Liberation Day Arrives
At a Rose Garden event earlier today, President Trump declared that “foreign trade and economic practices have created a national emergency” and announced reciprocal tariffs for almost all imports. Here is the full Executive Order (EO).
The President invoked his authority under the International Emergency Economic Powers Act of 1977 (IEEPA) to impose the tariffs. Starting on April 5, a 10% ad valorem tariff on all countries will go into effect. Starting April 9, President Trump will impose higher individualized reciprocal ad valorem tariffs on about 60 countries based on a calculation of bilateral trade deficits relative to exports to the U.S.
The full list of countries and applicable rates can be found in Annex I of the Executive Order. Here are some of the ad valorem rates imposed:
- China: 34%
- Cambodia: 49%
- EU: 20%
- India: 27%
- Japan: 24%
- Malaysia: 24%
- South Korea: 26%
- Taiwan: 32%
- Vietnam: 46%
President Trump highlighted that the level of reciprocal tariffs was half of what he considered a country’s unfair trade percentage, which appears to be a calculation of the ratio of each country’s overall trade surplus with the U.S. relative to its exports to the U.S., with a floor of 10% for nearly all countries. It appears the administration’s logic is to apply a tariff at a rate sufficient to collect revenue equal to one-half of the dollar value of the bilateral deficit in the trade of goods for a given country.
Canada and Mexico are not directly impacted by today’s reciprocal tariff actions. However, the existing fentanyl/migration IEEPA orders remain in effect for Canada and Mexico and the exemption for USMCA-compliant imports continues. Non-compliant goods continue to be subject to 25% tariffs (10% for energy and potash). If the Mexico and Canada IEEPA orders are terminated, then USMCA-compliant goods would still receive preferential treatment, but non-compliant goods will face a 12% reciprocal tariff.
Certain goods, including items under 50 USC 1702(b), Section 232 steel, aluminum, and auto tariffs, copper, pharmaceuticals, semiconductors, lumber, bullion, and essential minerals or energy not available in the U.S., will be exempt from the reciprocal tariff. Annex II contains the full list of the products exempted.
Imports admitted into a foreign trade zone on or after April 9, will be admitted as “privileged foreign status”.
Today’s announcements come after reports were due to the President from the United States Trade Representative (linked here), the Secretary of Commerce, and the Secretary of the Treasury on various trade issues, as outlined in the America First Trade Policy Memorandum.
The Michael Best Strategies team is monitoring these actions and will provide updates as more information is released.
Auto Tariffs In Effect Tomorrow
As our team covered last week, the President released a Presidential Proclamation imposing a 25% tariff on auto imports starting April 3 and on auto parts beginning May 3, with no duty drawback available. Automakers can reduce tariff liability on USMCA-qualifying vehicles by documenting U.S. content, but inaccuracies will trigger full retroactive tariffs. For auto parts under USMCA, the tariff is delayed until Commerce and CBP establish an enforcement process. An inclusion process for parts will be set up by June 24 and the list of impacted HTS codes can be found here.
Senate Approves Joint Resolution to End IEEPA Tariffs on Canadian Imports
This evening, the Senate approved a joint resolution to terminate the February 1, 2025, national emergency used to declare the 25% IEEPA tariffs on Canada. If the national emergency is terminated, then the tariffs on Canadian imports would end. Sens. Tim Kaine (D-VA), Amy Klobuchar (D-MN), and Mark Warner (D-VA) introduced the resolution. Democrats secured the support from Sens. Mitch McConnell (R-KY), Susan Collins (R-ME), Lisa Murkowski (R-AK), and Rand Paul (R-KY) to pass the resolution. McConnell's backing signals another break from the Trump Administration since stepping down as GOP leader. However, the House is unlikely to take up the measure, having already voted to effectively prevent the resolution from coming to the House floor. Even if it did receive a House vote and pass, it would still be subject to a presidential veto, needing a 2/3rds Congressional vote to override, making success extremely unlikely.
It is worth noting, however, that today’s announcement represents a separate emergency declaration, meaning Congress could try again to override today’s actions, and the House would once again have to proactively vote to avoid such a resolution, which may provide more difficult if it proves to be politically unpopular.
Executive Order Ending De Minimis Treatment for Chinese Imports
This evening, President Trump signed an EO ending de minimis treatment on Chinese and Hong Kong imports. The de minimis provision allows companies to import duty-free certain goods valued at $800 or less. On May 2, 2025, postal items valued at $800 or less will be subject to a 30% ad valorem tariff or $25 per item which will then increase to $50 after June 1, 2025. This EO follows an EO released in February that included similar provisions on de minimis but was later amended until the Department of Commerce could implement the necessary processes for inspections and tariff collections.
ICYMI: Key Players on Trade – Trump 2.0
View our previous alert on key players related to trade in the second Trump Administration here.
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Are you concerned about the impacts of the outlined trade issues? Please contact Sarah Helton, Michael Best Strategies’ Trade Practice Lead at sarah.helton@michaelbest.com for assistance.