The Reciprocal Tariff Act is the executive framework the Trump administration activated on April 2, 2026, to impose import duties based on bilateral trade deficits, not on the rates trading partners charge on American goods. Rates run from 10% to 145% depending on the country of origin. For freight forwarders, this changes HTS classification workflows, transit date tracking, and client cost projections on any shipment bound for the United States.
What the Reciprocal Tariff Act Is
Legal foundation: IEEPA and the Liberation Day executive order
The Reciprocal Tariff Act is not legislation passed by Congress. It is an executive order signed by President Trump on April 2, 2026, under the International Emergency Economic Powers Act (IEEPA). IEEPA authorizes the executive branch to take emergency economic measures without legislative approval.
The order classifies the chronic US trade deficit as a national economic emergency. That declaration provides the legal basis for differentiated import duties by country of origin.
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Why “reciprocal” does not mean rate-matching
The name is misleading. A traditional reciprocal tariff mirrors the rate a trading partner charges on American exports. The Reciprocal Tariff Act uses a different mechanism. It divides the bilateral trade deficit by total imports from that country and multiplies the result by 0.5.
Vietnam charges an average of 9% on American goods. Under the Reciprocal Tariff Act, Vietnam receives a 46% rate. The gap reflects the size of Vietnam’s trade surplus with the US, not its own tariff policy.
How Duty Rates Are Calculated
The administration’s published formula is:
Tariff rate = (bilateral trade deficit / total imports from that country) x 0.5
For China, the formula produces a base rate of 34%. The administration raised it to 145% through additional executive actions. That 145% stacks on top of the HTSUS Column 1 rate and, for Chinese goods, on top of Section 301 duties.
A universal floor of 10% applies to all countries not covered by a specific higher rate. It took effect on April 5, 2026.
Countries and Current Active Rates
Countries with the largest bilateral surpluses against the US carry the highest rates:
- China: 145% (reciprocal tariff + Section 301 stacking)
- Cambodia: 49%
- Vietnam: 46%
- Bangladesh: 37%
- Thailand: 36%
- Indonesia: 32%
- India: 26%
- European Union: 20% (90-day pause expired; full rate reinstated)
- Rest of world: 10% (universal baseline)
Canada and Mexico fall outside the Reciprocal Tariff Act framework. USMCA governs most of their trade with the US. Steel and aluminum from any origin, including Canada and Mexico, remain subject to Section 232 duties separately.
In April 2026, the administration announced a 90-day pause that lowered rates to 10% for more than 75 countries. China was excluded from the pause.
Which Products Are Covered
Most-affected HTS chapters
The Reciprocal Tariff Act applies to nearly all imports. The categories with the highest combined duty exposure are:
- Consumer electronics and components (HTS Chapter 85)
- Industrial machinery and equipment (Chapter 84)
- Apparel, textiles, and footwear (Chapters 61, 62, and 64)
- Furniture, wood products, and home goods (Chapter 94)
- Plastics and rubber articles (Chapters 39 and 40)
Exemptions
The executive order excludes specific product groups:
- Pharmaceutical products (select Chapter 30 categories)
- Semiconductors and silicon wafers
- Energy: crude oil, LNG, uranium
- Certain critical minerals
- Steel and aluminum already covered by Section 232 (those products do not stack the reciprocal rate on top of existing Section 232 duties)
CBP updates the exemption list through Federal Register notices. An exemption approved in April can be revoked in June. The Trump tariff tracker covers these updates in real time.
Operational Impact for Freight Forwarders
Entry date governs, not shipment date
The applicable duty rate is the one in effect on the US customs entry date, not the date of shipment. A container that left Shanghai on March 28 and entered Los Angeles on April 10 pays the 145% rate, even though it shipped before the executive order took effect.
Forwarders must calculate ETA with margin and flag the tariff risk to the importer before confirming the booking.
HTS classification review
A classification error under the Reciprocal Tariff Act can mean paying 20% instead of 46%. CBP has authority to reclassify at entry and bill the importer of record for the difference.
Asian suppliers classify goods under their own export schedules. The HTSUS diverges at the 8- and 10-digit level. Forwarders must verify HTS codes for each affected origin before issuing the shipper’s letter of instruction. The Har1monized Tariff Schedule lookup covers current HTSUS codes with Column 1 and Section 301 rates applied.
Additional CBP documentation
With the Reciprocal Tariff Act active, CBP requests more frequently:
- Country of origin declaration signed by the exporter
- Commercial invoice with precise merchandise description and unit price
- First sale documentation if the importer wants to apply that valuation method
- For China shipments: supporting documentation for any active Section 301 exclusions
Ways to Reduce Duty Exposure
Foreign Trade Zones (FTZ). Goods entering an FTZ do not incur duties until they exit into US commerce. FTZs allow importers to defer duty payments, re-export without paying duties, or manipulate goods in ways that may change their HTS classification. Active FTZ facilities operate at the ports of Los Angeles, Chicago, and Savannah.
First sale valuation. In multi-tier supply chains, the importer of record can declare the price of the first commercial transaction (manufacturer to trader) as the customs value instead of the final sale price. This reduces the dutiable base. Full documentation of the entire transaction chain is required. First sale for export explains the qualification criteria and documentation requirements.
Origin diversification. Manufacturers are shifting production from China to India, Vietnam, and Mexico. The logistics consequences of that shift, including new bottlenecks and lead time changes, are covered in detail in this year’s tariff pivot.
IEEPA tariff refunds. Importers who overpaid duties during periods of regulatory uncertainty, or whose goods qualify under retroactive exclusions, may recover overpaid amounts. IEEPA tariff refunds outlines the filing process and eligibility window.
Tariff consulting. Specialized tariff consulting for freight forwarders covers HTS classification analysis, origin ruling reviews, and exclusion petitions before the USTR. It delivers the most value on recurring China shipments where stacked duties exceed 145%.
Common Mistakes
Assuming the 90-day pause covers your client’s origin. Not all countries are in the pause. China is not. The pause can also end before 90 days through an additional executive order.
Quoting with the current rate and no adjustment clause. A 10% rate today can become 46% before the container reaches port. Quotes should include a tariff adjustment clause or a validity window of 24 to 48 hours.
Not separating stacked duties for China shipments. The effective rate on Chinese goods is not simply 145%. Add the HTSUS Column 1 rate (typically 3% to 4%) and Section 301 duties (up to 25% depending on the product). The real effective rate exceeds 160% across many HTS chapters.
Ignoring country of origin for multi-component shipments. CBP applies the substantial transformation rule. If the forwarder fails to document component origins correctly, CBP can assign the origin of the country with the highest applicable duty rate.
FAQ
Is the Reciprocal Tariff Act permanent?
No expiration date is set. The executive order can be modified, paused, or revoked through a subsequent executive action. It already happened in April 2026 when the administration paused rates for more than 75 countries.
Who actually pays the tariff, the exporter or the importer?
The importer of record pays CBP. The exporter has no direct legal obligation. The economic split depends on how the parties negotiated the purchase price.
Can a freight forwarder act as importer of record?
Yes, with a power of attorney from the client. Taking on that role means accepting full legal responsibility to CBP for duty payment and documentation accuracy.
What happens if CBP finds an incorrect HTS code?
CBP issues a CF-28 (request for information) or a CF-29 (notice of action) to the importer of record. CBP can collect the unpaid difference plus interest. If CBP determines there was fraudulent intent, additional penalties apply under 19 USC 1592.
Are e-commerce shipments affected?
Yes. The executive order eliminated the de minimis exemption (USD 800 threshold) for shipments originating from China starting May 2, 2026. Packages from platforms such as Shein and Temu pay the full 145% rate.
How does an importer request a product exclusion?
Exclusion petitions go to the Office of the United States Trade Representative (USTR). The importer of record files, not the forwarder. The process includes a public comment period and can take several months.
Running regular shipments from Asia to the US? Specialized tariff consulting for freight forwarders reviews your HTS mix, checks origin documentation, and calculates the real duty impact of the Reciprocal Tariff Act on your margins.
