
