U.S. Reciprocal Tariffs in Effect April 5, Increased Tariffs April 9

Trade Update • April 2, 2025

n April 2, 2025, President Donald J. Trump signed a sweeping executive order declaring a national emergency in response to what he described as “large and persistent annual U.S. goods trade deficits,” which reached $1.2 trillion in 2024—a 40% increase over the past five years.

The executive order, “Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits,” establishes a broad-based tariff system on imported goods from all trading partners, citing the need to protect U.S. manufacturing, critical supply chains, and national security.

Reciprocal Tariff

• Reciprocal tariffs vary by country (Annex I) — see the full list and percentage rates here.
• A 10% ad valorem tariff will apply to all imported goods from all trading partners, unless otherwise exempted.
• Applies to goods entered for consumption or withdrawn from warehouse on or after 12:01 a.m. EDT, April 5, 2025.
• In-transit goods (loaded on a vessel before the effective time) are exempt.

Key Exemptions – Annex II (pending publication)

The following goods and categories are excluded from the reciprocal tariffs, effective April 5, 2025:

• Articles protected under 50 U.S.C. 1702(b) (e.g., personal communications, humanitarian donations)
• Steel and aluminum articles covered under Section 232
• Automobiles and parts subject to Section 232
• Specific product categories listed in Annex II:
  • Copper
  • Pharmaceuticals
  • Semiconductors
  • Lumber articles
  • Certain critical minerals
  • Energy and energy products

• Goods under Column 2 of the HTSUS (typically non-normal trade relations countries).
• Future Section 232-imposed tariffs (automatically excluded).

Increased Tariff for Certain Countries – Effective April 9, 2025

• Goods from countries listed in Annex I will be subject to higher country-specific ad valorem tariff rates starting 12:01 a.m. EDT, April 9, 2025.
• These duties apply even under existing free trade agreements unless exempted.
• Goods in transit before this date are also exempt.

China, Hong Kong, and Macau

The order ensures that all duties imposed on China will also apply to goods from Hong Kong and Macau, closing potential evasion loopholes.

Canada and Mexico Exempt

Due to prior emergency actions on illicit drugs and migration, goods from Canada and Mexico are subject to distinct provisions:

Goods not qualifying under USMCA:

• 25% tariff, except energy and potash imports from Canada, which are subject to a 10% tariff.

If the emergency tariffs are suspended on Canada and Mexico:

• Non-originating goods will result in a 12% reciprocal tariff
• Exemptions remain will remain for energy, potash

U.S. Content Rule

To support U.S. production, the order includes a content-based rule:

• If 20% or more of an article’s value is U.S. content, then the tariff applies only to the non-U.S. portion.
• U.S. Customs and Border Protection (CBP) is authorized to collect documentation and verify compliance.

Foreign Trade Zones

Imported goods subject to the new tariffs and admitted into U.S. foreign trade zones after April 9, 2025 must be classified as “privileged foreign status,” locking in their tariff classification.

Low-Value Shipments and De Minimis Exemptions

• De minimis treatment under 19 U.S.C. § 1321(a)(2)(A)–(B) (gifts/personal goods) remains in effect.

• Section 1321(a)(2)(C) (low-value e-commerce imports) will remain exempt until Commerce notifies the President that adequate systems are in place for enforcement—after which, these imports may lose duty-free status.

Root Causes: Disparities in Global Trade

The order cites multiple systemic problems driving U.S. trade deficits, including:

• Non-reciprocal tariff structures: While the U.S. has one of the world’s lowest average MFN (Most-Favored-Nation) tariff rates at 3.3%, many trading partners impose significantly higher rates, including India (17%), Brazil (11.2%), China (7.5%), the EU (5%), and Vietnam (9.4%).

• Product-specific discrepancies:
  
  • Passenger vehicles: U.S. imposes 2.5%, but the EU imposes 10%, China 15%, and India 70%.
  • Apples: Duty-free in the U.S.; India (50%) and Turkey (60.3%) impose steep tariffs.
  • Ethanol: U.S. (2.5%) vs. Brazil (18%) and Indonesia (30%).
  • Network switches and routers: U.S. (0%) vs. India (10%).
  • Rice in the husk: U.S. (2.7% ad valorem equivalent) vs. India (80%), Malaysia (40%), Turkey (31% average).

• Non-tariff barriers: These include discriminatory licensing, burdensome technical standards, IP violations, barriers to digital trade, suppressed domestic consumption, and labor/environmental regulatory discrepancies.

These asymmetries, the order argues, have undermined U.S. manufacturing, innovation, and defense readiness.

The information presented is general in nature, and is not intended to constitute legal advice with respect to any event or occurrence, and may not be considered as such.​​ Information has been obtained from sources believed to be reliable. However, because of the possibility of human or mechanical error by our offices or by others, we do not guarantee the accuracy, adequacy, or completeness of any information and are not responsible for any errors, omissions, or for the results obtained from the use of such information.​ Due to the complexity of Customs Regulations, valuations are based on information currently available and should not be considered binding, we recommend obtaining National Customs Rulings in areas of uncertainty.​

How GHY Can Help?

GHY specializes in helping businesses navigate and reduce the impacts of tariffs through strategic solutions tailored to their needs. Our experts can audit your supply chain to identify inefficiencies, uncover cost-saving opportunities, and ensure compliance with evolving trade regulations. We also employ tariff engineering techniques to optimize product classification and sourcing strategies, minimizing duty exposure and maximizing profitability.

By partnering with GHY, your business gains access to the tools and expertise needed to streamline operations and stay competitive in a challenging trade environment.

Please contact your Client Care Manager or our Global Trade Services Team gts@ghy.com, or call +1 (800) 667-0771.