Demystifying the Tariff Turmoil
The world of tariffs can feel like a maze for importers, with new rules, acronyms, and rates popping up seemingly overnight. In 2025, the U.S. tariff landscape is more complex than ever. This article breaks down the key types of tariffs—standard duties, Section 301 tariffs, IEEPA tariffs (Reciprocal and Fentanyl), and Section 232 tariffs—to help importers understand what they are, how they differ, how they interact, and what you need to know to navigate them.
Standard Duties: The Baseline
Standard duties are the regular tariffs applied to imported goods based on their classification in the Harmonized Tariff Schedule of the United States (HTSUS). These duties vary by product and country of origin, often ranging from 0% to 15% (though higher for specific items like apparel). They’re the foundation of U.S. import taxes, set by Congress and trade agreements, and apply to nearly all imports unless exemptions exist (e.g., under free trade agreements like the USMCA).
Key Fact for Importers: Always check the HTSUS code for your product to know the base duty rate. These duties are the starting point, and other tariffs may add on top.
Section 301 Tariffs: Targeting China
Section 301 tariffs, authorized by the Trade Act of 1974, were introduced in 2018 to counter unfair trade practices by China, such as intellectual property theft. They apply exclusively to Chinese-origin goods, covering about $250 billion in imports (electronics, machinery, furniture, etc.). Rates range from 7.5% to 25%, depending on the product’s HTSUS code, and are added on top of standard duties.
How They Interact: Section 301 tariffs stack with standard duties and other applicable tariffs (like IEEPA tariffs on China). For example, a Chinese product with a 5% standard duty and a 25% Section 301 tariff faces a combined 30% duty before other tariffs are considered.
Need to Know: Importers can request exclusions for specific products through the U.S. Trade Representative (USTR), but approvals are limited. Check if your product qualifies for an exclusion to reduce costs.
IEEPA Tariffs: Emergency Measures
The International Emergency Economic Powers Act (IEEPA) allows the President to impose tariffs during a declared national emergency. In 2025, two types of IEEPA tariffs are in play: Fentanyl tariffs and Reciprocal tariffs.
- Fentanyl Tariffs: Starting in February 2025, these target China (20% on most goods), Canada, and Mexico (25% on non-USMCA-compliant goods, 10% on certain energy products) to address fentanyl trafficking and border security. They apply in addition to standard duties and Section 301 tariffs for Chinese goods.
- Reciprocal Tariffs: Introduced on April 2, 2025, these aim to reduce U.S. trade deficits by imposing a 10% baseline tariff on all countries (effective April 5) and higher rates (11% to 50%) on 57 countries with large trade surpluses (e.g., 34% on China, effective April 9). However, as of April 9, these were paused for 90 days for most countries except China, where rates escalated to 125% (145% including Fentanyl tariffs) due to Chinese retaliation. Goods from Canada and Mexico are exempt from Reciprocal tariffs but subject to Fentanyl tariffs.
How They Interact: IEEPA tariffs stack with standard duties and Section 301 tariffs but not with Section 232 tariffs (more on that below). For Chinese goods, this can lead to staggering rates—e.g., a product with a 5% standard duty, 25% Section 301 tariff, 20% Fentanyl tariff, and 125% Reciprocal tariff could face a 175% total duty. To prevent excessive stacking, Executive Order 14289 (April 29, 2025) sets precedence rules, applying the highest applicable rate among certain conflicting tariffs in some cases.
Need to Know: The de minimis exemption (duty-free entry for shipments under $800) ends for Chinese goods on May 2, 2025, increasing costs for low-value imports. Importers of USMCA-compliant goods from Canada or Mexico face 0% Fentanyl tariffs, saving significantly. Verify your goods’ origin and USMCA eligibility.
Section 232 Tariffs: National Security
Section 232 tariffs, under the Trade Expansion Act of 1962, are imposed when imports threaten U.S. national security. They currently apply to steel (25%), aluminum (25%), their derivatives, and automobiles/parts (25%, effective April 3, 2025). Unlike other tariffs, they’re product-specific, not country-specific, though exemptions exist (e.g., USMCA-certified autos pay 0% or reduced rates on non-originating content).
How They Interact: Section 232 tariffs don’t stack with Reciprocal tariffs—goods subject to Section 232 tariffs (e.g., steel, autos) are exempt from Reciprocal tariffs to avoid double taxation. However, they stack with standard duties and, for Chinese goods, Section 301 and IEEPA Fentanyl tariffs. For example, Chinese steel might face a 25% Section 232 tariff, 5% standard duty, 25% Section 301 tariff, and 20% Fentanyl tariff, totaling 75%.
Need to Know: Importers can request product exclusions through the Department of Commerce, but approvals are specific and time-limited. For steel and aluminum, weekly updates on exclusions are posted in CBP’s ACE system—check with your CBP client representative if issues arise.
Why This Matters for Importers
The interplay of these tariffs creates a complex web, with rates potentially exceeding 170% for some Chinese goods. Here’s how to stay ahead:
- Understand Your Costs: Use the HTSUS to calculate standard duties, then add applicable Section 301, IEEPA, or Section 232 tariffs. Tools like CBP’s ACE system can help track quotas and exclusions.
- Check Exemptions: Explore exclusions for Section 301 and Section 232 tariffs, and verify USMCA compliance for Canadian/Mexican goods.
- Document Compliance: Maintain “reasonable care” memoranda to prove due diligence in tariff calculations, reducing penalty risks.
- Stay Updated: Tariff policies shift rapidly. Monitor the Federal Register, CBP’s Cargo Systems Messaging Service, and the White House Presidential Actions page for changes.
The Bottom Line
Standard duties are your starting point, Section 301 hits Chinese goods, IEEPA tariffs address emergencies (fentanyl and trade deficits), and Section 232 protects national security. They often stack, but rules like EO 14289 and Section 232 exemptions prevent over-taxation in some cases. Importers must stay vigilant, leveraging HTSUS codes, exclusions, and compliance tools to manage costs in this turbulent tariff climate.
Hopefully this was a good primer to help you understand the basics of the various tariffs which apply to your goods. If you would like to know more, the brokerage team @ Ken Hamanaka is here to guide you through the chaos. Please reach out to speak with one of our customs experts: info@kenhamanaka.com