Executive Order Updating Certain Reciprocal Tariffs
On September 5, President Trump issued a new Executive Order modifying the scope of existing “reciprocal” tariffs imposed by previous executive orders. This latest executive order goes into effect on September 8 and makes several key changes to the existing tariff regime.
First, it modifies Annex II which contains import items that are exempted from reciprocal IEEPA and Section 232 tariffs. Thirty-nine (39) new product categories have been added to Annex II including gold, wood pulp, graphite, and various nickel derivatives. Eight (8) categories have also been removed from the exemption list, including aluminum hydroxide and several other chemicals that are primarily inputs for plastics production. See the full Annex II list here.
Additionally, the executive order establishes Annex III on “Potential Tariff Adjustments for Aligned Partners”. This section creates a framework for establishing categories of imports that may qualify for reciprocal and Section 232 tariff reductions. These products include certain generic pharmaceuticals and their components, mineral and agricultural products not found in sufficient quantities in the U.S. and select aircraft and aircraft parts. The executive order authorizes the U.S. Trade Representative and the Secretary of Commerce to implement these exemptions following trade deals that are deemed to address persistent trade deficits, without the need for future executive orders.
Here is the CBP notice on implementation of the executive order.
Court Rulings on IEEPA Tariffs
On August 29, the Federal Circuit Court of Appeals issued a 7-4 decision affirming the United States Court of International Trade's decision that the International Emergency Economic Powers Act (IEEPA) does not authorize the President to impose the Reciprocal (tariffs imposed across all countries) and Trafficking (fentanyl and immigration tariffs on Mexico, Canada, and China) Tariffs. The Trump administration then petitioned the Supreme Court on September 3 for an expedited ruling to overturn the appellate decision. U.S. Solicitor General, John Sauer has requested that the Supreme Court decide by September 10 on whether to pick up the case, with oral arguments beginning as soon as November. The petitioners support an expedited ruling. An expedited ruling could result in a Court opinion this year. Overall, the future of the tariff landscape and potential relief to importers remains uncertain. Importers should continue to have strong trade compliance and documentation.
Updates to U.S.-Japan Deal Result in Baseline 15% Tariff for Nearly All Imports
On September 4, President Trump issued an Executive Order to implement the U.S.-Japan trade deal announced in late July. The executive order establishes a 15% baseline tariff on Japanese imports into the U.S. as previously announced. Sector specific tariffs such as those on steel and aluminum, pharmaceuticals, and natural products not available in the U.S. remain in place. Automobiles, a significant portion of imports, will continue to face a tariff rate of 15%. The tariffs set forth under the executive order retroactively apply to August 7, 2025. U.S. Customs and Border Protection has issued interim guidance that any refunds sought for goods imported between August 7 and September 8 shall follow standard procedures. CBP will provide further guidance as appropriate.
The executive order also notes that Japan remains committed to increasing purchases of U.S. agricultural products to $8 billion and to increase imports of American rice by 75%, long a sticking point in trade negotiations. The order also states that President Trump will direct Japan’s committed $550 billion investment to key industries and strategic projects such as semiconductors, pharmaceuticals, metals, critical minerals, shipbuilding, energy (including pipelines), and advanced technologies such as artificial intelligence and quantum computing.
However, Japan’s top trade negotiator, Ryosei Akazawa, noted that the deal is not completely implemented as Tokyo is still waiting for further presidential action on adjustments to pharmaceutical and semiconductor tariff rates.
Brazil’s Stacking Tariffs and Section 301 Investigation
Trade negotiations between the U.S. and Brazil remain strained with neither side demonstrating a willingness to back down from their positions. Most Brazilian imports are currently subject to 50% IEEPA tariffs. The additional 40% IEEPA tariff stacked on top of the initial 10% baseline reciprocal tariff resulted from President Trump’s emergency declaration citing threats to U.S. national security, the criminal investigation into former Brazilian president Jair Bolsonaro, and unfair trade practices.
The Trump administration also launched a Section 301 investigation on Brazil for various trade practices that could result in additional tariffs on Brazilian imports. USTR hosted its public hearing on September 3 with testimony provided by U.S. and Brazilian agriculture, pharmaceutical, energy, technology, and wood stakeholders.
Brazilian President “Lula” da Silva publicly shared his critique of the current U.S. trade policy towards Brazil during a September 8 virtual meeting of BRICS leaders, stating “Tariff blackmail is being normalized as a tool for conquering markets and interfering in domestic issues."
Though there has been little progress in trade negotiations, Brazilian companies are acting despite the gridlock. Aircraft manufacturer Embraer said that the firm would be making a major
announcement on September 10 regarding a U.S. milestone for its business. While aircraft are exempted from the 40% IEEPA tariffs, Embraer’s exports to the U.S. still face the 10% reciprocal tariff. Embraer said last month it could potentially locate its manufacturing facility for its proposed C-390 military aircraft in the U.S.
Section 232 Investigations
While Section 232 tariffs on automobiles and auto parts, copper, steel, and aluminum products are in effect, the Department of Commerce is still investigating the following industries: timber and lumber, semiconductors, pharmaceuticals, trucks, critical minerals, commercial aircraft, polysilicon, unmanned aircraft systems, and wind turbines.
Latest on Additional Trade Discussions
Canada and Mexico: The U.S. is set to begin renegotiating the U.S.-Mexico-Canada Agreement (USMCA). Under USMCA, the USTR is required to begin public consultations by October 4. USTR is expected to issue a request for public comments as early as this week. Following the comment period, the Administration is required to hold a public hearing and provide a brief to Congress by January 31, 2026. The first official trilateral review of the trade deal will then occur by July 1, 2026.
EU: The U.S.-EU trade framework announced July is facing increased scrutiny from both European business leaders and members of the European Parliament as the deal goes before the EU’s legislative body for approval. The head of the Parliament’s trade committee said he has “doubts” about the agreement but suggested that amendments to the deal might still allow for Parliamentary approval. Business leaders have raised concerns regarding shifting U.S. trade policies, such as the addition of hundreds of steel and aluminum derivative products to the Section 232 tariff schedule after the initial deal was announced.
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Are you concerned about the impacts of the outlined trade issues? Please contact Sarah Helton, Michael Best Strategies’ Trade Practice Lead at sarah.helton@michaelbest.com for assistance.