The US tariff policy is constantly evolving, attracting global attention. This newsletter examines the tariff measures announced as of March 12, 2025 and discusses future prospects.
On January 20, 2025, a presidential memorandum was issued, directing various government agencies to compile a report on the America First Trade Policy and submit it to the president by April 1, 2025. The purpose of this directive is to reduce the U.S. trade deficit, protect key domestic industries, and counter unfair trade practices. Compared to the first Trump administration, there appears to be a greater emphasis on establishing a systematic policy framework at an early stage.
Key Aspects of the America First Tariff Policy
- Investigation of the trade deficit
- Investigation of unfair trade practices
- Review of the USMCA (United States, Canada, Mexico Agreement)
- Review of China Policy
- Strengthening of Export Control Administration Regulations
However, President Trump has been announcing new tariff policies one after another without waiting for the completion of this report. While full policy implementation and formal negotiations are expected to begin after April, it is speculated that the administration aims to maintain pressure to set the stage for negotiations with various countries in the meantime.
Additional tariffs announced and implemented by the Trump Administration as of March 12, 2025
In its second term, the Trump administration has shifted its trade negotiation strategy from using tariffs as a bargaining tool to imposing tariffs first and then entering negotiations — a “tariff-first” approach. This method is highly aggressive, and it has already disrupted international trade, prompting retaliatory tariffs from trading partners.
However, the initially feared “across-the-board tariff” proposal, which called for a uniform 10% to 20% tariff on all imports worldwide, now appears unlikely to be implemented for an extended period of time. This shift reflects a growing recognition that such a drastic measure, which would fundamentally alter the international trade system, could have significant political and economic consequences both domestically and internationally, necessitating policy adjustments.
Furthermore, while the implementation of reciprocal tariffs was announced for April 2, the practical challenges of enforcing such a system suggest that the administration is moving toward a more targeted trade negotiation strategy, focusing on specific countries and product categories.
Key Trends Moving Forward
The Trump administration is expected to use the removal of additional tariffs as a bargaining tool, seeking concessions from trading partners with significant trade deficits with the US including China, Mexico, Vietnam and Japan. The administration is also likely to target specific industries and products such as steel, aluminum, automobiles, energy, and pharmaceuticals over national security concerns.
Key demands may include the relocation of supply chains to the U.S., and increased imports of American agricultural products and military-related goods. However, these negotiations are unlikely to proceed smoothly, with prolonged trade conflicts, particularly with EU nations, anticipated.
Starting in April 2025, U.S. tariff policy is expected to enter a more concrete negotiation phase. Therefore, companies must closely monitor developments at the government and industry levels and carefully consider appropriate countermeasures.
The following section provides an analysis of individual tariff issues.
Mexico, Canada
The 25% tariff on Mexico and Canada was introduced under the International Emergency Economic Powers Act (IEEPA) with the stated purpose of strengthening border security and combating illegal drug trafficking. However, it is evident that these tariffs serve a dual purpose: beyond security concerns, they are also being used as leverage to reduce the trade deficit with both countries and as a bargaining tool in the renegotiation of the USMCA (United States-Mexico-Canada Agreement).
With the measures implemented on March 10, products covered under the USMCA were exempted until April 2. However, non-USMCA products account for more than 50% of all imports, and the long-term continuation of these tariffs remains uncertain. That said, the confirmation that the USMCA itself will remain in effect is an important development for both Canada and Mexico.
As with any of these tariff measures, the duration of these policies is a key concern. In some cases, such as automobiles, the US is raising tariff rates to encourage greater investment in North America, particularly in the US. These tariffs may remain in place for more than six months. If the US, Canada and Mexico agree to a stricter rule of origin, the US tariff must be higher than 2.5%; otherwise, the administration may view that companies may simply choose to pay the tariff as the compliance cost would exceed 2.5%.
A review of the USMCA is scheduled for the end of this fiscal year, and the outcome of these renegotiations is expected to influence future tariff measures. Canada has already agreed to an early review of the USMCA, and Mexico is also likely to agree to an expedited review as a condition for the removal or reduction of tariffs.
Additionally, ongoing negotiations regarding Mexico currently include the following demands:
- Raising tariffs on Chinese steel to prevent the circumvention of U.S. tariffs through Mexico.
- Ending the de minimis import program between Mexico and China.
On the other hand, with Canada, the U.S. is primarily focused on blocking capital inflows from Chinese criminal organizations.
Steel and aluminum tariffs were implemented, but their legal effectiveness may be disputed
On March 12, 2025 an additional 25% tariff on steel and aluminum was implemented. This measure expands upon the Section 232 tariffs that were first introduced in 2017 under the first Trump administration. At that time, major U.S. trading partners, including Japan, the EU, and South Korea, were able to negotiate tariff quotas and partial exemptions, thereby avoiding additional tariffs. However, since steel and aluminum imports have not decreased significantly since 2017, this new tariff imposition was deemed necessary. With this measure, previous agreements have been revoked, and an across-the-board tariff now applies to all countries on these products.
Legal Challenges and the Role of the Court of International Trade (CIT)
There is a high likelihood that lawsuits will be filed with the Court of International Trade (CIT) following the tariff implementation. However, as these lawsuits are not expected to seek an injunction, the collection of tariffs is expected to continue.
The central legal issue in these lawsuits will be whether the U.S. Department of Commerce’s decision to impose tariffs in 2025 based on its 2017 investigation is lawful or not. The key question is whether past investigation results can be used as justification without conducting a new investigation, or whether a new investigation is required.
This issue is closely related to the 2019 case concerning the increase of tariffs on Turkish steel. At that time, the Trump administration raised Section 232 tariffs on Turkish steel from 25% to 50%, prompting a lawsuit before the CIT. The plaintiffs argued that a new investigation was required before increasing tariffs, and the CIT ruled in their favor. However, upon appeal, the Federal Court of Appeals ruled that a new investigation was not necessary because the tariff increase occurred “shortly after” the initial tariff application.
In the current case, the main legal debate will be whether imposing tariffs on the same products in 2025 based on a 2017 investigation still meets the “shortly after” requirement. If the lawsuit succeeds, the additional tariffs collected during this period could be fully refunded.
A Section 232 investigation typically takes approximately nine months to complete. However, depending on the Commerce Department’s decision, a new investigation could be expedited and completed more quickly.
China
On February 4 and March 4, 2025, an additional tariff of 10% each was imposed under the IEEPA on each date to curve the inflow of fentanyl into the United States. As a result, when combined with the existing Section 301 tariffs, tariffs on Chinese imports can reach up to 45%.
There have been reports indicating the possibility of a meeting between President Trump and Chinese President Xi Jinping in June, with Trump also expressing a certain degree of willingness to reach an agreement with China. If concrete progress is made in these negotiations, the additional 20% tariffs imposed under IEEPA could be gradually reduced, provided that China meets the new targets.
Uncertainty Over the Removal of Section 301 Tariffs
However, there is no indication that the Section 301 tariffs will be lifted. The reason for this is that China is perceived as failing to comply with the Phase I agreement and the Section 301 tariffs serve as an important source of revenue for the U.S. government.
Given these factors, a significant relaxation of these tariffs is unlikely. Furthermore, unlike other countries, Chinese investment in the U.S. is not welcomed, making it difficult for China to secure concessions from the Trump administration.
Additionally, there have been allegations of country-of-origin fraud involving Chinese products, and reports indicate that a review of the country-of-origin rules based on the substantial transformation principle is under consideration. This change could be implemented as a measure to counter tariff evasion strategies involving third-country transshipment. If implemented, companies that rely on Chinese suppliers should exercise caution, as this could affect the classification and tariff treatment of their imported goods.
Declining Likelihood of Across-the-Board Tariffs and Consideration of Reciprocal Tariffs
Given the legal challenges and potential economic repercussions of the across-the-board tariffs, there appears to be a shift toward the reciprocal tariff approach. The reciprocal tariff system is scheduled to take effect on April 2, 2025. This approach is designed to match U.S. tariff rates to those imposed by its trading partners, aiming to counter high tariffs imposed by other countries and encourage overall tariff reductions.
However, implementing this system across all trading partners would require setting more than 2 million different tariff rates, making execution extremely difficult. Additionally, many major U.S. trading partners, including Japan, already maintain relatively low tariff policies, raising doubts about the effectiveness of this measure in reducing the trade deficit.
Consequently, the U.S. may selectively apply reciprocal tariffs to specific trade partners or product categories and, under the pretext of non-tariff trade barriers, unilaterally impose higher tariffs under the label of reciprocal tariffs.
In Conclusion
Moving forward, after April 2025, the scope of targeted trading partners and product categories is expected to become clearer, leading to a more defined direction in trade negotiations. As a result, businesses will be able to plan more effectively.
Companies are advised to proactively conduct simulations for supply chain restructuring based on anticipated trade policy scenarios. However, actual adjustments should be carefully implemented only after closely assessing trade policy developments.
Our firm remains committed to providing clients with timely updates and supporting the development of effective trade, government relations and communications strategies to minimize or avoid tariffs over the medium term, as adjustments to the initial policies are inevitably made.
Disclaimer: All views expressed in this article are solely for informational purposes and should not be construed as legal advice. This information is for reference only and is bound to change in case of any amendments or changes to applicable laws. We do not assume any responsibility or liability for any errors or omissions in the content of this article, and do not make any warranties about the completeness, reliability and accuracy of the information expressed in this article.
