Reciprocal tariffs explained: Impact on your business

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President Donald J. Trump imposed “reciprocal tariffs” on a host of countries on April 5, 2025, following his April 2 “Liberation Day” announcement. Since then, he has adjusted many reciprocal tariffs, increasing rates for some countries and lowering them for others.

The president established the reciprocal tariffs under the International Emergency Economic Powers Act (IEEPA). On February 20, 2026, the Supreme Court of the United States ruled that IEEPA does not authorize the president to impose tariffs.

During a White House press briefing following the decision, President Trump said he would replace the IEEPA tariffs with a 10% global tariff under the authority of Section 122. He later issued a proclamation establishing the 10% tariff effective February 24, 2026, for a period of 150 days. 

On February 21, the president said via Truth Social that he would increase the Section 122 tariff to 15%. He has yet to make that official.

• President Trump established sweeping reciprocal tariffs under the International Emergency Economic Powers Act (IEEPA). On February 20, 2026, the U.S. Supreme Court ruled that IEEPA does not authorize the president to impose tariffs.
• Following the Supreme Court decision, President Trump established a 10% global tariff under the authority of Section 122, effective February 24, 2026. He also said his administration would initiate Section 301 investigations.
• Noting that the Supreme Court did not mention refunds, Trump said he would fight IEEPA tariff refunds in court.

If a tariff is a tax on goods imported from other countries, what is a reciprocal tariff?

Reciprocal means “consisting of or functioning as a return in kind” or “mutually corresponding.” So, a reciprocal tariff is a tariff on a country that matches the tariff imposed by that country. Should Country A impose a 14% tariff on Country B, Country B’s reciprocal tariff for Country A would be 14% or the equivalent.

Reciprocal tariffs are designed to combat unfair trade practices and fix trade imbalances.

In February 2025, President Trump announced the coming of a “Fair and Reciprocal Plan” to “counter non-reciprocal trading arrangements with trading partners by determining the equivalent of a reciprocal tariff with respect to each foreign trading partner.”

In addition to existing tariffs on U.S. goods, the plan considered such factors as value-added tax (VAT), nontariff barriers, and other practices judged to impose “any unfair limitation on market access or any structural impediment to fair competition with the market economy of the United States.”

The White House unveiled its reciprocal tariff plan on April 2, 2025, during a “Liberation Day” Rose Garden event. The plan established:

• An additional 10% ad valorem rate of duty on all imports from all trading partners starting April 5, 2025
• Higher rates of duty for trading partners listed in Annex 1, starting April 9, 2025

The baseline 10% tariff on all countries took effect as planned on April 5. However, on April 9, President Trump suspended the higher country-specific reciprocal tariffs for all nations except China, Canada, and Mexico.

The 90-day pause was to end July 9, 2025, but on July 7, President Trump delayed implementation of the country-specific reciprocal tariffs until August 1. He also started sending letters to his counterparts in other countries; the Trump tariff letters announced the rate of duty that will take effect starting August 1 but left the door open to adjusting the tariff. (See a sample tariff letter.)

On July 31, the White House published a list of modified reciprocal tariffs. The new duties take effect seven days after the date of the order, at 12:01 a.m. ET, instead of August 1.

On September 5, 2025, President Trump issued an executive order modifying the scope of reciprocal tariffs. The order exempts 39 HTS codes from the reciprocal tariffs and subjects another eight HTS codes to those tariffs. It also provides a list of HTS codes for which the president may be willing to provide a 0% reciprocal tariff rate.

President Trump imposed a 10% tariff on virtually all countries effective April 5, 2025. Canada, Mexico, and China were the only exceptions; different tariff policies apply to them. Read more about the Canada tariffs and China tariffs.

Most countries later became subject to a higher rate of duty.

The tariffs announced in April and subsequent adjusted tariffs are listed below. If column one is blank, it’s because that country was not listed on the April version of Annex 1.

On February 20, 2026, the Supreme Court ruled that IEEPA does not grant the president the authority to establish tariffs. Per a February 20, 2026, executive order, the ad valorem duties imposed pursuant to IEEPA that are listed below, “shall no longer be in effect and, as soon as practicable, shall no longer be collected.” 

Another proclamation invoked Section 122 to impose a temporary import surcharge of 10% “on articles imported into the United States, effective February 24, 2026.” This 10% tariff will be in effect for 150 days.

The tariffs listed below are no longer in effect but are provided for historical purposes.

Transshipping is the practice of sending goods from one country to another country before shipping them to the final port of destination, or transferring cargo from one vessel to another while en route. It’s a way to sidestep tariffs imposed on the country of origin.

The Trump tariff letters specify that “goods transshipped to evade a higher tariff will be subject to that higher tariff.”

Ordinarily, this would mean the higher tariff on the country of origin would apply, rather than the lower tariff on the country the goods passed through. But that may not be what President Trump means. “Vietnam will pay the United States a 20% tariff on any and all goods sent into our territory,” he wrote on Truth Social on July 2, “and a 40% tariff on any transshipping.”

The “40% on transshipping,” Commerce Secretary Howard Lutnick later explained on X, means “if another country sells their content through products exported by Vietnam to us, they’ll get hit with a 40% tariff.”

So, there are questions about what this transshipping tariff means and how it will be enforced.

Tariffs have been in flux since February 1, 2025, when President Trump revealed his intention to impose new tariffs on China, Canada, and Mexico. New tariffs for many countries and specific products have been announced, implemented, paused, increased, and decreased, often within a matter of hours. We tracked tariff changes in this blog post and are tracking 2026 tariff changes here.

This is a challenging environment for businesses, both for planning and compliance, especially given the February 20, 2026, Supreme Court decision. When we don’t know what trade policies tomorrow will bring, it’s difficult to forecast future costs and revenue or rework supply chains.

Fortunately, technology can help businesses reduce the burden of international compliance. Avalara Cross-Border automates tariff code classification, which is key to determining tariff rates, and delivers real-time calculation of customs duties and import taxes. We stay on top of regulatory changes worldwide, so our customers can focus on other aspects of their business.

To learn how Avalara can help you comply with international tax requirements, contact us today.

What are reciprocal tariffs? 

Reciprocal tariffs are tit for tat: They’re tariffs on imports that match the tariffs imposed by the country of export. Countries impose reciprocal tariffs to improve trade barriers and imbalances.

Will the U.S. refund the reciprocal tariffs?

After the Supreme Court issued its IEEPA decision on February 20, 2026, President Trump pointed out that the court did not address refunds. “We’ll end up being in court for the next five years,” he said during a press briefing.

What’s the difference between reciprocal and retaliatory tariffs?

A reciprocal tariff matches another country’s tariff to balance trade between the two countries. A retaliatory tariff is a tax on imports from a country to punish that country for certain actions, such as setting high tariffs of its own or dumping.

What is dumping in international trade?

In trade, dumping means exporting goods to another country at a price lower than the actual cost of production or the domestic price in the country of import.

This blog post has been updated to reflect recent developments. It was originally published in July 2025.