On 7 July 2025, President Donald Trump signed an Executive Order extending country-specific tariffs rates from the original deadline of 9 July 2025 to 1 August 2025. Additionally, the President issued "tariff letters," introducing new country-specific tariffs ranging from 25% to 40%, to 14 countries as an ongoing effort to reach bilateral agreements ahead of the new deadline.

The letters indicated that current and future sectoral tariffs imposed under Sec. 232 authority would be exempt from these tariff rates, and that any retaliatory action from United States (US ) trading partners would result in another rate increase.

President Trump explained in a Fact Sheet, also issued on 7 July, that the action is intended to push for fairer trade terms and reduce trade deficits. It is not immediately clear how the President selected this list of 14 countries, but the White House has suggested that other trading partners are likely to receive similar letters before 1 August.

Notably, President Trump did not send letters to certain major trading partners, including European Union or India, both of whom remain in negotiations with the United States. This may suggest that progress on framework deals could materialize in the near term.

The changes in rates from the initial tariffs announcements are shown in the chart below:

Background

President Trump introduced additional tariffs on 2 April 2025 as part of his broader "America First" trade strategy with stated goals to level the playing field for US businesses and address trade deficits and national and economic security concerns of the US. The stated intention of the policy is to impose tariffs that match the barriers other countries place on US exports. On 9 April 2025, the tariffs were paused for 90 days until 9 July 2025 to allow for further negotiations with countries.

To date, only the UK and Vietnam are close to formalizing deals with the White House. The general terms of the US-UK Economic Prosperity Deal is outlined in an Executive Order under which the UK will receive lower tariffs for automobiles and metals under certain quotas. The White House has yet to publish the terms of the Vietnam deal, which reduces the country specific tariff from 46% to 20%.

The additional tariffs were discussed previously in several EY Global Tax Alerts:

• US suspends President Trump's Reciprocal Tariff Policy for 90 days, except for China, dated 11 April 2025
• US exempts certain electronic products from tariffs under President Trump's Reciprocal Tariff Policy, dated 14 April 2025
• US and UK unveil trade deal, dated 9 May 2025

Action for businesses

In light of these developments, business may want to consider taking the following actions:

• Keep up with the latest news and developments in trade policies and stay adaptable to quickly respond to changes in trade regulations and tariff rates.
• 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.
• Monitor the liquidation of entries to ensure opportunity to file protests if necessary to preserve the rights to refunds.
• Consider valuation planning, such as first sale for export, warranty push down and bifurcating product and non-product costs (e.g., exclusive distribution rights).
• Consider aligning customs valuation with transfer pricing policies.
• Review contracts with suppliers and customers to clarify contractual responsibility for duties and taxes.
• Consider renegotiating supplier and customer pricing agreements and/or cost-splitting arrangements.
• Assess the operational impact of eliminating de minimis duty-free treatment for Mainland China- and Hong Kong-origin products.
• Consider using the Foreign Trade Zone (FTZ) program for duty deferral on long-lead-time inventory items to provide cash-flow benefits.
• Consider duty drawback for the qualified imports (e.g., those affected by the tariffs).
• Review US-continuous-import-bond sufficiency to help ease the import of goods.