President Trump announces sweeping new tariff rates on key trading partners

On July 7, President Donald J. Trump signed an executive order extending the current pause on reciprocal tariffs through Aug. 1, postponing implementation of country-specific reciprocal rates until that time. The pause on country-specific reciprocal tariffs nonetheless leaves in effect a universal 10% reciprocal tariff rate.

Also on July 7, President Trump announced via social media new U.S. tariff rates targeting several key trading partners citing long-standing “non-reciprocal” trade practices and persistent U.S. trade deficits. The President also warned of additional tariffs against countries that choose to “align[ ] with BRICS.” The BRICS nations include Brazil, Russia, India, China, and South Africa.

The July 7 letters establish new reciprocal tariff rates for 14 countries—Bangladesh, Bosnia and Herzegovina, Cambodia, Indonesia, Japan, Kazakhstan, Laos, Malaysia, Myanmar, Serbia, South Africa, South Korea, Thailand, and Tunisia (collectively, “named countries”). The revised tariff rates for some countries will be lower than the initial reciprocal tariff rates, while others were assigned higher rates. The letters emphasize that additional adjustments will only be considered if the targeted countries take steps to liberalize, or open, their markets by reducing barriers to trade. The letters further clarify that the July 7 reciprocal tariffs are separate from existing “sectoral” (or industry-specific) tariffs, such as those imposed under Section 232 on steel, aluminum, and automotive industries, among others. Although many imports subject to Section 232 tariffs are exempt from reciprocal tariffs, various exceptions exist that can complicate the tariff-stacking analysis.

President Trump also indicated that additional letters are likely to be issued in the coming days.

On July 9, President Trump issued a second round of reciprocal tariff letters to an additional seven countries: Sri Lanka, the Philippines, Brunei, Moldova, Algeria, Iraq, Libya, and Brazil (collectively, part of the “named countries”). Like the July 7 letters, these communications cite persistent trade deficits and long-standing tariff and non-tariff barriers. They notify each country of revised reciprocal tariff rates that will take effect on Aug. 1.

Until Aug. 1, however, the 10% baseline reciprocal tariff will remain in effect across most affected imports, regardless of whether a trading partner has received an updated letter. Formal implementation of the updated rates announced in the July 7 letters will require further executive action. As of this alert’s publication, formal implementation has/has not been released on whitehouse.gov or the Federal Register.

Key Facts

New Tariff Rates: Starting Aug. 1, based on the July 7 and July 9 letters, the U.S. will impose new reciprocal tariffs ranging from 25% to 40% on all products from the named countries, in addition to any existing sector-specific tariffs.

• 40% for Myanmar and Laos
• 36% for Cambodia and Thailand
• 35% for Bangladesh and Serbia
• 32% for Indonesia
• 30% for South Africa, Bosnia, Herzegovina, Sri Lanka, Algeria, Iraq, and Libya
• 25% for Kazakhstan, South Korea, Japan, Tunisia, and Malaysia, Malaysia, Brunei and Moldova
• 20% for Philippines

For countries not named in the July 7 or July 9 letters, the reciprocal tariff rates announced on April 2 are expected to take effect on Aug. 1, unless otherwise modified by executive action, subsequent letters, or further negotiation.

Anti-Transshipment Warning: The letters explicitly warn that transshipped goods will not be exempt and may be subject to higher penalties. Transshipment is an illegal practice of diverting goods through a third country in an attempt to evade duties.

Carve-Out for U.S. Production: No tariffs will apply if companies from the named countries establish U.S.-based production facilities, with the letters pledging expedited approval processes for foreign direct investment (FDI) in the U.S.

Retaliation Clause: If the named countries raise retaliatory tariffs, the full tariff rate will apply plus the retaliatory rate, effectively stacking duties.

Constitutional Commentary from Congress

The Trump administration’s unilateral trade actions are drawing increasing Congressional scrutiny. In a July 2 letter, Senate Finance Committee Ranking Member Ron Wyden reiterated that binding international trade deals must be approved by Congress, warning that executive-only agreements “raise significant legal and constitutional concerns” and may unlawfully “limit Congress’s domestic lawmaking ability without consent.”

Wyden urged USTR Greer and other agencies involved in the negotiations to submit any resulting trade deals to Congress for formal approval—a position backed by bipartisan precedent, including a 2022 letter signed by 20 Senators.

Implications for U.S. Importers and Foreign Exporters

The imposition of broad-based reciprocal tariffs introduces significant risk for companies reliant on most-favored-nation (MFN) rates or fixed antidumping and countervailing duty (AD/CVD) margins. Many contracts negotiated under prior tariff assumptions may now face unanticipated costs, triggering potential disputes or renegotiations. Supply chains will continue to experience disruptions, particularly for components and finished goods sourced from Southeast Asia and southern Africa.

Despite warnings against illegal transshipment, the variable country-specific tariff rates are likely to usher in an era of heightened governmental scrutiny of country-of-origin claims, as the Administration has signaled a crackdown on transshipment practices. Meticulous documentation, origin certifications, and traceable supply chain records will be critical for U.S. importers.

The Administration has also framed tariffs as a mechanism to encourage foreign direct investment (FDI) in the United States, suggesting that companies with U.S.-based manufacturing operations may benefit from exemptions or relief mechanisms—offering a potential strategic pathway for tariff avoidance.

Contact Clark Hill

If you have any questions regarding the content of this alert, please contact Mark Ludwikowski (mludwikowski@clarkhill.com; 202-640-6680), Kevin Williams (kwilliams@clarkhill.com; 312-985-5907), Aristeo Lopez (alopez@clarkhill.com; 202-552-2366), Kelsey Christensen (kchristensen@clarkhill.com; 202-640-6670), or other members of Clark Hill’s International Trade Business Unit.

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