The American Lighting Association (ALA) sent out a good summary of last week’s tariff escalations by the Trump Administration.
President Trump is invoking his authority under the International Emergency Economic Powers Act of 1977 (IEEPA) to, as the White House puts it, “address the national emergency posed by the large and persistent trade deficit that is driven by the absence of reciprocity in our trade relationships and other harmful policies like currency manipulation and exorbitant value-added taxes (VAT) perpetuated by other countries.”
Using his IEEPA authority, President Trump will impose a 10% tariff on all countries. This took effect April 5, 2025 at 12:01 a.m. EDT. President Trump will also impose an individualized reciprocal higher tariff on the countries with which the United States has the largest trade deficits. All other countries will continue to be subject to the original 10% tariff baseline. This will take effect April 9, 2025 at 12:01 a.m. EDT.
These tariffs will remain in effect “until such a time as President Trump determines that the threat posed by the trade deficit and underlying nonreciprocal treatment is satisfied, resolved, or mitigated.”
The IEEPA Order also contains modification authority, allowing President Trump to increase the tariff if trading partners retaliate or decrease the tariffs if trading partners take significant steps to remedy non-reciprocal trade arrangements and align with the United States on economic and national security matters.
Reciprocal Tariffs will be “stacked” in addition to current duties
USTR has indicated that additional reciprocal tariffs will be “stacked” on top of tariffs already imposed. For products from China, this means that, effective April 9, those products will face a total increase of 54% since the beginning of the Trump Presidency (20% imposed already this year plus an additional 34% reciprocal tariffs). Even more recently the White House has suggested raising reciprocal tariffs on China to 130%. A list of reciprocal tariffs to take effect are outlined in the White House graphic below.
Additional Fine Print
Some goods will not be subject to the Reciprocal Tariff. These include:
- articles subject to 50 USC 1702(b);
- steel/aluminum articles and autos/auto parts already subject to Section 232 tariffs;
- copper, pharmaceuticals, semiconductors, and lumber articles;
- all articles that may become subject to future Section 232 tariffs;
- bullion;
- and energy and other certain minerals that are not available in the United States.
Regarding Canada and Mexico, USMCA-compliant goods 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. In the event the existing fentanyl/migration IEEPA orders are terminated, USMCA-compliant goods would continue to receive preferential treatment, while non-USMCA-compliant goods would be subject to a 12% reciprocal tariff.
De Minimis Loophole Closed (Again)
Along with the reciprocal tariff announcement, the White House announced that they will be closing the de minimis loophole. This loophole was closed in February and then reopened shortly after when US customs officials struggled to assess a growing build up of packages from China. The White House Fact sheet provides the following information:
- Imported goods sent through means other than the international postal network that are valued at or under $800 and that would otherwise qualify for the de minimis exemption will be subject to all applicable duties, which shall be paid in accordance with applicable entry and payment procedures.
- All relevant postal items containing goods that are sent through the international postal network that are valued at or under $800 and that would otherwise qualify for the de minimis exemption are subject to a duty rate of either 30% of their value or $25 per item (increasing to $50 per item after June 1, 2025).
- This is in lieu of any other duties, including those imposed by prior Orders. This will take effect May 2, 2025 at 12:01 a.m. EDT.
Stay Tuned
This remains a fluid situation, and it is entirely possible that some of these tariffs could be either negotiated down or increased in response to additional retaliatory tariffs from other countries in the coming days. The EU has reportedly prepared a series of resolutions that may escalate the situation shortly, and Friday China announced a 34% reciprocal tariff on all US goods.
China took further measures beyond the new blanket tariffs by also adding 11 US companies to the “unreliable entities list.” China’s Ministry of Commerce added 16 US companies to its “export control list” and announced it would impose export controls on seven types of rare earth items.
Image Above: Pixabay.com
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