On August 7th, the U.S. “reciprocal tariffs” first announced in early April 2025 are expected to finally go into effect, increasing the tariffs from a current 10% flat rate to a higher rate for many countries. Below are the relevant details and updates.
A Brief Recap on Reciprocal Tariffs
The reciprocal tariff policy was announced in April 2025 to replace uniform import duties with country-specific rates based on trade imbalances. However, implementation was paused days after the announcement for 90 days, during which a temporary 10% flat tariff was put in place.
As the pause neared its July 9 expiration, the White House extended it to August 1, giving trading partners more time to negotiate. In addition, the U.S. started sending formal letters to multiple countries, notifying them of updated tariff rates that would apply in the absence of any bilateral agreement. These letters acted as final notice ahead of enforcement, and triggered rushed trade deal negotiation.
New Reciprocal Rates in Detail
As the extended deadline culminates, the new U.S. reciprocal tariff rates are officially set to take effect on August 7, 2025.
Many of the U.S.'s key trading partners, including the United Kingdom, the EU, Japan, and South Korea, have successfully secured preliminary trade deals, locking in reduced rates. Conversely, other nations like Brazil and India have not yet reached agreements and will consequently face higher default tariffs under the reciprocal formula.
It's crucial to note that the rates for countries without a finalized agreement remain subject to potential change in the coming days and weeks, as negotiations may still be ongoing.
Here’s a breakdown of the updated rates for key regions:
| Country | Old Rate | New Rate | Notes |
|---|---|---|---|
| 🇪🇺 European Union | 10% | 15% | Deal announced on July 27 introduces 15% ceiling rate (see further details below). |
| 🇬🇧 United Kingdom | 10% | 10% | Deal signed on June 17, applying to most goods. |
| 🇨🇭Switzerland | 10% | 39% | No deal announced. |
| 🇹🇷 Turkey | 10% | 15% | |
| 🇨🇦 Canada | 25% | 35% | Negotiations ongoing. USMCA-compliant goods remain exempt. |
| 🇲🇽 Mexico | 25% | 25% | USMCA-compliant goods remain exempt. |
| 🇯🇵 Japan | 10% | 15% | Deal announced on July 22. |
| 🇰🇷 South Korea | 10% | 15% | Deal announced on July 30. |
| 🇨🇳 China | 30% | 30% | Temporary 30% uplift expires on August 12. Negotiations ongoing. |
| 🇹🇼 Taiwan | 10% | 20% | Reduced from previously threatened 32% |
| 🇮🇳 India | 10% | 25% | No deal expected. |
| 🇻🇳 Vietnam | 10% | 20% | Deal announced on July 2 but not yet signed. Trans-shipments will be subject to an additional 40% tariff. |
| 🇮🇩 Indonesia | 10% | 19% | Deal announced on July 22. |
| 🇵🇭 Philippines | 10% | 19% | Deal announced on July 22. |
| 🇧🇩 Bangladesh | 10% | 20% | Reduced from previously threatened 37% |
| 🇧🇷 Brazil | 10% | 50% | Includes additional 40% “free speech” tariff. |
EU-US Trade Deal Explained
Importantly, the trade deal between EU and US significantly differs in nature compared to other deals, as explained by the European Commission and confirmed by the U.S. government!
The deal establishes a single, all-inclusive US tariff ceiling of 15% for EU goods. It is an all-inclusive tariff rate and represents a ceiling that includes the US Most Favoured Nation (MFN) tariff that elsewhere is stacked on top of additional tariffs the US introduced. The 15% ceiling applies to nearly all EU exports currently subject to reciprocal tariffs, except where the US MFN tariff exceeds 15%, in which case only the MFN tariff applies with no additional tariffs on top.
The impact illustrated on some example products:
| Product | US MFN Rate | Previous Rate for EU Products (+10%) | New Rate for EU Products (15% Ceiling) |
|---|---|---|---|
| Leather belt | 0% | 10.0% | 🔺 15.0% (0+15%) |
| Sneakers | 8.5% | 18.5% | 🔻 15.0% (8.5+6.5%) |
| Leather handbag | 9.0% | 19.0% | 🔻 15.0% (9+6%) |
| Wool sweater | 16.0% | 26.0% | 🔻 16.0% |
Update on China Trade Deal
Chinese origin products are not affected by the reciprocal rate update on August 7th. The United States currently applies a 30 percent baseline tariff on imports from China under an agreement reached in May that removed the previously escalated 145% tariff uplift.
This current 30 percent tariff rate is set to expire on August 12, but U.S. officials have indicated a potential extension of this deadline as trade talks continue. President Trump has warned that tariffs could increase again if no new deal is reached, however, signaling that the new rate would be nowhere near the previous 145 percent tariff.
Looking Ahead
It is possible that some countries might still strike a deal over the upcoming days. We will continue to monitor these developments closely and keep updating new rates here as announced.
Recommended Actions
To mitigate the impact of these changes and ensure a smooth transition, we strongly recommend that merchants delivering to the U.S. take the following proactive steps:
- Review and Update U.S. Pricing: Immediately assess and adjust the U.S. retail pricing of any products that will be affected by the new tariff rates.
- Accurately Assign Country of Origin: Ensure that the country of origin is accurately assigned for every product. This is crucial to avoid unexpected and potentially unnecessary tariff costs. Consider reviewing and adjusting your product sourcing if feasible.
- Leverage Glopal's Solutions: Utilize Glopal’s T&D reverse calculation or B2B2C solution to significantly reduce the impact of any tariffs on average. These tools are designed to help you manage and potentially halve your tariff-related expenses.
Sources
The White House Executive Orders