The Whirlwind that is Reciprocal Tariffs

It's been a few weeks and things were just moving so fast with clients and the president changing his mind that it was just impossible to keep up and write a decent post. Aside from that, the information was only accurate for 24 hours anyway and then needed to be changed again. It seem like this last week was fairly stable, with a few rumblings about easing the auto parts tariff, but nothing resembling action. Anyway, we think now is a good time to go over things and let people know what's going on.

The reciprocal tariff list began with full fury on April 9 and tanked stock markets worldwide. with growing fear and pressure, the president walked back tariffs on most countries, except China. Then China and the US began to play a game of tariff poker, if you will. the US raising and China matching every bet. Now Canada and Mexico are where they were before April 9 happened with the tariffs leaving them untouched. The rest of the world is at 10% and china is at 125%.

A quick note about 125%. That's the rate of the reciprocal tariff. Yes, there are often 301 and IEEP tariffs that need to be added to that, but the reality is that the reciprocal tariff is 125% and not 245% as the White House "Fact Sheet" says. When the White House released the fact sheet we had so many clients call us alarmed that there had been another tariff raise. So read carefully, they can get away with calling this a "fact" since EVs, needles and some luxury goods can be as high as 100% in section 301, then add 20% IEEP, then add 125% reciprocal. But the printing was misleading and made people believe the edge cases were the reality which, I think, was the point.

The reciprocal tariffs are still exempt for Annex II items and are replaced by the Aluminum and Steel Derivative, Automobile and Auto Part and section 232 lists at a rate of 25%. Phones, laptops and certain chips and electronics are also exempted from the tariff list. There has been talk every few days of easing the auto part tariff, but for now it's still set to go into effect on May 2.

There are some additional actions which are upcoming which could also have an effect on reciprocal tariffs. Lumber and Copper have been under a 232 investigation for a couple of months and they were joined by pharmaceuticals and electronics recently. We won't know anything until the President gets his reports on the 4 different 232 orders but expect that this will change the tariff game in the future. The reports can take up to 270 days, however, so it still may be 6 months or more before we have any definitive action.

There were supposedly 75 nations wanting to talk to the Administration last week. That number is down to 34 and several are refusing to give concessions or balking at what the US is asking for. China is also warning other nations not to make deals with the US that cut them out. It's sort of a new game between Trump and Xi. But it adds an new element into an already unpredictable cycle. Will the reciprocal tariffs be reinstated to their fullest? Will there be an easing of the tariff war with China as has been suggested in the latest news cycle on 4/22/2025? We just don't know right now but we'll be watching and will update you when we know more.