The Trump Administration announced two significant trade actions this past week. On Monday, February 10, 2025, President Trump signed two Executive Orders (“EOs”) modifying the existing Section 232 tariffs on steel and aluminum imports in a manner that broadens coverage or raises rates. On Thursday, February 13, 2025, President Trump issued a memorandum laying out plans to impose “reciprocal” trade actions—including tariffs—against U.S. trading partners determined to engage in trade practices that are unfair or result in imbalances. The memorandum suggests the Administration may take up the cause of U.S. exporters facing unfair barriers to market access abroad.
Expansion of Section 232 Tariffs on Steel and Aluminum Imports
Existing Section 232 tariffs had imposed 25% tariffs on steel imports and 10% tariffs on aluminum imports, subject to various country exemptions or exceptions and product exclusions. The new EOs modify these tariffs to apply 25% tariffs as of March 12, 2025, on all steel and aluminum products that had been subject to the existing Section 232 tariffs, removing all country exemptions, ending all quota or tariff-rate quota agreements, and terminating the product exclusion process for pending and future requests.
The EOs will also newly apply the 25% tariffs to additional derivative steel and aluminum products that had not been previously subject to Section 232 tariffs. These additional derivative steel and aluminum articles will be specified in Annex I of each respective EO, which have not yet been released. The Commerce Department will also establish a process for domestic producers to request the inclusion of additional derivative articles beyond those identified in Annex I, such that the scope of Section 232 tariffs may continue to expand over time.
For importers, the assessment of Section 232 tariffs on derivative steel and aluminum products will depend on the HTS classification of the imported derivative article, the value of the steel or aluminum content, and the country where the steel article was melted and poured or where the aluminum article was smelted and cast. According to the EOs, any misclassification of imports resulting in non-payment of the Section 232 steel and aluminum duties will result in imposition by Customs and Border Protection (“CBP”) of the maximum monetary penalty allowed by law.
Announcement of “Fair and Reciprocal Plan” to Correct Unfair and Unbalanced Trade
On February 13, President Trump issued a memorandum instructing U.S. government agencies to develop a “Fair and Reciprocal Plan” to correct “longstanding imbalances” in international trade and to ensure fairness for U.S. companies exporting and operating overseas. Specifically, the memorandum declares the President’s intent to take action to reduce the U.S. trade in goods deficit and to counter policies and practices of foreign governments deemed to be non-reciprocal in nature, including by “determining the equivalent of a reciprocal tariff with respect to each foreign trading partner.”
The President’s memorandum identifies various “non-reciprocal tariff relationships” that will be targeted under this policy, including: (1) foreign tariffs on U.S. exports; (2) unfair, discriminatory, or extraterritorial taxes, including value-added taxes; (3) non-tariff barriers and other unfair or harmful policies or practices, including subsidies or burdensome regulatory requirements on U.S. companies operating overseas; (4) distortive exchange rate policies, wage suppression measures, and other “mercantilist policies” hindering U.S. competitiveness; and (5) other unfair market access limitations or structural impediments to fair competition.
In a Fact Sheet accompanying the announcement, the White House identified illustrative examples of foreign country measures and policies that are non-reciprocal, including:
- Brazilian tariffs on ethanol
- Indian tariffs on agricultural goods and motorcycles
- EU tariffs on cars and import restrictions on shellfish
- Digital service taxes, including those imposed by Canada and France
The memorandum instructs government agencies to investigate and identify additional non-reciprocal measures. After the submission of several reports due in April under the earlier “America First Trade Policy Memorandum,” the President directs Commerce and USTR, in consultation with others, to initiate “all necessary actions” to investigate the harm caused by non-reciprocal trade measures and to detail proposed remedies for each U.S. trading partner to ensure reciprocal trade relations. The legal basis for these actions is not specified in the memorandum.
Commerce and USTR will present their findings and recommendations to the President, though at this point there is no express deadline for doing so. The memorandum also directs OMB to assess all fiscal impacts on the Federal Government, as well as the impacts of any information collection requests on the public, and to deliver its assessment to the President within 180 days (or by August 12, 2025).
The Administration’s focus on non-reciprocal trade relationships may open the door to bilateral demands to improve foreign market access for U.S. exporters—regarding not just tariff barriers, but also a wide range of non-tariff barriers.
Importantly, while the memorandum suggests that reciprocal tariffs or other actions might come only after reports are submitted to the President in April and beyond, President Trump might take certain actions sooner.
Covington’s International Trade Practice
Covington’s trade lawyers have been advising a wide range of clients with regard to the Section 232 actions, reciprocal tariffs, and related customs questions. If you have any questions concerning the information in this alert, please contact the members of our International Trade practice.
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