President Trump’s Tariffs – Status Update

On April 2, 2025, US President Donald Trump announced his intention to impose reciprocal tariffs of 10% on all goods imported into the United States, and higher “special reciprocal tariffs” on imports from several countries with whom the United States has a large trade deficit. President Trump also announced an increase of tariffs on steel and aluminum to 50%, regardless of the country of origin, and a 25% tariff on automobile imports into the United States. On July 30, President Trump announced the imposition of a 50% tariff on imports of copper pipes and wires. The president also announced the cancellation of all de minimis exemptions on product imports valued at less than USD 800, which will now be subject to the standard rules on imports to the United States.

Back on April 9, President Trump announced a 90-day moratorium on the special reciprocal tariffs, which has since been extended until August 1. During the moratorium, the United States reached special agreements on tariff rates with several countries. However, readers should be circumspect about the use of the term “agreement” within this context. With the exception of the agreement with Britain, these oral agreements lack proper detailed documentation and engage merely in principles. It appears it will take years to draft detailed trade agreements between the countries.

The table below presents the main agreements achieved, as published by the Trump Administration. Basically, the countries consented to the imposition of a particular tariff rate on products imported to the United States, while refraining from imposing retaliatory tariffs. Some of the signatory countries also agreed to invest considerable sums of money in the United States and to open their markets to American imports.

In July, President Trump sent a series of letters to leaders of countries that did not reach an agreement with the United States, threatening that if they fail to reach agreements, the special reciprocal tariffs will take effect on August 1. On July 30, President Trump announced the imposition of a 25% tariff on products manufactured in India, alleging that India imposes numerous restrictions on imports from the United States. The president also announced the imposition of a 50% tariff on products manufactured in Brazil, inter alia, due to the trial underway against former Brazilian president Jair Bolsonaro, one of Trump’s allies.

The United States’ largest trade deficit was and still is opposite China. President Trump already decided to impose substantial tariffs on China that, at one point, reached 145%. At the moment, intensive negotiations are underway between the two countries. In the meantime, the tariff on Chinese products has been lowered to about 30%.

Legal Situation in the United States

According to the United States Constitution, the US Congress, and not the president, is vested the authority to impose tariffs. Congress granted the president limited powers to impose emergency tariffs under the International Emergency Economic Powers Act (IEEPA). President Trump has announced that several emergencies have arisen that justify his imposition of tariffs: illegal imports of fentanyl (a powerful painkiller used as a key ingredient of illegal drugs and medicines in the United States), the United States’ trade deficit, and particular issues surrounding products such as steel and automobiles. President Trump imposed tariffs by invoking his emergency powers pursuant to the IEEPA. Two federal courts have already ruled that Trump acted with ultra vires by exceeding the limits of  the IEEPA, since a trade deficit, for example, cannot be considered an emergency. These rulings are currently being appealed before the District of Columbia Federal Court of Appeals.

Prima facie, the trade agreements that Trump already achieved will remain in effect regardless of the ultra vires claims against him. On the other hand, the trade agreements are based on the assumption that the president has broad authorities to impose and cancel tariffs. In the absence of such authority, the trade agreements may need to be renegotiated.

Global Legal Situation

Since World War II and until recent years, there was a consensus among Western countries that low tariffs are harmful to economies and that discriminatory tariffs between countries are particularly deleterious. This consensus was anchored in the General Agreement on Trade and Tariffs of 1947 (GATT) and in the activities of the World Trade Organization established in 1995. Over the last decade, it became increasingly evident that the lowering of tariff rates had negative consequences, particularly the migration of industrial manufacturing from wealthy Western countries to Southeast Asia, China, and Africa. The migration of industrial manufacturing to these countries caused economic hardship in entire regions of the United States whose subsistence relies on industrial manufacturing. President Trump’s tariff policy is designed to specifically address this problem. According to his rationale, manufacturing plants will return to the United States in order to avoid paying the heavy tariffs.

President Trump’s tariff hike plan constitutes direct breaches of the United States’ covenants under the GATT, which prohibits discriminatory tariffs between countries and the raising of tariffs that have already been lowered. De facto, the cornerstone of President Trump’s policy is to impose discriminatory tariffs, since he believes they are strong bargaining chips during negotiations to get countries to increase their investments in the United States and open their markets to American imports. Either way, President Trump’s tactic appears to breach US covenants under the GATT.

President Trump is finding it relatively easy to employ his strategy due to the weakening of the World Trade Organization. For example, the United States has refrained from nominating candidates for membership in the World Trade Organization’s Appellate Body for several years, a fact that effectively paralyzed this important institution, which serves as a quasi-judicial court tasked with resolving international trade disputes. The WTO’s Appellate Body has been unable to review appeals due to ongoing vacancies since 2020. Several countries have actually filed complaints against the United States with the WTO, but one can assume the WTO is incapable of wielding any considerable influence over US policy.

On the other hand, the United States’ chaotic trade policy could fundamentally redraw the map of world trade. If countries can no longer rely on low tariff rates in the United States, they will be compelled to develop new markets and reach agreements that exclude the United States.

The US tariff policy poses significant economic repercussions. Many economists believe that President Trump’s plan is damaging. They assert raising tariffs in order to cause manufacturing to return to the United States will trigger significant hikes in product prices and will not cause any significant diversion of manufacturing to the United States. Studies show that about half of the cost of the tariffs is being imposed on American consumers through price hikes.

The United States’ imposition of tariffs also poses considerable global economic repercussions. The United States is imposing tariffs on different countries at different rates, which could trigger shifts of massive volumes of manufacturing and trade between countries. Countries will relocate manufacturing plants to countries that have lower tariffs on exports to the United States, and we can expect to see wide-scale attempts to “cheat” with respect to various products’ country of manufacture.

These changes in trade agreements, tariff rates, and economic relations between major economies are creating considerable uncertainties. Companies seeking an accurate understanding of the implications on their operations should obtain expert legal counsel to provide ongoing updates on the latest legal developments.