US Tariff Policy Update
In the four months since President Trump proclaimed April 2, 2025, ‘Liberation Day,’ there have been various developments in the US trade and tariff policy.
Shortly after Liberation Day, President Trump set reciprocal tariff rates for imports from every country into the US. Those rates varied based on trade deficit levels and other factors used by the White House. The reciprocal rates were ultimately paused for 90 days for additional trade talks between the US and its trading partners. A 10% global tariff rate, except for certain products (steel/aluminum) and countries (China, Canada, Mexico), was set in place during those negotiations.
In the meantime, we have seen several country-specific tariff rates and trade deal announcements, legal challenges, and country-level negotiations. These efforts led up to the latest deadline of August 7, the effective date for tariff rates, some set by negotiation and others set unilaterally by the President.
*It is important to note that the underlying authority of the President to set tariff rates, given by the International Emergency Economic Powers Act (IEEPA), is currently subject to a legal challenge in the Federal Appeals Court. The Court of International Trade previously struck down the reciprocal tariffs, but that decision was paused to hear additional arguments, which are ongoing. A ruling in that case could come any day.*
The August 7 deadline appears to be the one that will stick relative to the country-specific rates. HFA has heard from several members who are receiving pricing updates from vendors, given the expected implementation of the new tariff rates.
President Trump signed an Executive Order on July 31 that sets the tariff rates for all imports coming into the United States. A listing of these rates can be found here. These rates reflect country-specific rates, like Vietnam’s 20% (which was announced at 46% on Liberation Day), but they do not include China, which has a separate deal with the Administration that pauses reciprocal tariffs until August 12.
Practically speaking, there is a period of time when products shipped BEFORE 12:01 a.m. on August 7, 2025, AND withdrawn from the warehouse for consumption BEFORE 12:01 a.m. on October 5, 2025, would NOT be subject to the reciprocal rates. However, goods shipped AFTER 12:01 a.m. on August 7, 2025, will be subject to the updated/adjusted reciprocal tariff rates.
Aside from the effective dates and the details on rates, there are still unanswered questions from these new policies, especially as they relate to the definition of ‘transshipment.’ At a high level, transshipping involves shipping goods through another country on the way to their final destination. This has been a way that some importers have avoided tariffs from China – shipping goods through a low/no tariff country into the US. The President has set a 40% tariff rate for transshipped goods to reduce it. We are still working to determine if that only applies to finished goods or components; would a ‘substantial transformation’ metric exist? At this point, the guidance from the federal government is that US Customs and Border Protection (CBP) will make that transshipping determination. However, the criteria involved in that decision remain unknown.
In most cases, the adjusted reciprocal tariff rates are an increase over the 10% global tariff rate set in April. Based on the information received by HFA members, prices for these goods will also be adjusted to reflect this new set of tariff policies. Our message to the Administration and Congress has been consistent – the uncertainty around trade/tariff policy and increased tariff rates will lead to higher prices for retailers and consumers. These effects will be particularly felt across our small businesses, which make up the vast majority of HFA members.
If you have any questions about these tariff issues or want to share their impact on your business, please contact HFA staff at kcrawford@nahfa.org.
HFA is here to support you. We’re tracking these issues closely and advocating for smarter, fairer policies that work for retailers like you.
