Increased customs duties levied on foreign goods by the US on their trade partners.

In a recent development, US President Trump issued an Executive Order titled "Further Modifying the Reciprocal Tariff Rates" on 31st July 2025. This order follows the Executive Order 14257, enacted on 2nd April 2025, and builds upon it, effective from 7th August 2025.

The Executive Order imposes additional ad valorem duties on goods from certain trading partners. Goods originating from foreign trading partners not listed in Annex I will be subject to an additional ad valorem duty of 10%. For goods originating from the European Union (EU), the additional duty will be 15% if the Column 1 Duty Rate is less than 15%. If the Column 1 Duty Rate is 15% or higher, the additional duty will be zero. Goods that were already in transit prior to 7th August 2025 will not be subject to the new duties.

The trade partners listed in Annex I of the Executive Order 14324 of July 30, 2025, include countries with which the USA has significant trade deficits. These countries were initially subject to reciprocal additional tariffs, which were later suspended, replaced by a base tariff rate. The specific countries named in Annex I are not detailed in the provided sources, but they are subject to higher individual tariffs, reflecting a distinction in tariff treatment.

Companies should consider supply-chain mapping and country-of-origin analysis to understand the impact of the tariffs based on their manufacturing footprint and the US non-preferential rules-of-origin rules. Businesses are advised to monitor trade developments, assess supply chain impacts, and consider strategies such as valuation planning, duty deferral, and contract reviews to manage compliance and cost exposure.

For further background, see the "US imposes President's Reciprocal Tariff Policy against trading partners and ends duty-free treatment for low-value shipments from China", dated 3rd April 2025, published by the Tax Technical Knowledge Services group of NTD, with Carolyn Wright as the legal editor.

The HTSUS will be modified to suspend specific headings until the effective date of the modifications outlined in Annex II. If US Customs and Border Protection (CBP) determines that an article has been transshipped to evade applicable duties, an additional ad valorem duty of 40% will be imposed, along with any other applicable fines or penalties.

Ernst & Young LLP (United States) provides contacts for further information on this matter: Sergio Fontenelle, Lynlee Brown, Nathan Gollaher, Michael Heldebrand, Helen Xiao, Bryan Schillinger, Jay Bezek, Prentice Wells, Shane Williams, Renata Natalino, Parag Agarwal, Nesia Warner, Celine Petersen, Cody Davis, Tanna Johnson, Christopher Bourdganis, Ilona van den Eijnde, James Lessard-Templin, Sundar Markandan, Mary Cheng, Max Patel.

The Secretary of Commerce and the United States Trade Representative are tasked with monitoring the circumstances of the Executive Order and consulting with senior officials. Companies should closely track dates of entry for imports to apply the applicable rates. Consider valuation planning, such as first sale for export, warranty push down, and bifurcating product and non-product costs. Also, consider using the FTZ program for duty deferral on long-lead-time inventory items to provide cash-flow benefits.

The Executive Order includes provisions addressing transshipment. For goods that were already in transit prior to 7th August 2025, they will not be subject to the new duties. This order marks a significant shift in US trade policy and underscores the importance of companies understanding their supply chains and the implications of tariffs on their operations.

Increased customs duties levied on foreign goods by the US on their trade partners.