Key takeaways

United States (US) President Trump issued an Executive Order on 31 July 2025 imposing additional ad valorem duties on goods from certain trading partners, effective 7 August 2025.

Businesses should 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.

Background

The 31 July Executive Order, titled "Further Modifying the Reciprocal Tariff Rates," builds upon Executive Order 14257, which was enacted on 2 April 2025. The latest Executive Order imposes additional ad valorem duties on goods from certain trading partners, as detailed in Annex I of the order. These modifications will take effect for goods entered into the US for consumption or withdrawn from a bonded or Foreign Trade Zone (FTZ) warehouse for consumption on or after 12:01 a.m. eastern daylight time, 7 August 2025. Goods that were already in transit prior to this effective date will not be subject to the new duties. (For background, see EY Global Tax Alert, US imposes President's Reciprocal Tariff Policy against trading partners and ends duty-free treatment for low-value shipments from China, dated 3 April 2025.)

Specific tariff modifications

The new Executive Order specifies the following tariff modifications.

1. European Union (EU): For goods originating from the EU, the additional ad valorem duty will be determined based on the current ad valorem (or ad valorem equivalent) rate under the Harmonized Tariff Schedule of the United States (HTSUS). If the Column 1 Duty Rate is less than 15%, the total duty will be set at 15%. If the Column 1 Duty Rate is 15% or higher, the additional duty will be zero.
2. Non-listed trading partners: Goods originating from foreign trading partners not listed in Annex I will be subject to an additional ad valorem duty of 10%, effective 7 August 2025.
3. Suspension of certain HTSUS headings: The HTSUS will be modified to continue suspending specific headings until the effective date of the modifications outlined in Annex II. This is intended to facilitate the implementation of the new duty rates.

Monitoring and recommendations

The Secretary of Commerce and the United States Trade Representative are tasked with monitoring "the circumstances involving the emergency declared in Executive Order 14257" and regularly consulting with senior officials. They will inform the President of any circumstances that may indicate the need for further action or adjustments to the tariffs based on the responses of foreign trading partners.

Transshipment provisions

The Executive Order includes provisions addressing transshipment. If US Customs and Border Protection (CBP) determines that an article has been transshipped to evade applicable duties, the article will be subject to an additional ad valorem duty of 40%, along with any other applicable fines or penalties.

Action for businesses

Affected companies should consider 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.
• Closely track dates of entry for imports to apply the applicable 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 rules.
• 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 using the 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.