Tariff Talk

Details on changes to the treatment of reciprocal tariffs were released last night, with plenty for trade to digest. Most importantly, there are no reciprocal changes effective today, August 1. The published list reflects recent announcements and a near-universal default to 15% in lieu of a trade agreement in process.

Canada will see a rate change to its IEEPA (fentanyl) tariff from 10% to 35%, with a new stipulation: goods “determined by CBP to have been transshipped to evade applicable duties will be assessed an additional ad valorem rate of duty of 40%,” according to the executive order. Also effective August 1 are the 232 tariffs on copper semi-finished and derivative articles.

The updates to reciprocals are now showing an effective date of August 7, with an exclusion for goods on the water (understood to be on the last vessel) prior to that date. However, there is also globally impactful language permitting CBP to assess an additional 40% tariff on imports that have been transshipped to avoid tariffs—placing increased focus on accurate rules of origin. CBP and the Secretary of Commerce are responsible for publishing twice-annual lists of circumvention high-risk countries. The order also reiterates the administration’s authority to adjust these rates (lower or higher) based on the performance of trade agreements. It further reminds that China is separate from this global update, with its current pause set to expire in two weeks. Talks of an extension are ongoing, with the nation currently held at 10%.

The delay to August 7 is believed to help CBP and third-party providers prepare for the volume of changes. Agreements in progress, such as with the EU, contain language that caps or contains tariff rates to the reciprocal 15%. HTS are being established for this new methodology, but details on how to apply for the hierarchy of tariff programs are still pending. OCEANAIR is ready for next week; we anticipate much published guidance, country by country. Stay tuned to our socials for updates, and clients may always reach our team at compliance@oceanair.net.