What are the implications of US President Trump's reciprocal tariffs on global trade

On April 2, 2025, President Trump announced new reciprocal tariffs on imports, impacting trade with key partners like the EU and China.

In brief

• On April 2, 2025, President Trump announced reciprocal tariffs on all imports, starting with a 10% blanket rate effective April 5.
• Key trading partners face significant tariffs, including 20% on EU imports and 34% on Chinese goods, raising concerns over trade relations.
• Businesses must assess the impact of these tariffs on supply chains and explore strategies for duty mitigation and managing import duties.

On 2 April 2025, US President Trump unveiled further elements of the "America First Trade Policy", the broad trade policy review that introduces a sweeping wave of new reciprocal tariffs measures on all imports to the US. Effective midnight on 5 April, the policy brings in a minimum blanket tariff rate at 10% for all US imports. Furthermore, beginning midnight on 9 April, a country-specific ad valorem rate will also apply to countries with which the United States has the largest trade deficits and which impose other trade barriers. Key US trading partners are amongst the most affected, with EU imports to face a 20% rate and a 34% tariff applied to all imports from China.  

The detail of the executive order did specify that certain goods will not be subject to these new reciprocal tariffs, including the previously announced 25% ad valorem tariff on all automobile and automobile parts imports that went into effect as of 3 April, goods subject to ongoing investigations (such as copper, pharmaceuticals, semiconductors, etc.) and imports from Canada and Mexico that qualify for the USMCA agreement. 

The new tariff rates supersede any existing most favored nation (MFN) rate, an agreement at the World Trade Organisation (WTO) level that disallows member nations from discriminating between their trading partners. Originally brought about to address non-reciprocal trading arrangements to reduce the trade deficit and free the US from its reliance on imported goods, the unprecedented measures casts further uncertainty for supply chains and global trading with the US, and continues to signal a broader international trade war.  

Retaliatory measures are expected by a large number of the affected countries and economic blocs. The EU is to announce its tariff countermeasures by mid-April, with other nations anticipated to issue immediate tariffs on US exports.  

With the policy now in force, businesses should immediately consider the impact these new tariffs have not only their supply chain, but overall tax and financial risk. Actions to consider include; 

• Review possibilities for duty mitigation via customs valuation: alignment of customs valuation with transfer pricing can result in lower landed tax rates at import to the US, including via "First Sale" for export planning or bifurcating product and non-product costs. 
• Consider strategies to delay, eliminate or recover potential excess import duties: review the potential use of special trade programs in the US such as bonded warehousing, Foreign Trade Zones (FTZ) and special classification provisions in Chapter 98.