On July 31, 2025, President Donald Trump signed an executive order modifying the reciprocal tariff rates for certain countries that have goods trade deficits with the United States (the "Tariff Executive Order"). The Tariff Executive Order maintains a baseline 10 percent tariff for imports from all countries and increases tariffs to levels ranging from 15 percent to 41 percent for nearly 70 countries that are identified in Annex I to the Executive Order. The modified tariff rates are effective on August 7, 2025 for most imports (with exceptions for certain goods that were on the water prior to August 7 that enter the United States before October 5, 2025).
The Executive Order builds upon President Trump's April 2, 2025 announcement of a reciprocal tariff regime and follows several months of bilateral trade negotiations. According to the Tariff Executive Order, the United States has pursued discussions with a wide range of trading partners, resulting in mixed outcomes:
- Some countries have either concluded, or are close to concluding, meaningful trade and security agreements with the United States.
- Others, while having participated in negotiations, have not offered terms the President deems sufficient to correct trade imbalances or align with U.S. national security priorities.
- Certain countries did not engage in negotiations at all.
Consequently, the Tariff Executive Order imposes higher, country-specific tariff rates on those countries that have not reached acceptable trading terms. These rates will remain in place until bilateral agreements are concluded and the President issues new orders to implement those agreements.
In addition, on July 30, 2025, President Trump signed an executive order eliminating the duty-free de minimis exemption for imports from all countries valued at or under $800 (the "De Minimis Executive Order") (with a temporary exception for imports effectuated through the postal service).
The key details of the tariffs are as follows:
Tariff Rates:
Country-Specific Tariffs: The Tariff Executive Order establishes specific ad valorem tariff rates for imports from nearly 70 countries. These rates vary widely, from a low of 10 percent to a high of 41 percent, and are listed in Annex I to the executive order. The rates were determined based on the status of ongoing trade negotiations, with some countries receiving higher rates for failing to sufficiently address the administration's trade concerns.
Baseline Tariff: Imports from any country not specifically listed in Annex I to the Tariff Executive Order are subject to a 10 percent ad valorem baseline tariff. This baseline tariff applies in addition to any existing Most Favored Nation ("MFN") duties as set forth in column 1 to the Harmonized Tariff Schedule of the United States.
European Union: Under a recently announced trade deal with the European Union, the reciprocal tariff rate of 15 percent is inclusive of the MFN duty rate applicable to each imported product. For example, if a product's normal duty rate is 5 percent, an additional 10 percent reciprocal tariff will apply to bring the overall rate to 15 percent. For those products with a MFN duty rate of greater than 15 percent, only the MFN duty rate—and no reciprocal tariffs—will apply.
Brazil: With respect to imports from Brazil, a separate executive order issued on July 30, 2025 imposes an additional 40 percent tariff on most products, which is stacked on top of the 10 percent reciprocal tariff for an aggregate rate of 50 percent for most Brazilian imports.
Savings Clause:
The tariffs announced in the Tariff Executive Order will apply to all goods that are entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on August 7, 2025. However, goods that are loaded onto a vessel at the port of loading and in transit on the final mode of transit before this date and that are entered for consumption, or withdrawn from warehouse for consumption, before October 5, 2025, are not subject to the additional tariffs.
Exceptions:
The Tariff Executive Order maintains the exceptions set forth in the original reciprocal tariff executive order, including the following:
- Imports from Canada and Mexico will continue to be subject to a separate tariff regime for these countries;
- Steel and aluminum products that are subject to Section 232 tariffs;
- Copper products that are subject to Section 232 tariffs;
- Automobiles and automotive parts that are subject to Section 232 tariffs;
- Goods that become subject to Section 232 tariffs in the future;
- Goods identified in Annex II to the original executive order, including pharmaceuticals, semiconductors, lumber articles, certain critical minerals, and energy and energy products; and
- Imports from Cuba, North Korea, Russia, and Belarus will continue to be subject to their separate tariff rates1.
Notably, there is no process noted for requesting an exemption from the tariffs.
Canada, Mexico, and China:
The Tariff Executive Order does not apply to Canada, Mexico, and China, which remain subject to separate tariff frameworks. With respect to Canada, President Trump signed an executive order concurrent with his signing of the Tariff Executive Order that increases the tariff rate on Canadian imports from 25 percent to 35 percent, effective as of August 1, 2025. Notably, all products treated as originating goods under the United States-Mexico-Canada Agreement ("USMCA") continue to be exempt from the tariffs.
With respect to Mexico, President Trump announced on July 31, 2025 a 90-day pause on any additional tariffs for Mexican imports. As a result, imports from Mexico will continue to be subject to a 25 percent tariff, except for those that are eligible for tariff-free treatment under the USMCA.
Negotiations with China continue to proceed on a separate track. Under Executive Order 14298, which was issued on May 12, 2025, Chinese goods are subject to a 10 percent reciprocal tariff rate until August 12, 2025, at which time they are scheduled to revert back to significantly higher levels. Notably, the reciprocal tariff rate applies in addition to a 20 percent tariff on Chinese imports for China's alleged failure to adequately curb the export of opioids into the United States. There have been discussions to extend China's reciprocal tariff pause beyond its August 12, 2025 deadline, though no such extension has yet been announced.
Transshipment:
The Tariff Executive Order establishes enhanced penalties for transshipped goods – i.e., goods declared to have originated in a given country even though they actually originated in a different country. Under the order, goods found by U.S. Customs and Border Protection ("CBP") to be transshipped will be subject to a 40 percent additional ad valorem duty, in lieu of the applicable reciprocal tariff rate. To support enforcement, the Secretary of Commerce and the Secretary of Homeland Security, in consultation with the U.S. Trade Representative, are required to publish a list every six months identifying countries, entities, and specific facilities that are involved in transshipment or other tariff circumvention schemes.
Elimination of De Minimis Exemption for All Imports:
On July 30, 2025, President Trump signed the De Minimis Executive Order, which eliminates the duty-free de minimis exemption for shipments from all countries valued at or under $800. Under the De Minimis Executive Order, all goods that are shipped through the international postal network are subject to either:
- A tariff equal to the effective reciprocal tariff rate applicable to the country of origin of the product, or
- A flat rate of $80 per item for countries with an effective reciprocal tariff rate of less than 16 percent, $160 per item for countries with a rate between 16 and 25 percent, or $200 per item for countries with a rate above 25 percent.
The De Minimis Executive Order applies to all goods entered for consumption on or after 12:01 a.m. eastern daylight time on August 29, 2025.
Actionable Guidance for Businesses:
To navigate the new reciprocal tariffs and the elimination of the de minimis exemption, businesses should proactively take steps to ensure compliance and manage costs.
- Assess Your Supply Chain and Tariff Exposure
- Identify Origin Countries: Review your product sourcing to identify imports from the nearly 70 countries listed in Annex I to the Tariff Executive Order.
- Determine Your New Tariff Rates: Calculate the applicable tariff rates for your imports, ranging from 15 percent to 41 percent for countries in Annex I. Note that a 10 percent baseline tariff will apply to imports from countries not on the list.
- Apply Country-Specific Rules:
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- European Union: A reciprocal tariff rate of 15 percent is inclusive of the normal duty rate.
- Brazil: An aggregate rate of 50 percent will be applied, which includes a 40 percent additional tariff and a 10 percent reciprocal tariff.
- Adapt to the New De Minimis
Rules
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- Adjust for All Shipments: Prepare to calculate and pay duties on all shipments, regardless of value, as the duty-free de minimis exemption has been eliminated for all countries. This change is effective August 29, 2025.
- Calculate New Flat Rates: Be prepared to apply either the effective reciprocal tariff rate for the country of origin or a flat rate of $80, $160, or $200 per item on goods shipped through the international postal network.
- Enhance Customs and Compliance Procedures
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- Vigilance Against Transshipment: Be aware that enhanced penalties are now in effect for transshipment, or shipping goods through an intermediary country to obscure their true origin. Goods found to be transshipped will be subject to a 40 percent additional ad valorem duty.
- Verify Documentation: Implement robust due diligence procedures to ensure all import documentation, including country of origin information, is accurate and complete to avoid penalties.
- Monitor Government Lists: Proactively monitor the list published every six months by the Secretary of Commerce and the Secretary of Homeland Security, which identifies countries, entities, and facilities involved in transshipment.
- Manage In-Transit Shipments
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- Prioritize for the Grace Period: Check your shipping records for any goods that were loaded onto a vessel at the port of loading and in transit before August 7, 2025.
- Meet the Final Deadline: To be exempt from the new additional tariffs, these qualifying shipments must be entered for consumption before October 5, 2025.
- Stay Informed on Ongoing Negotiations
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- Monitor China's Situation: The current 10 percent reciprocal tariff rate for China is set to revert to significantly higher levels on August 12, 2025. There has been no announced extension.
- Keep an Eye on Mexico: The 90-day pause on additional tariffs for Mexican imports announced on July 31, 2025, is a temporary measure. Monitor for updates as this pause nears its end.
Footnote
1 Notably, Cuba and North Korea are subject to comprehensive sanctions such that there is an embargo on imports from these countries.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
