Major New Trade Deals for Reciprocal Tariffs and More Tariff-Related Announcements

Update: President Donald Trump announced August 7 that India's tariff rate will jump to 50% on August 27, citing the country's imports of Russian oil as the reason for the doubling of the tariff.

With the arrival of the August 1 deadline for concluding trade deals, President Trump announced several deals—with the EU, Japan, Malaysia, and South Korea—but the most important deal of all—with China—remains in negotiations in advance of an August 12 (extended) deadline. These trade pacts (which are not formal free trade agreements) center on the IEEPA reciprocal tariffs imposed on April 2 with respect to a host of countries, which were later paused until July 9 and then August 1 (for prior coverage, see the trade alert dated April 7, 2025). 

Along with the trade deal announcements, there has been a flurry of other trade activity, including executive orders (EOs) on updated reciprocal tariff structures, which are now effective on August 7, actions against Brazil, Canada, and India, tariffs on copper, and the repeal of the low-value goods exemption. Against this backdrop, it is also worth noting that the litigation challenging the legality of the IEEPA tariffs is proceeding on appeal and is expected to be on a “fast track” to reach the U.S. Supreme Court during its upcoming term commencing in October.

New Trade Pacts

Japan

The first major deal—that with Japan—was announced on July 23 in what the White House termed the “U.S.-Japan Strategic Trade and Investment Agreement.” Japan has agreed to invest $550 billion in the U.S., including commercial and defense shipbuilding, pharmaceutical and medical production, critical minerals mining, processing, and refining, semiconductor manufacturing and research, and energy infrastructure and production. In a win for the U.S. aircraft industry, Japan also has agreed to purchase 100 Boeing commercial aircraft.

On the tariff front, the U.S. has agreed to a new 15% IEEPA baseline reciprocal tariff (in place of the 24% tariff announced on April 2 that was later raised to 25%) for all imports of Japanese-originating goods. Japan has agreed to increase import quotas for U.S.-originating rice and other agricultural products by 75%. Imports of autos and auto parts from Japan will be subject to the 15% rate rather than the 25% rate for Section 232 tariffs applicable to imports from all other countries (except the U.K. at 10% and now, the EU at 15%). The new trade deal removes quantitative restrictions (quotas) on imports of these items such that Japanese companies can export unlimited numbers of vehicles and parts to the U.S.

Japan is the fifth-largest source of imports for the U.S.; in 2024, Japan shipped $148 billion worth of goods to the U.S., according to Commerce Department data. Cars, car parts, and agricultural and construction machinery are among the top goods Americans bought from Japan.

European Union

The most significant of the new trade deals was concluded with the EU on July 28 which is the largest trading partner of the U.S. Trade between the U.S. and EU totaled $976 billion in 2024. 

As set forth in the White House Fact Sheet accompanying the announcement of the pact, the EU will purchase $750 billion in U.S. energy and make new investments of $600 billion in the U.S. by 2028. The two trading partners will establish a framework for establishing fair quotas for certain sensitive industries, e.g., dairy and agriculture, and will seek to eliminate what the U.S. views as “red tape” for U.S. small and medium-sized businesses seeking to export products to the EU.

EU tariffs on U.S.-originating industrial goods (based on tariff code) will drop to zero, while EU-originating goods will be subject to a new IEEPA tariff rate. The new reciprocal tariffs EO (see below under “New Tariff Structures”) sets a reciprocal tariff rate of 15% for imports from the EU but the total duty applied could still be higher in some cases:

• If the current Column 1 (most-favored-nation, or MFN) duty rate is below 15%, a reciprocal tariff rate will be applied so that the combined rate reaches 15%.
• If the MFN rate is already 15% or higher, no reciprocal rate will be added, and the total duty rate will remain unchanged at the current level.

Importantly, vehicles and auto parts from the EU will be subject to the 15% rate instead of the 25% Section 232 duties applicable to U.S. imports of these items from other countries (except imports from the U.K. and Japan for which the rates are 10% and 15%, respectively). 

In another milestone, EU-originating pharmaceutical and semiconductor products are included in the 15% rate, thus eliminating any possibility of new Section 232 “national security” tariffs on those items once the ongoing investigations by the Commerce Department conclude. While the statutory deadline to complete those investigations does not fall until early 2026, most observers expect those investigations to conclude with the issuance final reports and recommendations to the president within the next month or so.

The sectoral tariffs on steel, aluminum, and copper will remain unchanged—the EU will continue to pay 50%. 

South Korea

On July 30, South Korea secured an 11th hour trade deal with the U.S., averting a 25% tariff set out in President Trump’s July letter to the Korean government (and in the “Liberation Day” tariffs). President Trump announced the “preliminary” trade pact on his social media platform, Truth Social. Under the agreement, Korea pledges to invest $350 billion in the U.S. in assets designated by Trump and has agreed to fully open trade with the U.S. Korean goods imported into the U.S. will face a 15% tariff. Significantly, Korean auto exports to the U.S. will also be subject to the 15% rate, rather than the 25% rate that President Trump imposes on auto imports from most countries. (For prior coverage, see the trade alert dated March 28, 2025 and the trade alert dated July 24, 2025.) Products that qualify under the U.S.-Korea Free Trade Agreement likely will not be exempt from the new 15% reciprocal tariff. South Korea has requested an exemption from these tariffs, citing its strategic trade and security relationship with the U.S. but the U.S. has not confirmed an exemption.

Pakistan

Also on July 30, President Trump announced that the U.S. and Pakistan have reached a trade deal, although others have said a deal is “near.” Either way, no details on the tariffs or other measures have been published. One point of note: Pakistan has withdrawn its DST-like 5% tax on foreign technology companies and digital platforms supplying goods and services into the country after the tax was in effect less than a month.

Malaysia

On July 31, it was announced that Malaysia has secured a trade agreement with the U.S., under which Malaysia will purchase $240 billion in items such as Boeing aircraft, coal and telecommunications equipment and ease or abolish duties on most U.S. imports. No further details on the agreement are available at this time.

Tariff Updates

In addition to the announced trade deals, President Trump released a series of tariff-related EOs that affect specific countries and sectors.

Brazil

President Trump released an EO on July 30, 2025 involving Brazil. In the EO, the president declared a national emergency with respect to this country: “[r]ecent policies, practices, and actions of the Government of Brazil threaten the national security, foreign policy, and economy of the United States. Members of the Government of Brazil have taken actions that interfere with the economy of the United States, infringe the free expression rights of United States persons, violate human rights, and undermine the interest the United States has in protecting its citizens and companies. Members of the Government of Brazil are also politically persecuting a former President of Brazil, which is contributing to the deliberate breakdown in the rule of law in Brazil, to politically motivated intimidation in that country, and to human rights abuses.”

The remedy for this cited national emergency is the imposition of an additional IEEPA tariff of 40% on many goods imported into the U.S. from Brazil, which applies in addition to the 10% reciprocal tariff, bringing the cumulative rate to 50%, the highest tariff rate of any U.S. trading partner. The duty imposed is in addition to any other duties, fees, taxes, and charges applicable to such imports. The 50% steel, aluminium, and copper tariffs remain in place. However, an annex to the EO includes a list of nearly 700 excepted products, including orange juice, but not coffee or beef, as well as goods covered by ongoing Section 232 investigations. In an unusual move, the EO also sanctions a Brazilian judge overseeing the criminal prosecution of former President Bolsonaro. The tariffs are slated to go into effect on August 6.

Canada

An EO and Fact Sheet released on July 31 address Canada’s stated failure to “cooperate in curbing the ongoing flood of fentanyl and other illicit drugs, and it has retaliated against the United States for the President’s actions.” As a result, the existing 25% IEEPA tariff rate is raised to 35% effective August 7 but USMCA-originating products remain exempt. It is unclear whether, in light of the lack of progress in ongoing trade negotiations, Canada may decide not to withdraw its Digital Services Tax law (aimed mainly at U.S. multinational tech companies that dominate internet commerce) (for prior coverage, see the article in the July 2025 issue of BDO’s Indirect Tax News.)

Mexico

The U.S.’s other North American trading partner fared better, securing a 90-day pause on the imposition of a 30% tariff. Following a conversation with Mexican President Sheinbaum on July 31, President Trump announced on Truth Social that he would delay the tariff on Mexico as trade negotiations continue. However, the 25% fentanyl tariff, the 25% tariff on autos, and the 50% tariff on steel, aluminum, and copper continue to apply during the pause.

India

President Trump announced on Truth Social on July 30 that he is imposing a 25% tariff on Indian goods imported into the U.S. This tariff will apply as from August 7, as will an unspecified penalty, citing India’s "non-monetary Trade Barriers" and its purchase of arms and oil from Russia. India and the U.S. still seem to be engaged in negotiations for a trade deal.

New Tariff Structures

On July 31, President Trump signed an EO that sets out revised reciprocal tariffs ranging from 10% to 41% on imports from 71 countries and he moved forward the effective date to August 7 (rather than August 1 as expected). The new rates take effect for goods entered for consumption, or withdrawn from a warehouse for consumption, on or after 12:01 a.m. EST, August 7. However, goods loaded onto a vessel at the port of loading on the final mode of transit before 12:01 AM ET August 7 and entered for consumption before 12:01 AM ET on October 5 will remain subject to the duties in effect before the EO. 

The tariff for a number of countries is now lower than the rate announced on April 2, but the same or higher for some countries. The list of countries and IEEPA tariffs are as follows:

Copper Tariffs

In a sector-specific tariff development, the Trump administration announced that a 50% tariff on semifinished copper products and copper-derived products, but not on raw copper, is effective on August 1. A domestic sales quota will commence in 2027. The tariff is being imposed under Section 232 and is set out in a Proclamation and Fact Sheet published on July 30. The tariff is substantially higher than the rates recommended by Treasury Secretary Bessent (15% in 2027 and 30% as from 2028).

Exemption for Low-Value Goods

Another development announced on July 30 portends the most procedural and practical problems for U.S. Customs & Border Protection (CBP). An EO was issued ending the exemption for the import of low-value goods (i.e., goods valued under $800) for all countries. Starting on August 29, imports of low-value goods into the U.S. will be subject to the tariff that applies to the country of origin. The exemption was terminated in April for goods from China (for prior coverage, see the trade alert dated April 7, 2025). 

Given CBP’s limited resources (which are already overwhelmed keeping up with enforcement of the many tariff changes since January 20 for commercial shipments over $2,500), many question how CBP can now administer and enforce this new rule covering millions of low-value shipments on a monthly basis. This is especially true because the recent “One Big Beautiful Bill” enacting many changes to the income tax code provided $16 billion in additional funding to Immigration & Customs Enforcement (ICE) to deal with the illegal migrant crisis, but no additional funding to CBP.

Semiconductors, Chips and Pharmaceuticals

President Trump announced on August 5 that he will unveil new tariffs on semiconductors and chips possibly as soon as the week of August 11 but did not provide any further details on rates. He also said that planned tariffs on pharmaceuticals imported into the U.S. could go as high as a whopping 250% following a year or so with a lower rate.