Tariff-related developments have occurred almost every week since President Trump returned to office in late January. Those included announcements of tariffs, deferral of those tariffs, and even modifications of prior actions. Keeping track of the status of tariffs on individual goods has posed an early challenge, even if the overall trend toward greater import duties has been clear. The momentum from early actions culminated in new tariff announcements on April 2. This all sets the stage for the future of U.S. trade policy, which promises to be dramatically different from prior decades. Our experts review the actions of the Trump administration so far and consider the implications for the road ahead.
- The reordering of trade policy over the past decade
- Early actions from the Trump administration
- Escalation of tariffs on April 2
- Key questions about the road ahead
- What to do now?
The reordering of trade policy over the past decade
The expansion of tariffs on goods imported into the United States has been an important subject of discussion for at least eight years. After decades of policies supporting global trade with limited barriers, the first Trump administration imposed a range of targeted tariffs on goods from China, Canada, Mexico, and the European Union. That triggered responses from affected countries and spurred negotiations over mutual trade policies. For example, a new trade agreement was negotiated among the United States, Mexico, and Canada Agreement (USMCA) to replace the prior North American Free Trade Agreement (NAFTA). The Biden administration subsequently modified some tariffs but kept many others intact.
Trump has consistently promoted an expansion of tariffs as the new path forward for U.S. trade policy. Such actions were widely promised on the campaign trail leading to the 2024 election. Following the election, tariff-related discussions have continued to escalate.
Early actions from the Trump administration
The Trump administration completed numerous individual actions in pursuit of its trade policy goals since the January 20 inauguration. A review of those actions through March highlights a tariff framework that includes policy goals, country-specific actions, and product-specific actions.
Policy goals: Several executive orders are important when understanding the overall actions taken so far. These outline the goals (reduce trade deficits; eliminate barriers to exports) as well as the means.
- The conceptual framework: The foundation upon which key tariff actions rest is outlined in an America First Trade Policy memorandum. That was issued on Inauguration Day and directs the federal government to identify measures to reduce trade deficits, eliminate barriers that are considered unfair, and restrict trade that’s considered a threat to national security. These are primarily referred to as Section 232 tariffs under the Trade Expansion Act of 1962.
- Reciprocal tariffs: One aspect of the policy memorandum is the concept of trade barriers that are considered unfair. Pursuing that subject, Trump directed the Secretary of Commerce and the U.S. Trade Representative to propose reciprocal tariffs to be levied on a country-by-country basis. For this purpose, unfair trade barriers go beyond tariffs to include taxes, regulations, or any other policies of foreign governments that serve to undermine the competitiveness of U.S. companies. The initial rates were determined by a standard formula targeting a tariff rate to close the trade gap.
- Compounding tariffs: Most of the early actions from the Trump administration focused on the imposition of tariffs on imports from one country or on a specific type of good. However, another recent development involves the amplification of tariffs on one country due to its trade with another country. Specifically, a March 24 order imposes a 25% tariff on all goods imported from any country that imports oil from Venezuela, whether directly or indirectly, authorized on April 2. This tariff would apply in addition to all other tariffs, so it would further amplify existing tariffs, where applicable. The challenge for companies is that these declarations aren’t applied consistently, and in the case of the Venezuelan oil example, applicable at a future date by the Commerce Secretary. Companies must continually validate that they are applying the correct tariff rates.
Country-specific actions: Countries that were the focus of tariffs during the first Trump administration have again been identified for action in 2025. This initial list, which focused on the declared national emergency related to fentanyl drug imports, will then be expanded by subsequent actions beginning on April 2 focused on the bilateral trade deficits.
- Canada: Tariffs on goods imported from Canada have been the subject of considerable attention and change in a short period of time. An order from February 1 would have imposed a 25% tariff on goods imported from Canada beginning on February 4. However, the United States agreed to delay the tariffs until March 4 following additional negotiations. Those duties were amended in early March, but the core 25% tariffs have taken effect.
- Mexico: Tariffs on Mexican goods have involved a similar story as Canadian goods. The initial order imposing tariffs as of February 4 was then paused until early March. After passage of March 4, those tariffs are now in effect, albeit in a slightly modified form following an amendment order from March 6 in early March.
- China: Trump announced a 10% tariff on all goods imported from China beginning on February 4. That order was subsequently amended on February 5 with respect to duty-free de minimis imports. An amending order from March 3 increased the tariff rate to 20%. Tariffs on Chinese imports were further amended on April 2 to essentially to 125% beginning on April 10. However, certain products remain under original 2018 Section 301 tariffs of 0%, 7.5%, or 25%.
Actions specific to goods: Trump has also focused on individual types of materials and products.
- Automobiles: Tariffs on automobiles have been a particular area of attention for Trump. The automotive supply chain also involves considerable integration among the United States, Mexico, and Canada, so additional consideration would be warranted. An order from March 26 established the framework for automotive tariffs moving forward. Namely, a 25% tariff would be imposed on imports of passenger vehicles and light trucks beginning on April 3. These tariffs were justified by a Section 232 provision protecting U.S. national security. However, vehicles that are USMCA-compliant wouldn’t be subjected to such tariff.
- Steel and aluminum: Trump imposed a 25% tariff on steel and a 10% tariff on aluminum during his first term in office, but exemptions were added over time. Amplifying this approach, Trump ordered a 25% tariff, without exemption, on all imports of both steel and aluminum. These tariffs were justified by a Section 232 provision protecting U.S. national security. The effective dates for such tariffs varied but would be fully implemented by the beginning of April. These tariffs were accompanied with a list of derivatives incurring the 25% tariff unless companies could verify that the steel/aluminum were sourced in the United States. This prevents steel/aluminum coming in through these specific products.
- Copper: An order from February 25 focusing on copper is different from earlier actions in that it does not directly impose tariffs. Rather, it directs Commerce Secretary Lutnick and others to evaluate national security risks associated with copper imports and recommend actions to mitigate such risks and strengthen the U.S. copper supply chain.
- Timber and lumber: Similar to copper, Trump announced an investigation into timber, lumber, and derivative products to evaluate the national security effects of such imports. A contemporaneous order directed the expansion of American timber production.
- Electronics: The administration issued a memorandum on April 11, 2025, to clarify the exemption of semiconductors from the April 2, 2025, reciprocal tariff executive order. This memorandum explicitly exempted 20 HTSUS codes that include such products as equipment to manufacture semiconductors and wafers, flat-panel displays, smartphones, and other related consumer and industrial products. This exemption applies to all countries, including China.
Escalation of tariffs on April 2
The beginning of April was identified as a key moment for tariffs at the outset of the Trump administration. Specifically, April 1 was identified as the due date for initial reports directed by the America First Trade Policy. Subsequent actions coalesced around reports being due April 1, with the expectation of action to be taken on April 2. Trump further amplified the significance of that date through comments in recent weeks.
Trump signed a new executive order, “Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits,” on April 2. Details of that order are also highlighted in a recent article. This carried through on prior promises to impose tariffs in response to the trade practices of other nations. Based on the order, all articles imported into the United States will be subject to a 10% ad valorem duty, which became effective on April 5. Furthermore, beginning on April 9, all goods imported from the countries identified in Annex-1 of the order are subject to an additional ad valorem rate outlined by country. These additional tariffs range from 11% for the Democratic Republic of the Congo to 49% from Cambodia. Annex-III of the order provides additional details about the implementation of such duties. Trump also provided an exemption from the reciprocal tariffs for goods included in Annex-II of the order. Companies need to verify that such goods are not otherwise subject to tariffs based on other orders from the administration.
Tariffs imposed by Trump have continually evolved and the April 2 reciprocal tariffs are no exception. Shortly after implementation, an amendment was ordered with respect to goods from China. More significantly, the reciprocal tariffs were modified on April 9 through a new order. Those modifications include a 90-day pause on the enhanced reciprocal tariffs with respect to countries other than China. That pause will last until July 9, and a 10% ad valorem duty will instead apply during that time. The order also substantially increased the tariff on goods imported from China, with a 125% rate taking effect on April 10.
The tariffs announced on April 2 caused significant reactions despite their rollout being telegraphed for weeks and months. The most immediate response came from the stock market, as investors sought to factor in the impact of tariffs. Members of Congress have also expressed varying views on the scale of the actions taken, specific details of tariffs, and the expected consequences. The April 9 modifications provide some degree of relief in the form of additional time and the prospect of further changes that might be negotiated. More broadly, the cumulative effect of tariffs is just beginning to be felt, as businesses seek clarity on the details of tariffs and revisit their long-term planning.
Key questions about the road ahead
The first quarter of 2025 was chaotic, with many trade developments occurring over a short period of time. A key lesson from that period is that the Trump administration is carrying through on its promises to dramatically reorder U.S. trade policy through the imposition of tariffs. So, in short, the road ahead is expected to involve continued tariffs across a wide swath of imported goods from many different countries. However, key questions remain about the pace of change that might be expected and how businesses can adapt.
- What will be the pace of change? Fundamentally, businesses are faced with a question about the degree of turbulence that might be expected moving forward. Business planning involves short-, medium-, and long-term considerations. Short-term planning may accommodate fluctuating tariffs, but medium- and long-term planning is incredibly difficult depending on the extent to which details will change in material respects. Tariffs on Canada and Mexico provide a useful illustration since those were initially announced, paused due to negotiations, and then reinstated in slightly modified form. Will those continue to be altered on some cadence, or will the existing tariffs remain in place without interruption?
- Will further compounding tariffs be announced? The amplification of tariffs on countries importing oil from Venezuela is an early test case in compounding tariffs. It’s not yet known if the Trump administration will pursue further goals in this manner. If this type of tariff becomes more common, then it will challenge businesses due to added complexity. It was encouraging that the Section 232 tariff provisions were excluded from the reciprocal tariff initiatives.
- How frequently will exemptions be negotiated? Trump has hinted at potential exemptions from tariffs when offering public comments in recent weeks. However, it’s unknown how frequently, and under what circumstances, such exemptions might be provided. Lobbying from industries and business organizations may play a role in this respect. In addition, negotiations during the declared 90-day extension on reciprocal tariffs with specific countries will likely be key to the creation of exemptions. Clarity on this process might be important to long-term planning.
- Will economic changes alter tariff policies? The imposition of tariffs is expected to impact the U.S. economy in multiple ways over the coming months and years. If those include negative impacts, such as reduced economic growth or increased inflation, then changes to tariffs could be considered. However, at this point, there is no indication of what factors would cause any changes.
- How will foreign governments respond? Many of the actions taken by the Trump administration have been framed in terms of a response to barriers imposed by others. In that sense, the tariffs imposed by the United States are reciprocal in nature. Foreign governments may well view the situation differently and, in turn, respond to the new tariffs and import or export restrictions with their own retaliatory actions.
What to do now?
Businesses of all types are facing a dramatically different trade landscape given the escalation of tariffs that are now in effect or are expected in the future. This applies most directly to those importing products and exporting products through cross-border sales. However, this also extends to businesses that rely on goods imported by others and those that produce components that are sold abroad by others. Businesses need to carefully monitor non-U.S. tariff and trade restriction responses. In response, businesses may consider the following actions:
- Assess the impact of tariffs on your business. Determine your organization’s financial exposure to tariff impacts on finished goods, components, and raw materials imported into the U.S. market.
- Determine ways to reduce tariff exposure. Analyze the potential benefits and risks involved with various impact reduction methods like transfer pricing, reshoring, and alternate supplier sourcing.
- Optimize transfer pricing strategy. Review and reevaluate transfer pricing policies to manage the impact on tariffs on intercompany cross-border transactions.
- Uncover opportunities for tariff recovery. Identify opportunities to recover some of the financial burden from the imposed tariffs via customers and other means, as well as recovering through additional cost reduction ideas.
Looking for additional guidance and strategies to help assess, reduce, and recover from the financial impacts of tariff and trade policy? Learn how our international trade consulting leaders can help.
