On Feb. 13, President Donald Trump issued a memorandum directing the Secretary of Commerce and U.S. Trade Representative (USTR) to review all tariffs imposed on U.S. exports as well as other non-tariff trade barriers that undermine U.S. market access abroad. It then directs these officials to recommend a reciprocal duty amount or other measure that should be applied in response.
This memorandum itself does not contemplate which specific tariff authorities could be used to impose reciprocal tariffs. Instead, it states that USTR and the Commerce Department “shall initiate, pursuant to their respective legal authorities, all necessary actions to investigate the harm to the United States from any non-reciprocal trade arrangements adopted by any trading partners.”
The new “reciprocal” memorandum builds on the approach outlined in the America First Trade Policy Memorandum that President Trump issued on the first day of his second term. That document directed the same officials to identify any unfair trade practices by other countries and recommend appropriate solutions. It also identified the International Emergency Economic Powers Act (IEEPA) as a potential tool through which to respond.
This new memorandum does not include a specific deadline by which the administration will impose reciprocal tariffs. Instead, it calls for the relevant officials to recommend reciprocal tariffs to the president after they deliver the reports required by the America First Trade Policy Memorandum. These are due on April 1.
In response to a question from a reporter regarding the timing of these additional tariffs, President Trump deferred to Commerce Secretary nominee Howard Lutnick. In his response, the incoming secretary appeared to conflate the requirements of the two memorandums and reiterated April 1 as the date by which the administration will be ready to impose reciprocal tariffs—to which the president interjected “pretty close.” However, neither memorandum precludes action before or after this date.
In comments from the Oval Office, President Trump explained that “reciprocal” tariffs would be applied to all nations with no exclusions. A White House Fact Sheet identified India, Brazil, the European Union (EU) and Canada as countries that impose unfair trading practices on the United States.” In his remarks , the president also stated that the United States will treat the EU’s Value Added Tax (VAT) “like a tariff.” However, the president also left the door open to negotiation, noting that if other countries “reduce or terminate their tariff against us … we will pay the same thing.”
If implemented, the move toward “reciprocal” tariffs will represent a major departure from the World Trade Organization’s (WTO) General Agreement on Tariffs and Trade (GATT), which includes the most-favored-nation (MFN) principle. Under the MFN system, any favorable trading terms offered by one WTO member to another must be extended to all other WTO members. If fully implemented, this will likely force a shift away from the WTO to an approach of negotiating tariffs on a country-by-country basis.
In addition to the announcement on reciprocal tariffs, President Trump warned that additional tariffs on automobiles, pharmaceuticals and semiconductors will be imposed soon.
Section-by-Section
Sec. 1. Background.
The United States has one of the most open economies globally, with low average weighted tariff rates. It imposes fewer barriers to imports compared to other major world economies with similar political and economic systems. In contrast, foreign nations have adopted a closed market system that reduces U.S. exports to support domestic industry.
The lack of reciprocity has caused a growing trade deficit that harms American workers and businesses. The U.S. trade deficit is an economic and national security threat. Promoting reciprocal and balanced trade can help reduce the deficit grow the economy and improve relationships with trading partners, benefiting American companies and consumers.
Sec. 2. Policy.
The United States will establish a “Fair and Reciprocal Plan” (Plan) aimed at countering non-reciprocal trading arrangements. The Trump administration will determine the equivalent reciprocal tariff to be applied to each foreign trade partner based on an analysis of the following:
- tariffs imposed on U.S. exports;
- discriminatory or extraterritorial taxes, including a value-added tax (VAT), imposed on U.S. businesses, workers and consumers;
- costs to U.S. businesses, workers and consumers due to non-tariff barriers or unfair practices, including subsidies and regulatory requirements on U.S. businesses operating in a foreign country;
- policies and practices that distort exchange rates and suppress wages, making U.S. businesses and workers less competitive; and
- any other practice that, in the judgment of the USTR, in consultation with the Secretary of the Treasury, the Secretary of Commerce and the Senior Counselor to the President for Trade and Manufacturing, limits market access or undermines fair competition with the United States.
By considering all policies that disadvantage the United States, the Plan will ensure the global trading system is fair and balanced.
Sec. 3. Taking Action.
(a) After the submission of the specified agency reports due under the “America First Trade Policy Memorandum,” the Secretary of Commerce and USTR, in consultation with other senior officials, will initiate, pursuant to their respective legal authorities, investigations into non-reciprocal trade agreements. Upon completion of the investigations, the Secretary of Commerce and USTR will submit a report to the president detailing proposed remedies aimed at achieving reciprocal trade relations with each identified trading partner.
(b) Within 180 days of Feb. 13, 2025, the Director of the Office of Management and Budget must assess all fiscal impacts of the Plan on the Federal Government and evaluate the effects of any information collection requests on the public. A written assessment must be delivered to the President.
Sec. 4. Definitions.
(a) Value-added tax - a type of consumption tax levied on the incremental increase in value of a good or service at each stage of the supply chain.
(b) Nontariff barrier or measure - any government-imposed measure or policy that restrictsor impedes international trade in goods, including import policies, sanitary and phytosanitary measures, technical barriers to trade, government procurement, export subsidies, lack of intellectual property protection, digital trade barriers, and government-tolerated anticompetitive conduct of state-owned or private firms.
Sec. 5. General Provisions.
- This memorandum does not limit or affect the legal authority of any executive department or agency; or the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.
- This memorandum shall be implemented consistent with applicable law and subject to the availability of appropriations.
- This memorandum does not create any enforceable rights or benefits for any parties against the United States or its entities.
- The USTR is directed to publish this memorandum in the Federal Register.
THIS DOCUMENT IS INTENDED TO PROVIDE YOU WITH GENERAL INFORMATION REGARDING THE MOST RECENT TARIFF ANNOUNCEMENT FROM THE TRUMP ADMINISTRATION. THE CONTENTS OF THIS DOCUMENT ARE NOT INTENDED TO PROVIDE SPECIFIC LEGAL ADVICE. IF YOU HAVE ANY QUESTIONS ABOUT THE CONTENTS OF THIS DOCUMENT OR IF YOU NEED LEGAL ADVICE AS TO AN ISSUE, PLEASE CONTACT THE ATTORNEYS LISTED OR YOUR REGULAR BROWNSTEIN HYATT FARBER SCHRECK, LLP ATTORNEY. THIS COMMUNICATION MAY BE CONSIDERED ADVERTISING IN SOME JURISDICTIONS.