Trump Imposes Global Tariffs with “Reciprocal” Tariffs for 57 Countries
Trump cites trade deficits as an “unusual and extraordinary threat.”
On April 2, 2025, President Donald Trump issued an executive order imposing a 10% global tariff on all imports into the United States, effective April 5, 2025, along with higher country-specific “reciprocal tariffs,” effective April 9, 2025. The reciprocal tariffs target the 57 countries listed in Annex I of the order and are in addition to existing tariffs, duties, or taxes. The global tariffs increase the U.S. effective tariff rate from 11% to 22.5% and amount to a tax increase of approximately $400 billion. The tariffs also increase the risk of stagflation, which could occur if prices increase and the United States and other trading partners enter into a recession.
Trump imposed the tariffs under the International Emergency Economic Powers Act (IEEPA). Trump cited “underlying conditions, including a lack of reciprocity in our bilateral trade relationships, disparate tariff rates and non-tariff barriers, and U.S. trading partners’ economic policies that suppress domestic wages and consumption, as indicated by large and persistent annual U.S. goods trade deficits” as an “unusual and extraordinary threat to the national security and economy of the United States.” He declared a national emergency “arising from conditions reflected in large and persistent annual U.S. goods trade deficits, which have grown by over 40% in the past 5 years alone, reaching $1.2 trillion in 2024.”
America First Trade Policy
Trump’s tariff plan is part of his effort to reshape the global economy. It marks the end of the era of free trade and is the most dramatic change in U.S. trade policy since the 1930s. Trump has argued that free trade has undermined the U.S. manufacturing base at the expense of the U.S. working class and has allowed other countries to take advantage of the United States. “We will supercharge our domestic industrial base, we will pry open foreign markets and break down foreign trade barriers,” Trump said. He also called April 2, 2025 “one of the most important days…in American history.”
Trump announced his plan to impose reciprocal tariffs back in February in a memorandum calling for "fair and reciprocal" tariffs on every country that charges duties on U.S. imports. The memorandum ordered the Director of the Office of Management and Budget (OMB) to assess the trade effects of non-reciprocal trade arrangements, including tariff and nontariff measures, using the country-by-country review requested in the America First Trade Policy Memorandum.
A Focus on Trade Deficits
Trump stated in his executive order that “[l]arge and persistent annual U.S. goods trade deficits have led to the hollowing out of our manufacturing base; inhibited our ability to scale advanced domestic manufacturing capacity; undermined critical supply chains; and rendered our defense-industrial base dependent on foreign adversaries.” He argued that these deficits are “caused in substantial part by a lack of reciprocity in our bilateral trade relationships…evidenced by disparate tariff rates and non-tariff barriers that make it harder for U.S. manufacturers to sell their products in foreign markets.”
Trump also cited “economic policies of key U.S. trading partners insofar as they suppress domestic wages and consumption, and thereby demand for U.S. exports, while artificially increasing the competitiveness of their goods in global markets.” Trump stated that “[t]hese conditions have given rise to the national emergency that this order is intended to abate and resolve.”
Key Details
Formula for Determining Tariff Rates
The administration determined each country’s tariff rate by calculating each country’s trade-in-good deficit with the United States as a share of their total exports to the United States and dividing that number in half. The calculation, it notes, assumes that tariff and non-tariff factors lead to persistent trade deficits and that tariffs work through direct reductions of imports. The administration states that this calculation provides the “tariff rate necessary to balance bilateral trade deficits between the U.S. and each of our trading partners.”
"For nations that treat us badly, we will calculate the combined rate of all their tariffs, nonmonetary barriers and other forms of cheating,” Trump said. “And because we are being very kind, we will charge them approximately half of what they are and have been charging us. So the tariffs will be not a full reciprocal. I could have done that. Yes. But it would have been tough for a lot of countries.” This calculation assumes that a bilateral trade deficit is an accurate quantitative measure of unfair trade practices, including non-tariff barriers. The global tariff of 10% still applies to countries with which the United States has a trade surplus.
Countries with Highest Tariffs
Rates for key trading partners include 49% for Cambodia, 48% for Laos, 46% for Vietnam, 37% for Thailand, 34% for China, 32% for Taiwan, 24% for Japan, and 20% for the EU. For China, the 34% comes in addition to the 20% previously imposed.
Mexico and Canada
Imports from Mexico and Canada that comply with the United States-Mexico-Canada Agreement (USMCA) are not subject to the global tariff or reciprocal tariffs. Non-compliant goods will be subject to the previously announced tariffs of 25% and non-compliant energy and potash will be subject to the previously announced tariffs of 10%. The baseline 10% tariffs will apply to non-USMCA goods if the current tariffs are removed.
Exemptions
The reciprocal tariffs will not apply to strategically important industries that are subject to separate tariffs, notably tariffs under Section 232. These include:
Donations and informational materials under 50 U.S.C. 1702(b)
Autos and auto parts, which are already subject to the new 25% tariff.
Aluminum and steel, which are already subject to a 25% tariff.
Products listed in Annex II of the order. This includes copper, pharmaceuticals, semiconductors, lumber, certain critical minerals, and energy and energy products.
Goods from countries listed in column 2 of the Harmonized Tariff Schedule of the United States (HTSUS), which are countries with which the United States does not grant Most Favored Nation (MFN) status. This includes Cuba, North Korea, Russia, and Belarus.
Goods that may become subject to duties pursuant to future national security actions under Section 232.
The U.S. content of a good if at least 20% of the value of a good comes from U.S. content. The tariffs will apply to the full value of goods that do not have 20% of their value from U.S. content.
Duration
If a country takes “significant steps to remedy non-reciprocal trade arrangements and align sufficiently with the United States on economic and national security matters,” the president could “decrease or limit in scope” the tariffs imposed under the order. This opens the possibility that Trump could use the tariffs as leverage for either economic or national security purposes.
De Minimis
Trump also issue an executive order ending the de minimis rules that provides a duty-free treatment of up to $800 in imports from China beginning May 2, 2025. Shipments sent through the international postal network will be subject to a 30% tariff or a $25 tariff per postal item (increasing to $50 on June 1) in place of the tariffs. Shipments not sent through the international postal network will be subject to regular tariffs.