by Lauren Mandell, David J. Ross, Neena Shenai, Rhonda K. Schmidtlein, Heather E. Hedges, and Mark Kim

On April 2, 2025, President Donald Trump issued an executive order (the Reciprocal Tariffs Executive Order or Executive Order) announcing a 10% baseline reciprocal tariff on nearly all U.S. trading partners, effective April 5, and an additional reciprocal tariff on 57 countries, effective April 9. Seven of the United States’ top ten trading partners are among the 57 countries the Order states will face an additional reciprocal tariff: 34% for China (including the baseline tariff and the additional tariff), 20% for the European Union, 46% for Vietnam, 32% for Taiwan, 24% for Japan, 27% for India, and 26% for South Korea. Other than exemptions for duties imposed pursuant to Section 232 actions and for certain enumerated products, the tariffs are additive.

However, on April 10, the President suspended country-specific reciprocal tariff for all countries except China for a period of 90 days, until July 8, 2025.  On the same day, after days of escalation, the President increased the Chinese reciprocal tariff to 125%.

On April 11, the President excluded from the reciprocal tariffs a host of electronics, including smartphones, laptops, televisions.  This relief appears to be temporary because on April 14, the U.S. Commerce Department announced new Section 232 investigations of semiconductors, as well as pharmaceuticals, that could result in tariffs.

Background

On February 13, 2025, President Trump issued an executive memorandum titled “Reciprocal Trade and Tariffs” (the Reciprocal Trade Memorandum). The Memorandum stated that the Trump Administration would introduce the “Fair and Reciprocal Plan” to reduce the large trade deficit in goods and address unfair and unbalanced trade with trading partners.

The Reciprocal Trade Memorandum provided that the Trump Administration would determine the reciprocal tariff rate by assessing each country’s “non-reciprocal trade arrangement,” which was broadly defined to include tariffs; unfair, discriminatory, or extraterritorial taxes, including value-added taxes; nontariff barriers, including subsidies and burdensome regulatory requirements in foreign markets; exchange rate policies; and any other practice that is judged to impose an unfair limitation on market access or any structural impediment to fair competition with the United States.

On April 2, President Trump announced a 10% across-the-board tariff on all countries and an individualized, higher tariff on countries with which the United States has large trade deficits. According to President Trump, the tariff rates were calculated based on an assessment of “approximately half of what they are and have been charging us,” or one-half of the tariffs and nontariff barriers (including currency manipulation) that the Administration believes each country maintains with respect to the United States.

Following the announcement, the Office of the U.S. Trade Representative (USTR) provided further detail on the tariff rate calculations. Per this guidance, the change in tariff rate that “results in a bilateral trade balance of zero” was calculated by dividing the U.S. trade deficit with a given country by the product of that country’s total imports to the United States, price elasticity of import demand (ε), and the pass-through from tariffs to import prices (φ). Based on the parameter values selected (ε = 4 and φ = 0.25), the equation can be simplified to the trade deficit with a given country divided by that country’s total imports to the United States.

Annex I of the Reciprocal Tariffs Executive Order, included below, provides the country-specific reciprocal tariff rates (inclusive of the 10% baseline duty). Conforming changes to the Harmonized Tariff Schedule are reflected in Annex III. We note that, as of April 3, these rates have been slightly revised from those released immediately following President Trump’s announcement. 

“Stackable” Duties

The reciprocal tariffs are additive, meaning that they apply in addition to most existing tariffs – including, with respect to China, Section 301 duties and duties recently imposed under the fentanyl/migration orders pursuant to the International Emergency Economic Powers Act (IEEPA). The Executive Order provides that “the rates of duty established by this order are in addition to any other duties, fees, taxes, exactions, or charges, applicable to such imported articles.” 

U.S. Content Stepdown

The reciprocal tariffs are levied only on an article’s non-U.S. content provided that at least 20% of the article’s value is U.S.-originating. “U.S. content” is defined as “the value of an article attributable to the components produced entirely, or substantially transformed in, the United States.” The Executive Order directs U.S. Customs and Border Protection (CBP) to verify and ascertain an article’s U.S. content value and substantial transformation in the United States. This provision would give companies the opportunity to seek lower reciprocal tariff duties when importing a product that is partially U.S.-originating.

Duties on Canada and Mexico

The Reciprocal Tariffs Executive Order indicates that the prior fentanyl/migration IEEPA orders remain in effect, and the new reciprocal tariffs do not apply to Canada or Mexico for the time being. Specifically:

• The rate of duty for USMCA-originating goods will be 0%.
• The rate of duty for non-USMCA-originating goods will continue to be 25%.
• The rate of duty for non-USMCA-originating energy or energy resources and potash imported from Canada will be 10%.

Additionally, duties for USMCA-originating goods and non-USMCA-originating goods will be 0% and 12%, respectively, in the event that the previous executive orders imposing tariffs on Canada and Mexico are terminated.

Excluded Products and Modification

Section 3(b) and Annex II of the Reciprocal Tariffs Executive Order set forth certain categories of goods that will not be subject to the reciprocal tariffs:

• All articles under 50 U.S.C. 1702(b) that are subject to IEEPA’s exceptions:
  • postal, telegraphic, telephonic, or other personal communication that does not involve a transfer of anything of value
  • donations, by persons subject to the jurisdiction of the United States, of articles, such as food, clothing, and medicine, intended to be used to relieve human suffering (with exceptions)
  • information or informational materials, including but not limited to publications, films, posters, phonograph records, photographs, microfilms, microfiche, tapes, compact disks, CD-ROMs, artworks, and news wire feeds (with certain exemptions)
  • accompanied baggage for personal use and acquisition of goods or services for personal use
• All articles and derivatives of steel and aluminum subject to the Section 232 duties pursuant to Proclamations 9704, 9705, 9980, 10895, and 10896, as amended
• All automobiles and automotive parts subject to the Section 232 duties pursuant to Proclamation 10908
• Copper, pharmaceuticals, semiconductors, lumber articles, certain critical minerals, and energy and energy products
• All articles from a trading partner subject to the rates provided in Column 2 of the Harmonized Tariff Schedule of the United States (HTSUS) (g., Russia, North Korea)
• All articles that may become subject to duties pursuant to future Section 232 actions

Additionally, the Executive Order specifies scenarios in which the President may modify the reciprocal tariffs:

• The Secretary of Commerce and USTR may recommend additional action if the reciprocal tariffs are not effective in resolving the overall trade deficit or the U.S. trading partners’ nonreciprocal trade arrangements.
• If any trading partner retaliates against the reciprocal tariffs (through duties on U.S. exports or other measures), the President may modify the HTSUS to increase or expand the scope of the duties.
• If any trading partner takes “significant steps” to address nonreciprocal trade agreements and “align sufficiently with the United States on economic and national security matters,” the President may modify the HTSUS to decrease or limit the scope of the duties.
• If U.S. manufacturing capacity and output worsen, the President may modify the HTSUS to increase duties.

The Executive Order does not provide for an exclusion process. 

Legal Authority

President Trump used IEEPA as the legal authority to impose the reciprocal tariffs, describing “large and persistent annual U.S. goods trade deficits” as a national emergency. IEEPA is a national security statute that has historically been used as the legal authority for imposing U.S. sanctions, among other things. This is the second tariff action that President Trump has initiated based on IEEPA. The first action – and the first time ever that IEEPA was used for tariffs – was the President’s decision to impose tariffs on Canada, Mexico, and China, citing their failures to address immigration and fentanyl.

Hours after the President announced the reciprocal tariffs, the U.S. Senate passed a joint resolution that would block the tariffs on Canada by terminating the national emergency that President Trump invoked to justify the tariffs. Although it is highly unlikely that the joint resolution will pass in the House of Representatives (given that the House has changed its rules to preclude a vote on such a measure), the bipartisan support for the resolution in the Senate – with four Republican senators voting “yea” – signals potential uncertainty in the future political dynamics between Congress and the President on the Administration’s trade and tariff policy.

Suspension of Most Reciprocal Tariffs

On April 10, the President suspended the country-specific reciprocal tariff for all countries except China for a period of 90 days, until July 8, 2025. As a result, all countries other than China, Canada, Mexico and “Column 2” countries such as Russia and North Korea will be subject only to the 10% baseline tariff for the time being.

Escalation with China 

The United States and China have engaged in a cycle of retaliation and counter-retaliation in the week since the President imposed the initial reciprocal tariff. Specifically:

• On April 4, China responded to President Trump’s initial action by announcing a 34% tariff on all imported goods originating from the United States.
• On April 8, President Trump responded to China’s action by increasing the reciprocal tariff on Chinese goods to 84%, effective April 9.
• On April 9, China responded again, raising the tariff on US goods to 84%, effective April 10.
• On April 9, President Trump countered China’s action by increasing the reciprocal tariff on Chinese goods to 125%, effective April 10.
• On April 11, China responded again, raising the tariff on US goods to 125%, effective April 12.

Because the U.S. tariffs are additive, the total tariff on some Chinese imports is significantly higher than 125%.  For example, lithium-ion electrical vehicle batteries imported from China are now subject to 173.4% tariffs, which includes the 125% reciprocal tariff, 20% fentanyl/migration tariff, 25% Section 301 tariff, and a 3.4% ordinary customs duty.

Electronics and Pharmaceuticals 

On April 11, the President excluded from the reciprocal tariffs a host of electronics, including smartphones, laptops, televisions.  The President explained on Truth Social on April 13 that this was not a tariff “exception”; rather, these products “are just moving to a different Tariff ‘bucket.’”  On April 14, the U.S. Commerce Department followed suit by announcing investigations of imports of semiconductors as well as pharmaceuticals.  These investigations, following an investigation of no more than 270 days, could result in a separate tariff on these products.     

90 Days of Negotiations? 

According to the Trump Administration, more than 75 countries have reached out to negotiate with the United States on trade. Kevin Hassett, the Director of the National Economic Council in the White House, said that 15 of these countries have made “explicit offers.” Mr. Hassett added that the Administration is setting up “a very orderly process” to prioritize negotiations with certain countries, though he did not describe the process or name the countries. 

Lauren Mandell, David J. Ross, Neena Shenai and Rhonda K. Schmidtlein are Partners, Heather E. Hedges is a Senior Associate, and Mark Kim is an Associate at Wilmer Cutler Pickering Hale and Dorr LLP. This post first appeared on the firm’s blog. 

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