The Federal Register published President Trump’s April 2, 2025 EO 14257 on “Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits,” declaring a national emergency pursuant to the International Emergency Economic Powers Act of 1977 (IEEPA) based on a finding by the President that “underlying conditions, including a lack of reciprocity in our bilateral trade relationships, disparate tariff rates and non-tariff barriers, and U.S. trading partners’ economic policies that suppress domestic wages and consumption, as indicated by large and persistent annual U.S. goods trade deficits, constitute an unusual and extraordinary threat to the national security and economy of the United States.” The White House also issued an associated fact sheet on EO 14257.
- Background
In response to this emergency, and to “rebalance global trade flows,” EO 14257 imposes an additional 10 percent tariff on all imports from all countries effective as of 12:01am ET on April 5, 2025. Moreover, EO 14257 also provides that certain countries will be subject to a higher additional tariff rate as detailed in Annex 1 of EO 14257 effective beginning 12:01am ET on April 9, 2025.
These tariffs will be implemented in addition to any other duties, fees, taxes, exactions, or charges applicable to such imported goods. Moreover, the additional tariff rates established by EO 14257 only apply to the non-U.S. content of an imported good, but only if the U.S. content of such good accounts for at least 20 percent of its value. For purposes of EO 14257, “U.S. content” refers to “the value of an article attributable to the components produced entirely, or substantially transformed in, the United States.”
- Exceptions under EO 14257
Under EO 14257, goods imported from Canada and Mexico are not subject to the new 10 percent tariff or country-specific tariff rates in Annex 1 of EO 14257. However, the existing tariff orders on Canada and Mexico grounded in IEEPA emergencies arising from fentanyl and migration remain in effect and are unaffected by EO 14257. As a result, USMCA compliant goods from Canada and Mexico “will continue to see a 0% tariff, non-USMCA compliant goods will see a 25% tariff, and non-USMCA compliant energy and potash will see a 10% tariff.” The White House notes that in the event that the existing IEEPA tariffs based on fentanyl and migration are terminated, USMCA compliant goods from Canada and Mexico “would continue to receive preferential treatment, while non-USMCA compliant goods would be subject to a 12% reciprocal tariff.”
Beyond the exceptions for Canada and Mexico discussed above, the new 10 percent tariff and the additional country-specific tariffs established in Annex 1 also do not apply to the following: (1) all articles and derivatives of steel and aluminum subject to the duties imposed pursuant to section 232 of the Trade Expansion Act of 1962 and included in President Trump’s Proclamation 10895 of February 10, 2025 Adjusting Imports of Aluminum Into the United States, and Proclamation 10896 of February 10, 2025 Adjusting Imports of Steel into the United States; (2) all automobiles and automotive parts subject to the additional duties imposed pursuant to section 232 of the Trade Expansion Act of 1962 included in President Trump’s Proclamation 10908 of March 26, 2025 Adjusting Imports of Automobiles and Automobile Parts Into the United States; (3) products listed in the 37-page Annex 2 of EO 14257, including (among others) copper, pharmaceuticals, semiconductors, lumber articles, certain critical minerals, and an array of energy products and their derivatives; (4) all goods from countries with which the United States does not maintain normal trade relations (i.e., Russia, Belarus, North Korea and Cuba); and (5) all articles listed in 50 U.S.C. 1702(b), which covers informational materials, humanitarian donations, and travelers’ baggage.
Moreover, goods subject to EO 14257 will still be eligible for the de minimis exemption for low-value shipments – which allows goods valued at $800 or less to enter the country using an informal entry procedure that is less burdensome and complex and without paying duties or certain taxes – until notification by the Secretary of Commerce to the President that adequate systems are in place to “fully and expeditiously” process and collect duty revenue from such goods. Note however, that goods subject to President Trump’s April 2, 2025 EO 14256 on “Further Amendment to Duties Addressing the Synthetic Opioid Supply Chain in the People’s Republic of China as Applied to Low-Value Imports” – which closes the de minimis exemption for goods from China and Hong Kong – are not impacted by EO 14257 and that the de minimis exemption remains unavailable for goods from China and Hong Kong.
- Tariff Modifications
Notably, EO 14257 provides a “modification authority” under which the Secretary of Commerce and the United States Trade Representative – in consultation with the Secretary of State, the Secretary of the Treasury, the Secretary of Homeland Security, the Assistant to the President for Economic Policy, the Senior Counselor for Trade and Manufacturing, and the Assistant to the President for National Security Affairs – may recommend to the President additional action, if necessary, if the implementation of these reciprocal tariffs “is not effective in resolving the emergency conditions” under this order.
Finally, EO 14257 gives President Trump absolute discretion to further modify tariff rates and categories for all merchandise imported into the United States if any of the following occurs: (1) any trading partner retaliates against the United States in response to this action through import duties on U.S. exports or other measures; (2) any trading partner takes significant steps to remedy non-reciprocal trade arrangements and align sufficiently with the United States on economic and national security matters; or (3) U.S. manufacturing capacity and output “continue to worsen.”