President Trump Issues Universal Reciprocal Tariff and Higher Individualized Rates; Removes De Minimis Exemption for Chinese Goods

On April 2, 2025, President Trump issued an Executive Order (“EO”) imposing a 10% universal tariff on imports from all countries (with certain exceptions described below) pursuant to the International Emergency Economic Powers Act of 1977 (“IEEPA”). These tariffs will take effect at 12:01 a.m. eastern standard time on April 5, 2025.

WASHINGTON, DC - APRIL 02: U.S. President Donald Trump speaks during a “Make America Wealthy Again” trade announcement event in the Rose Garden at the White House on April 2, 2025 in Washington, DC. Touting the event as “Liberation Day”, Trump announced additional tariffs targeting goods imported to the U.S. (Photo by Chip Somodevilla/Getty Images)

The tariff rates will increase on a country-specific basis for select countries with which the United States has significant trade-in-goods deficits. The increase will take effect at 12:01 a.m. eastern standard time on April 9, 2025. The full list of countries subject to higher rates and their respective percentages are available in Annex I of the EO.

Prior IEEPA tariffs imposed on Canada and Mexico will remain in place. Therefore, goods of Canada and Mexico eligible for preferential treatment under the United States-Mexico-Canada Agreement (“USMCA”) remain duty-free. Tariffs on non-USMCA qualifying goods remain at 25%, or 10% for energy, energy resources, and potash. If the prior EOs imposing tariffs of 25% covering non-originating imports from Mexico and Canada are revoked, these articles will be subject to an ad valorem rate of duty of 12%. The 12% rate would not apply to energy or energy resources, to potash, or to an article eligible for duty-free treatment under USMCA that is a part or component of an article substantially finished in the United States.

The current IEEPA duty rate on China of 10% will increase to 34% on April 9, as specified in Annex I of the EO.

The additional duties do not apply to the following categories of goods as set forth in Annex II to the EO:

• All articles, including certain informational materials and donations, described in 50 U.S.C. 1702(b);

• All articles and derivatives of steel and aluminum subject to the duties imposed pursuant to Section 232 of the Trade Expansion Act of 1962 (“Section 232”);

• All automobiles and automotive parts subject to the additional duties imposed pursuant to Section 232;

• Other products enumerated in Annex II, including copper, pharmaceuticals, semiconductors, lumber articles, certain critical minerals, and energy and energy products, as well as any additional articles that may become subject to duties pursuant to future Section 232 actions; and

• All articles from a trading partner subject to the rates set forth in Column 2 of the Harmonized Tariff Schedule of the United States.

The EO contains an “in transit” exception for both the April 5 and April 9 effective dates for “goods loaded onto a vessel at the port of loading, and in transit on the final mode of transit before 12:01 a.m. eastern daylight time.” Based on a review of prior EOs issued by President Trump pursuant to IEEPA, it appears that the exception may have been intended to apply to goods loaded onto a vessel at the port of lading or in transit on the final mode of transit before the effective date. It is possible that U.S. Customs and Border Protection (“CBP”) will provide further clarification of the intent of the “in transit” exception in the future.

The tariffs announced in the EO are in addition to any other duties applicable to the imported articles, including (but not limited to) normal customs duties, antidumping or countervailing duties, or duties imposed pursuant to Section 301 of the Trade Act of 1974.

The EO notes that the tariffs will only apply to the non-U.S. content of a subject article, provided that at least 20% of the value of the subject article is U.S. originating. The EO specifies that U.S. content refers to the value of an article attributable to the components produced entirely, or substantially transformed in, the United States. Parties intending to claim U.S. content should be mindful of the EO’s statement that CBP is authorized to take measures required to verify such claims.

Finally, the EO states that the de minimis exemption for low-value imports from countries other than China will remain in place but only until the Secretary of Commerce determines adequate systems are in place to collect tariffs on these items. No timeframe was provided for this determination.

Removal of De Minimis Exemption for China

Also on April 2, 2025, President Trump issued a separate EO eliminating de minimis treatment for low-value imports from China and Hong Kong, which will take effect at 12:01 a.m. eastern standard time on May 2, 2025. This follows the Secretary of Commerce’s determination that adequate systems are in place to collect the tariffs for imports from China.

According to the EO, imports valued at or below $800 that would otherwise qualify for the de minimis exemption will be subject to a duty rate of either 30% of the item’s value or $25 per item. After June 1, 2025, this will increase to $50 per item. Further, CBP may require formal entry for any postal package instead of the specified duties.

Within 90 days, the Commerce Department will submit a report assessing the order’s impact and will consider whether to include Macau in the rule as well.

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