President Trump signed an executive order (EO) “Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits.” The EO implements across-the-board 10% tariffs on all imported goods and reciprocal tariffs on some 60 nations with the largest trade imbalances with the U.S. equal to half of what they are levying on U.S. goods. A White House fact sheet on the EO is available here and the U.S. Trade Representative posted an explanation of the methodology used to calculate the reciprocal tariff rates for individual countries that explains they are intended to zero out persistent trade imbalances.
Stock market indexes plummeted 4% to 6% on Thursday in response to the tariff announcement and The Wall Street Journal is warning that this market upheaval could be “just the beginning” and investors “should expect much bigger falls in stocks and bond yields.” Trump, however, doubled down on his tariffs, saying implementation is “going very well.” The White House also posted a “What They’re Saying” document highlighting supportive statements for the President’s tariff policies from members of Congress and numerous trade association leaders.
Canada and Mexico are not covered by the new 10% global tariff or the new reciprocal tariffs but continue to face the tariffs President Trump previously imposed on these nations. The President also exempted certain products from his new global and reciprocal tariffs, including: (1) energy and other minerals that are not available in the United States; (2) steel and aluminum articles; (3) automobiles and auto parts already subject to Section 232 tariffs; (4) copper; (5) pharmaceuticals; (6) semiconductors; and (7) lumber articles; (8) all articles that may become subject to future Section 232 tariffs; and (9) bullion.
Democrats and some experts say Trump’s newest round of tariffs will threaten yearslong, bipartisan efforts to shore up the U.S. supply chain, particularly for critical minerals and materials that are used to produce various military technologies such as ships, aircraft, and missile components. The White House also confirmed that President Trump’s previously announced 25% auto tariffs took effect on Thursday, April 3, 2025 and that duties on automotive part imports will be launched on May 3, 2025. In the Federal Register notice detailing the auto tariffs, the Commerce Department is directed to establish a process within 90 days for adding more parts to the list, including parts request by domestic producers.