President Trump signs Executive Order imposing reciprocal tariffs to address U.S. trade deficits

As expected, President Trump today signed an Executive Order, entitled “Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits,” in which the United States will institute reciprocal tariffs on countries throughout the world.

A major driver for today’s announcement, as stated in the Executive Order, is related to a February 13 Presidential Memorandum signed by President Trump, entitled “Reciprocal Trade and Tariffs,” that directed further review of U.S. trading partners’ non-reciprocal trading practices, and also the relationship between non-reciprocal practices and the trade deficit, with the final results of those investigations received yesterday,

In comments made earlier today at the White House’s Rose Garden, the President described this measure as a “Declaration of Economic Independence,” noting that for years Americans were forced to sit on the sidelines as other nations got rich and powerful, at the expense of the U.S., and stated that it is now the U.S.’s turn to prosper and use trillions of dollars to reduce taxes and pay down the country’s national debt.

“We will supercharge our domestic industrial base,” he said. “We will pry open foreign markets and break down foreign trade barriers, and ultimately, more production at home will mean stronger competition and lower prices for consumers. This will be, indeed, the golden age of America. It's coming back.”

Drivers for the tariff measures previously cited by the White House include addressing U.S. trade imbalances, pushing for increased domestic manufacturing, and stemming the flow of fentanyl across U.S. borders from Canada and Mexio.

In his comments at the Rose Garden, President Trump said that there will be a minimum across-the-board baseline 10% reciprocal tariff placed on U.S. trading partners importing goods into the U.S., with the exception of goods which are compliant with the USMCA (United States-Mexico-Canada) agreement, and non-compliant goods, as previously announced, will continue to be charged 25%. The 10% tariff will take effect at 12:01 AM ET on Saturday, April 5.

In addition to the 10% baseline tariff, the President said that the U.S. will implement tariffs on nearly 60 U.S. trading partners ranging between 10%-to-50%, and calculated at half the rate foreign nations impose on U.S. exports. As an example, he stated that China will pay a 34% tariff, with the European Union paying 20%, Taiwan paying 32%, Vietnam paying 46%, and Japan paying 46%, among others.

This announcement is the most recent one in a series of tariff actions the White House has made since President Trump was re-elected and began his second term on January 20. Last week, it announced that effective April 3, it will move forward with a 25% tariff on automobiles, with a matching 25% tariff on certain automobile parts imported into the United States, effective on May 3. The primary objective of the tariff is to encourage automakers to manufacture more vehicles in the U.S. and address what the White House calls a critical threat to U.S. national security.

Other previous tariff-related announcements include:

• 25% tariffs on steel and aluminum products imported into the United States;
• 20% tariffs on imports from China; and
• 25% tariffs on goods from Mexico and Canada, with energy products from Canada at a 10% tariff

While the White House has been signaling its intent to implement new and increased tariffs, there has been a fair amount of pushback from industry associations.

National Retail Federation Vice President of Government Affairs David French said that more tariffs equal more anxiety and uncertainty for American businesses and consumers.

“While leaders in Washington may not care about higher prices, hardworking American families do,” said French. “Tariffs are a tax paid by the U.S. importer that will be passed along to the end consumer. Tariffs will not be paid by foreign countries or suppliers. Even more so, the immediate implementation of these tariffs is a massive undertaking and requires both advance notice and substantial preparation by the millions of U.S. businesses that will be directly impacted. We encourage President Trump to hold trading partners accountable and restore fairness for American businesses without creating economic uncertainty and higher prices for American families.”

And National Association of Manufacturers President Jay Timmons described the President’s announcement today as complicated, adding that manufacturers are scrambling to determine the exact implications for their operations.

“The stakes for manufacturers could not be higher,” said Timmons. “Many manufacturers in the United States already operate with thin margins. The high costs of new tariffs threaten investment, jobs, supply chains and, in turn, America’s ability to outcompete other nations and lead as the preeminent manufacturing superpower.”

A recent LM reader survey based on feedback from around 100 logistics and supply chain professionals, found that 91% of respondents are concerned that their logistics operations are currently being impacted by various types of market uncertainty.

By far, tariffs were the top driver for the uncertainty, based on the survey’s findings.

“Tariffs are a wild card and leading to delaying or cancelling our expansion plans,” a respondent stated. “Additionally, inflation seems to be returning and this makes us question cost analytics.”

Given the ongoing tariff implementations taken by the U.S. on its various trading partners, sourcing-related steps received a fair amount of attention in the survey, with many respondents noting that they are seeking alternate countries of origin in order to try and avoid tariffs, as well as importing as much as possible and creating safety stock; and shifting manufacturing locations.

Those steps also include regularly evaluating and onboarding new suppliers, establishing additional distribution routes or partners to diversify options, and utilizing data analytics for demand forecasting and risk assessment, according to survey respondents.

LM’s sister publication Supply Chain 247 reported that Canada, Mexico, the EU, and China are among the nations expected to respond with counter-tariffs. European Commission President Ursula von der Leyen said the EU has “a strong plan” to retaliate if necessary.

Countries facing the steepest tariff increases include Vietnam, Cambodia, India, and Thailand—all of which are significant U.S. sourcing hubs, particularly in textiles, electronics, and furniture. The tariffs on Vietnam and Cambodia, set at 46% and 49% respectively, are among the highest ever imposed by a U.S. administration.

With implementation beginning this weekend and more countries affected in early April, supply chains that rely on steady, low-cost imports now face a period of disruption, recalibration, and higher costs. The full impact—on prices, trade flows, and consumer sentiment—will unfold in the weeks and months ahead.

In addition to these tariffs, the Executive Order stated that, effective May 2, the de minimis exemption, which allows goods under $800 sent from China to the U.S. to not be subject to tariffs, will be removed. Various reports stated that, moving forward, items that previously were not tariffed now will have a 30% duty or a $25 flat fee per item and will increase to $50 per item after June 1, with the expectation that it wil have a signifcant impact on China-based e-commerce players whom have leveraged the de minimis exemption to ship products to the U.S.