More than four months after the initial introduction of the “Liberation Day” tariffs in early April 2025, which lasted only a day before being rolled back in favor of a 10 percent baseline tariff, the reciprocal tariffs returned on August 7, 2025, with revised country-specific tariff rates. These new tariffs, which continue to exempt various items that have been carved out from these reciprocal levies, also reflect the terms of trade deals reached with U.S. trading partners throughout the summer. Meanwhile, new “secondary” tariffs on goods from countries purchasing crude oil from Russia and a new Section 301 tariff on Brazil have already been imposed, and increasingly specific comments regarding current Section 232 reviews on pharmaceuticals, semiconductors, and chips indicate that additional tariffs on those products are imminently forthcoming. We explore each of these topics in further detail below.
Liberation Day, Part Deux
As of August 7, 2025, Customs and Border Protection (CBP) began collecting country-specific reciprocal tariffs as originally contemplated under the April 2, 2025, executive order (“Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits”), as discussed in our earlier client alert. However, new country-specific tariff rates provided for in Annex I of the July 31, 2025, executive order (“Further Modifying The Reciprocal Tariff Rates”) will replace the earlier tariff rates imposed under Annex I of the April 2, 2025, order. The new reciprocal tariff rates range from 10 percent to 41 percent, and include tariffs of 15 percent for Norway and Israel, 20 percent for Taiwan, and 39 percent for Switzerland.
The new tariff rates reflect amended terms announced in preliminary bilateral trade deals with select U.S. trading partners, as follows:
The new reciprocal tariff executive order maintains the tariff exemptions that have been in effect since April 2025, including items enumerated in Annex II of the President’s April 2, 2025, executive order (“Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits”), items included on the April 11, 2025, Clarification Memorandum, items subject to a Section 232 tariff, and items qualifying for certain Chapter 98 special entry provisions. Except with respect to the European Union (EU), these new reciprocal tariff rates apply in addition to applicable standard “most favored nation” tariffs (as determined by Harmonized Tariff Schedule of the United States (HTSUS) classification) and any applicable Section 301, antidumping, and countervailing duties. For EU goods, a sliding reciprocal tariff will apply on top of the most favored nation tariff to bring the item to the headline 15 percent reciprocal rate, and no duties will be added on goods already having a most favored nation tariff of 15 percent or more. In addition, if items contain greater than 20 percent U.S. content, the portion of value attributable to that U.S. content is exempt from the reciprocal tariff.
The new reciprocal tariff executive order also provides for an additional 40 percent ad valorem “transshipment” tariff penalty for importers determined to be improperly evading these reciprocal duties, such as through declaration of an incorrect country of origin. This penalty applies in addition to potentially applicable penalties under existing customs laws and regulations.
It’s Fun to Stay with the USMCA
Both Canada and Mexico also faced elevated tariff burdens alongside the imposition of these new reciprocal tariffs. Although neither Canada nor Mexico were able to strike a trade deal with the U.S. in advance of the reciprocal tariff deadline, the tariff rate applicable to Canadian- and Mexican-origin goods has now diverged for the first time, reflecting the strength of the administration’s relationship with each respective neighbor:
- President Trump issued an additional July 31, 2025, executive order (“Amendment to Duties to Address the Flow of Illicit Drugs Across Our Northern Border”) increasing the fentanyl-related tariff that has been applicable to Canadian-origin goods since March 4, 2025, from 25 percent to 35 percent, effective August 1, 2025.
- However, with respect to Mexico, which was closer than Canada to reaching a trade deal with the U.S., President Trump granted an additional 90-day pause on the slated increase in the fentanyl-related tariff that was scheduled to rise to 30 percent, keeping rates on Mexican goods at 25 percent for the time being.
Goods covered by the USMCA, which constitute a large amount of U.S. imports from both Canada and Mexico, continue to not be subject to these fentanyl-related duties, meaning qualification under the terms of that agreement will become even more important for cross-border importers.
A Crude Awakening for Importers of Russian Oil
An August 6, 2025, executive order (“Addressing Threats to the United States by the Government of the Russian Federation”) instructs CBP to place an additional 25 percent “secondary” tariff on imports of products from India due to India’s practices of importing Russian-origin crude oil. That tariff will begin being collected later this month and will apply in addition to the 25 percent reciprocal tariff on India imposed under the July 31, 2025, order. These secondary tariffs also will exempt Annex II items as well as items already subject to Section 232 tariffs, among other items. Comments from the White House indicate that similar secondary tariffs may be applied on additional significant Russian trading partners in the coming weeks, including China and Turkey.
A Latte More Tariffs on Goods from Brazil
A July 30, 2025, executive order (“Addressing Threats to the United States by the Government of Brazil”) instructed CBP to begin collecting an additional 40 percent tariff on certain imports from Brazil as of August 6, 2025. This 40 percent tariff, issued under the President’s Section 301 trade authorities, applies in addition to the 10 percent reciprocal tariff on Brazil imposed under the April 2, 2025, executive order. However, as set forth in Annex I to this July 30, 2025, executive order, the 40 percent Section 301 tariff exempts a broader set of items than the reciprocal tariff, including civil aircraft, orange juice, various raw materials, and other items constituting almost half of U.S. imports from Brazil—but notably, not coffee.
Upcoming Tariffs on Semiconductors, Chips, and Pharmaceuticals
The August 6, 2025, comments from President Trump in the Oval Office indicate that the administration may be finalizing its policies regarding ongoing Section 232 investigations into semiconductors, chips, and related products. Specifically, the President indicated that such items would likely be subject to a 100 percent tariff, with a notable—but not-yet-fully-scoped—exception for companies that have invested or who commit to make significant investments in the U.S. After these comments, EU leaders also indicated their understanding that EU exports of semiconductors and chips to the U.S. would be capped at the 15 percent all-inclusive tariff rate negotiated under the U.S.-EU trade deal.
On pharmaceuticals and pharmaceutical products, comments from the White House indicate a potential ramp-up in tariffs that would begin “very soon”—possibly as early as this month—with ultimate Section 232 tariffs escalating up to a range between 150 percent and 250 percent at the end of a one- to two-year timeline. The administration stated a policy goal of ensuring that pharmaceuticals are manufactured in the U.S. Under the U.S.-EU trade deal, EU exports of pharmaceutical goods would also be limited to the 15 percent all-inclusive tariff rate negotiated under that deal, though certain, still-unscoped generic pharmaceutical products would be exempted from tariffs altogether.
China Trade War Update
Finally, we are still awaiting further details about the future of the current U.S.-China trade war truce that has been in place since May 2025. Most Chinese-origin products have been subject to a fentanyl-related tariff since February 2025 (initially 10 percent, later raised to 20 percent in March 2025). As noted in one of our prior alerts, the additional reciprocal tariffs that once reached 125 percent for products of Chinese origin was reduced in May down to the same 10 percent baseline tariff that other countries faced until this week. In return, China also pulled back its own retaliatory tariffs on U.S. products and committed to loosening export controls for certain critical minerals destined for the U.S. This current arrangement is scheduled to expire on August 12, 2025, though discussions following the most recent bilateral U.S.-China trade talks indicate the current policies may be extended soon.
What Should Importers Do?
As we’ve noted in our earlier alerts, even given the uncertainty of the current environment, affected parties should take the following next steps to evaluate their exposure to these tariffs and consider additional actions to mitigate their effects:
- Review your U.S. imports’ HTSUS codes to see which tariffs may affect your items—depending on the HTSUS code, certain items may (or may not) be excepted from increased tariffs. The HTSUS code is key.
- Review the country of origin (COO) to ensure you are accurately applying relevant U.S. Customs rules. Ascertaining COO will become increasingly more important as tariff rates diverge between countries and additional penalties may be assessed for incorrect declarations of origin.
- Review your valuation methods to ensure that value is being declared correctly.
- Review your supplier and sales agreements for any terms that implicate responsibility for payment of tariffs (e.g., Incoterms). Adjustments may need to be made for a high-tariff environment.
- Consider whether any changes to your supply chain may be advantageous in the long term, recognizing that significant uncertainty exists about which countries and/or products may be targeted by tariffs.
- Monitor rapidly changing developments in this area, as the scope and timing of the tariffs are likely to change from the current proposals. The future of these tariffs is uncertain because they are the subject of ongoing litigation. Changes may also be made as deals continue to be reached with U.S. trade partners.
- Update risk factors to address the impact or risks of newly imposed tariffs, if relevant.
