US adjusts tariff hierarchy application to ease burden
Date of Publication: May 2, 2025
On April 29, 2025, President Trump issued an Executive Order (EO) addressing certain tariffs on imported articles, adjusting the hierarchy of their application and providing some limited relief to importers. The EO is related to the following prior Presidential actions taken with respect to tariffs:
- Executive Order 14193 of February 1, 2025 (Imposing Duties to Address the Flow of Illicit Drugs Across Our Northern Border), as amended,
- Executive Order 14194 of February 1, 2025 (Imposing Duties to Address the Situation at Our Southern Border), as amended;
- Proclamation 9704 of March 8, 2018 (Adjusting Imports of Aluminum Into the United States), as amended;
- Proclamation 9705 of March 8, 2018 (Adjusting Imports of Steel into the United States), as amended; and
- Proclamation 10908 of March 26, 2025 (Adjusting Imports of Automobiles and Automobile Parts into the United States).
This latest EO sets out the procedure for determining which of multiple tariffs will apply to an article when subject to more than one of the tariff actions listed in the EO. The goal of this action is to ease the tariff burden created by earlier actions that imposed "Section 232" tariffs on certain autos and auto parts starting on April 3, 2025 (autos) and May 3, 2025 (auto parts), as well as earlier actions that imposed tariffs on certain Canadian and Mexican origin aluminum and steel products.
How tariffs were previously applied
Prior to this EO being issued, the Trump tariffs were applied in a “stackable” manner. This meant that any new tariff that implemented was “in addition to” any existing applicable tariffs. This had the potential to result in extremely high tariff rates in certain situations.
For example, if you were importing a good from China that was also subject to Section 301 duties, you could have tariffs that included the baseline MFN duty (e.g.,3%), the IEEPA fentanyl tariff (20%), a Section 301 tariff (25%) and the reciprocal tariff (125%). As a result, the total stacked tariff would look like this:
3% + 20% + 25% + 125% = 173%
How the new EO unstacks tariffs
The EO issued on April 29th eased, by unstacking, some of the previously issued tariffs in certain situations. Those situations are as follows:
- An import subject to Section 232 auto/auto parts tariffs will not be subject to (1) IEEPA fentanyl tariffs for non-USMCA qualifying goods from Canada and Mexico; and (2) Section 232 aluminum or steel tariffs.
- If auto/auto part tariffs arenotapplicable, but IEEPA fentanyl tariffs for non-USMCA qualifying goods from Canada or Mexico apply, then those goods will not be subject to Section 232 aluminum or steel tariffs. This will provide both duty relief and reduce compliance burdens around reporting country of melt/pour (steel) and country of smelt/cast (aluminum).
- Imports otherwise subject to aluminum Section 232 tariffs may still overlap with steel Section 232 tariffs and vice versa based on content and classification.
Clarification is still needed on whether imports from CA and MX that qualify for USMCA will also be exempted from Section 232 aluminum or steel tariffs. Hopefully future CSMS from CBP will confirm.
The EO also stated other tariff actions will still stack as applicable, such as the IEEPA China fentanyl tariffs, Section 301 tariffs, AD/CVD, reciprocal tariffs, and Column 1 duty rates. It is assumed the exclusion for reciprocal tariffs if otherwise subject to Section 232 duties or if included in the Annex III HTS list still applies.
Timeline
Another benefit for importers is that the White House made the above tariff relief retroactive to March 4, 2025 (the date on which the Canada/Mexico fentanyl related tariffs started). Thus, importers may file refund requests with Post Summary Corrections or, if within the 10-day window, entry revisions. It is expected that CBP will issue further information via CSMS on the proper process for handling refunds where applicable.
As of this writing, updates to the HTSUS have not been made, but the EO ordered the HTSUS to be updated by May 16, 2025. CBP issued a CSMS message on May 1st related to the EO, however specific details were not provided and are expected in a subsequent Federal Register Notice.
To learn more about how the ONESOURCE Global Trade suite of tools and services can help businesses analyze potential impacts, explore alternative sourcing options, and optimize their trade operations to mitigate risks and capitalize on potential advantages, please contact your Account Manager or Customer Success Manager.