- within Corporate/Commercial Law, Privacy and Consumer Protection topic(s)
- with readers working within the Basic Industries, Business & Consumer Services and Healthcare industries
As of 4 April 2025 17:00 PM (CET), this information is accurate. Please note that this update reflects a rapidly evolving situation.
On 2 April 2025, US President Trump declared 'Liberation Day' by signing an Executive Order, unveiling a broad package of 'reciprocal tariffs' aimed at addressing the US trade deficit and boosting domestic manufacturing. Framing these measures as a response to a national economic emergency, President Trump indicated that the tariffs would strengthen domestic production and correct longstanding trade imbalances.
This latest US tariff strategy follows earlier trade actions, including tariffs imposed on all imports of steel and aluminium, which took effect on 12 March 2025, and the tariffs proposed on 26 March 2025 on all imports of automobiles and certain automobile parts, which had not yet taken effect by Liberation Day.
What tariffs were imposed?
Automotive tariffs
As part of his Liberation Day announcement, President Trump confirmed his Proclamation concerning 25% tariffs on imports of passenger vehicles, light trucks, and certain automobile parts on all countries – including the EU – which entered into force at 12:01 a.m. EDT on 3 April 2025.
Reciprocal tariffs
President Trump also unveiled his long-anticipated 'reciprocal tariffs'. Firstly, the Executive Order imposed an additional baseline tariff rate of 10% on all imports from all third countries. This will take effect from 12:01 a.m. EDT on Saturday, 5 April 2025.
Separately, Annex I of the Executive Order set out higher country-specific adjusted reciprocal tariff rates. For example, the EU was assigned a country-specific tariff rate of 20%, while other countries also deemed the "worst offenders" such as China (34%), Vietnam (46%), Cambodia (49%), Thailand (36%), Taiwan (32%), and Sri Lanka (44%), faced significantly higher rates.
The US Administration later disclosed the formula used to calculate these country-specific adjusted reciprocal tariffs, which appears to focus on the trade deficit for the US in goods with that particular third country.
While the reciprocal tariffs only apply to goods and not services, Annex II of the Executive Order lists a 37-page catalogue of products (classified by their HS code) which are, at least for now, excluded from the reciprocal tariffs. Notably, the Executive Order explicitly mentions copper, pharmaceuticals, semiconductors, lumber articles, certain critical minerals, and energy and energy products, as products exempted from the reciprocal tariffs.
However, exemption from these reciprocal tariffs for goods listed in Annex II to the Executive Order does not guarantee long-term relief. In Part I of our tariff blog, we noted that separate tariffs on semiconductor chips and pharmaceutical imports are expected and could exceed a rate of 25%. This means that even if a product is currently listed in Annex II, it remains at risk of future reciprocal tariffs.
Potential consequences
Significant disruptions to global supply chains are expected, particularly for companies reliant on manufacturing and sourcing from South-East Asian countries such as Vietnam, Cambodia, India, Thailand, and Taiwan, as mentioned above, which have been hit with the highest country-specific adjusted reciprocal tariffs. Businesses with integrated supply chains in these regions will likely face rising costs, production delays, and logistical bottlenecks as they navigate the increased tariffs. Additionally, shipping and air freight routes may be affected, with potential congestion and increased US customs scrutiny.
Perhaps the unintended consequence of these measures is that instead of driving investment and economic resurgence in the US, these tariff hikes could reshape global trade flows. With exporters seeking to avoid additional US duties, many may look to redirect trade towards the EU, the world's largest single market, where tariff barriers remain lower.
Retaliation of the EU
President of the European Commission, Ursula von der Leyen, stated on Thursday morning that the EU will respond to the US reciprocal tariffs of 20% on the EU's imports with countermeasures "if negotiations fail."
The EU's response to the reciprocal tariffs will complement the EU rebalancing measures announced last month to deal with the US' tariffs on European steel and aluminium. The EU has been finalising its countermeasures, which includes reimposing previous balancing measures after the suspension expired on 31 March 2025, and consulting on a new package of additional measures to target approximately €18 billion worth of US goods.
The EU's Commissioner for Trade and Security, Maroa `efčovič, has arranged a video call with his US counterparts on Friday, 4 April 2025 to explore "the best way to move forward from this unnecessary and painful phase, by addressing legitimate concerns on both sides."
Maroa `efčovič will discuss the EU's negotiation and retaliation strategy with trade ministers from the EU Member States at an extraordinary Trade Council meeting on Monday, 7 April 2025 in Luxembourg. The Trade Council meeting will also allow the EU trade ministers to comment on the proposed countermeasures to the US' steel and aluminium tariffs. They are set to vote on these countermeasures on Wednesday, 9 April 2025.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
