“Reciprocal” Tariffs Delayed, Some Revised

President Trump has further postponed implementation of his “reciprocal” tariffs and has adjusted the reciprocal tariff rates that could be imposed on more than a dozen trading partners.

Reciprocal tariffs under the International Emergency Economic Powers Act, set at 10 percent for many countries but at 11 to 50 percent for others, were initially announced in an April 2 executive order. The higher tariffs were subsequently suspended for a 90-day period that had been set to expire at 12:01 a.m. on July 9, while the 10 percent rate has remained in place for imports from virtually all countries (Canada and Mexico being notable exceptions).

In a July 7 EO, the president extended the suspension of the higher tariff rates through 12:01 a.m. EDT on Aug. 1. This action does not affect either the global baseline 10 percent tariff or the reciprocal tariff on imports from China, which is set to remain at ten percent through mid-August.

Higher reciprocal tariffs could be imposed Aug. 1 despite two court rulings against them. The Court of International Trade has ruled that the reciprocal tariffs are unlawful and the District Court for the District of Columbia has ruled that IEEPA does not authorize the president to impose any tariffs at all. However, both decisions have been stayed pending appellate proceedings, allowing the tariffs to remain in effect.

In the meantime the U.S. has been engaged in negotiations with numerous trading partners toward agreements that could forestall the imposition of higher reciprocal tariffs. Preliminary agreements have only been reached with the United Kingdom and Vietnam, however, so this week Trump began sending letters to foreign leaders advising them of the higher rates he plans to impose on imports from their countries beginning Aug. 1 unless they make further progress in trade talks with the U.S.

In some cases these tariff rates are the same or close to those announced in April; e.g., 25 percent for Japan, Korea, and Malaysia; 30 percent for South Africa; and 36 percent for Thailand. In other cases there is more of a difference; e.g., 40 percent instead of 48 percent for Laos, 40 percent instead of 44 percent for Myanmar, 36 percent rather than 49 percent for Cambodia, and 30 percent instead of 35 percent for Bosnia and Herzegovina.

The letters said these tariff rates could be adjusted up or down in the future (and Trump told reporters the Aug. 1 deadline could change) depending on the U.S.’ “relationship” with recipient countries, particularly their willingness to further open their markets to the U.S. They letters also warned that (1) “goods transshipped to evade a higher tariff” would be subject to that higher rate and (2) the U.S. will further increase tariffs on imports from recipient countries by the same amount of any tariff increase they impose on U.S. goods “for any reason.”

Click here to stay up to date on the U.S.’ reciprocal tariffs.

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