Rates for country-specific reciprocal tariffs have been announced based on an Executive Order signed last evening. The new rates will be effective on August 7 instead of August 1 as announced earlier. An exemption period will be provided for “goods laden on a vessel at the port of loading and in transit on the final mode of transport on or before August 7 and entered before October 5.” The exemption is applicable only to goods shipped via vessel, not aircraft, and they consider the “final mode of transport” to be the last leg of a shipment that is transloaded at an intermediary point.
The agreement with the countries of the EU will result in their goods being assessed differently from those of other countries. For these countries, the 15% reciprocal in most cases eliminates the base tariff rate; this is a new wrinkle. However, for goods which are charged a base rate of over 15%, the higher base rate will be used, and the 15% additional tariff is not charged. As has been customary, the reciprocal tariffs are assessed on top of the base rate in all other instances. The Executive Order can be accessed on the web at the following link:
Further Modifying the Reciprocal Tariff Rates – The White House
This action applies to all countries except China, which has an August 12 implementation date, and Brazil, where an additional 40% tariff will be charged effective August 6. A similar exemption period is being provided for the 40% Brazilian tariff.
In other tariff news, the 25% IEEPA tariffs on Canadian goods were increased to 35% effective August 1. This is an increase in the rate level, not a new tariff, so the application of the tariff remains the same. Goods that are eligible and certified under USMCA are exempt from the tariff.
While there is wording on each of these tariff actions that warns of a 40% tariff on goods transshipped to evade the tariffs, we think this only applies when CBP determines that a violation has occurred. It is important to remember that claiming the wrong country of origin for this purpose is already an illegal action.
Best Regards,
Sam McClure, LCB
Director of Compliance & Customs Services