Trump Triples Down on Tariffs: What Now?

After weeks of mixed signals from the Trump administration regarding tariffs, President Trump has imposed new tariffs on automobiles and reciprocal tariffs on nearly all imported goods. While the new announcements provide some clarity as to President Trump’s plan, the path forward remains uncertain.

Auto Tariffs

On March 26, President Trump signed a proclamation to impose a 25% tariff on all imports of passenger vehicles, light trucks, and certain automotive parts.[1] The list of covered Harmonized Tariff Schedule of the United States (HTSUS) codes is included in a technical annex. The tariff is in addition to any other applicable duties, fees, exactions, and charges. The tariffs on passenger vehicles and light trucks went into effect on April 3, and the tariffs on certain automotive parts will take effect on May 3. The proclamation states that the tariffs shall continue in effect, unless such actions are expressly reduced, modified, or terminated. It does not include an end date, and President Trump has said that he intends the tariffs to be permanent.

The proclamation included a US content exclusion for finished vehicles imported under the United States-Mexico-Canada Agreement (USMCA). The exclusion allows importers of finished vehicles to submit documentation to the Department of Commerce “identifying the amount of US content in each model imported into the United States.” US content is defined as “the value of the automobile attributable to parts wholly obtained, produced entirely, or substantially transformed in the United States.” The proclamation also included a temporary exemption for certain imports of automobile parts that qualify for preferential treatment under the USMCA. The exemption will remain in place until the Department of Commerce and US Customs and Border Protection establish a process by which the 25% tariff can be applied only to the non-US content of USMCA automobile parts imports. The proclamation states that “no drawback shall be available with respect to the duties imposed.”

President Trump implemented these new auto tariffs utilizing a 2019 report from the Commerce Secretary under section 232 of the Trade Expansion Act. The report stated that automobiles and certain automobile parts are being imported into the US in such quantities and under such circumstances as to threaten to impair the national security of the US. In a 2019 proclamation, President Trump concurred with the Commerce Secretary’s finding and instructed him to monitor imports of automobiles and certain automobile parts and to inform him of any circumstances that would indicate further action. The 2025 proclamation states that the Commerce Secretary has informed the Trump administration that national security concerns have escalated. Because of the purported ongoing threat to national security, President Trump implemented the new auto tariffs.

Reciprocal Tariffs

On April 2, President Trump announced his plan for reciprocal tariffs. He issued an executive order imposing a new 10% baseline tariff on all imported goods, which is increased for certain countries listed in an annex ranging from 11% to 50%.[2] The tariffs will take effect on April 5. The new tariffs are in addition to any other applicable duties, fees, exactions, and charges.

But the executive order excluded certain products in an annex, including products subject to the recent tariffs on aluminum, steel, and automobiles, and products for which additional tariffs are expected to be forthcoming, including copper, lumber, pharmaceuticals, and semiconductors. Canada and Mexico were also excluded from the reciprocal tariffs but continue to face recently imposed tariffs. The suspension of the tariffs for all goods from Canada and Mexico that fall under the USMCA remains in place.

In contrast, China was not excluded from the order and will now face a 34% reciprocal tariff on top of the recently imposed 20% tariff. The executive order also targeted countries through which China has shipped its goods to avoid tariffs, including imposing a 46% tariff on goods from Vietnam and a 49% tariff on goods from Cambodia. Imports that qualify for de minimis treatment (i.e. under $800) are currently exempt from the new reciprocal tariffs. But President Trump signed a second executive order eliminating the “de minimis loophole” for goods from China and Taiwan, which will take effect on May 2.[3]

President Trump relied on the International Emergency Economic Powers Act (IEEPA) to impose the reciprocal tariffs, as he did to impose the recent tariffs on China, Canada, and Mexico. The IEEPA, which has never been used before to impose tariffs, gives the president authority to control international transactions after declaring a national emergency. This time President Trump claimed that the lack of reciprocity in US trade relationships, disparate tariff rates and non-tariff barriers, and US trading partners’ economic policies that suppress domestic wages and consumption constitute a threat to the national security and economy of the US.

A few hours before President Trump announced his reciprocal tariffs, the Senate passed a resolution rejecting Trump’s use of the IEEPA to impose a 25% tariff on goods from Canada. The resolution is unlikely to actually eliminate the tariffs because it would have to pass the House and get approval from Trump.

And again, with newly imposed tariffs, the threats of retaliation loom. After President Trump’s announcement on April 2, Treasury Secretary Scott Bessent warned that countries should not retaliate unless they want to face even higher tariffs on their exports to the US. But some have already taken action. Prime Minister Mark Carney recently stated that Canada’s traditional relationship with the US is over, and in response to the auto tariffs, he announced that Canada will impose 25% tariffs on all non-USMCA-compliant vehicles imported from the US. China criticized the new reciprocal tariffs as “inconsistent with international trade rules” and matched the US reciprocal tariff by imposing a 34% tariff on all goods imported from the US starting April 10. The EU recently delayed its first round of retaliatory tariffs from April 1 to April 13 to allow for more time to negotiate with the Trump administration. However, European Commission President Ursula von der Leyen stated that the EU was now finalizing its countermeasures in response to both the steel and reciprocal tariffs.

What happens now?

Going forward, tariff policies will continue to fluctuate almost daily. Although President Trump has indicated that he is not open to granting exemptions from the reciprocal tariffs, the administration has signaled that it is open to negotiations when it comes to tariffs and non-tariff barriers. President Trump’s shifting desires make it difficult to plan ahead. President Trump has also threatened to impose tariffs on countries that purchase oil or gas from Venezuela and various industries, including copper, lumber, pharmaceuticals, and semiconductors. And although it is unlikely to ever become law, Senators Chuck Grassley and Maria Cantwell filed a bill on April 3 that would limit the president’s power to impose tariffs by requiring the president to notify Congress 48 hours before imposing tariffs and Congressional approval thereafter.

As these changes continue, the Adams & Reese Global Trade & Transportation Team is ready to assist you.

FOOTNOTES

        [1].     Proclamation No. 10,908, 90 Fed. Reg. 14705 (Apr. 3, 2025).

        [2].     Exec. Order, Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits (Apr. 2, 2025).

        [3].     Exec. Order, Further Amendment to Duties Addressing the Synthetic Opioid Supply Chain in the People’s Republic of China as Applied to Low-Value Imports (Apr. 2, 2025).