US Tariffs: the regulatory landscape, impact on trade and strategic guidance for clients in the commercial, maritime and insurance sectors

Presidential authority & legal foundations for US tariff policies

The legal framework governing tariffs in the US is rooted in the US Constitution, which grants Congress the power to levy tariffs. However, this authority has been delegated to the president through various legislative measures, including the Trade Expansion Act of 1962 and the Trade Act of 1974. See U.S. Const. art. I, § 8, cl. 1; Trade Expansion Act of 1962, 19 U.S.C. § 1862; Trade Act of 1974, 19 U.S.C. § 2411. These acts authorize the president to adjust tariffs for national security purposes or in response to unfair trade practices. See 19 U.S.C. § 1862; 19 U.S.C. § 2411. Additionally, the Trade Promotion Authority enables the president to negotiate international trade agreements, with congressional approval through an expedited process. See 19 U.S.C. § 2191. The president's authority is primarily exercised under the International Emergency Economic Powers Act (“IEEPA”), which has been the administration’s preferred tool for swiftly implementing economic sanctions and other trade-related actions in response to foreign threats. See 50 U.S.C. § 1702.

Overview of the regulatory framework & executive orders implementing tariffs – scope, timing, countries, & industry/product affected

Initial EO 14257 & subsequent amendments

On Wednesday, April 2, 2025, via its Executive Order 14257 (“EO 14257”), the President announced significant tariffs on major trading partners, including a 10% baseline rate on all goods entering the US, which was required to be paid by US importers effective Saturday, April 5, 2025, at US seaports, airports, and customs warehouses. Greater levies on goods from approximately 60 trading partners started on April 9, 2025. These tariffs apply to imports from nearly all US trading partners, but exclude goods already subject to product-specific duties—such as those on steel, aluminum, automobiles, and auto parts—as well as certain energy-related and other specifically exempted products.

On Wednesday, April 9, 2025, President Trump paused all reciprocal tariffs listed below for 90 days by issuing Executive Order 14266, setting a baseline of 10%—for listed countries, with an exception for Canada and Mexico, which tariffs will apply per Executive Orders and the provisions of the US-Mexico-Canada Agreement (USMCA).

The pause does not apply to China, to which greater tariffs apply. On April 11, China announced retaliatory tariffs on US goods, raising rates to 125% effective April 12. Due to additive US tariffs, some Chinese imports now face combined duties exceeding 170%. For instance, lithium-ion EV batteries are subject to 173.4% in total duties (125% reciprocal, 20% fentanyl-related, 25% Section 301, and 3.4% base tariff). That same day, US Customs and Border Protection (“CBP”) granted temporary exemptions from the reciprocal tariffs for various electronic products, including smartphones, laptops, and televisions. However, April 14, the Commerce Department initiated three national security investigations under Section 232 concerning imports of (1) semiconductors and related downstream goods, (2) pharmaceutical products, and (3) refined critical minerals. These investigations, directed by Executive Order titled: “Ensuring National Security and Economic Resilience Through Section 232 Actions on Processed Critical Minerals and Derivative Products,” could result in future tariffs.

A White House Fact Sheet dated April 15 raised China’s reciprocal tariff rate to 245%, which includes the 125% base, a 20% fentanyl-related tariff, and Section 301 duties (ranging from 7.5% to 100%). While some electronics remain exempt for now, these measures likely apply to Hong Kong and Macau as well, per Executive Order 14257 (Apr. 2) and related regulations.

Timing of tariffs & applicability

EO 14257, amongst other executive orders, must be read in conjunction with CBP Alerts. The CBP explains in such alerts that there is an “on the water” clause in effect for all freight bound to the US that has been on the water before the April 5, 9, and 10, 2025 tariff announcements. In fact, the US tariffs are based on the sailing or travelling date (as they apply equally to goods shipped by boat and by plane), or the date the freight leaves the factory or warehouse. Section 3(a) of EO 14257, as modified by the amendment on April 9, 2025, explains that the tariff modifications are effective “with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on April 10, 2025 and that were not in transit on the final mode of transit prior to 12:01 a.m. eastern daylight time on April 10, 2025.” Essentially, the tariffs being paused on many nations’ trade are based on the sailing date, or the date the freight leaves the factory or warehouse. The “on the water clause” has not changed. However, this language remains vague, especially since goods “entered for consumption” or “withdrawn from warehouse for consumption” or “transit on the final mode of transit” are neither explained nor defined.

First, 19 CFR 141.0a defines “entered for consumption” as “an entry summary for consumption has been filed with CBP in proper form, including electronic submission to the Automated Commercial Environment (ACE) or any other CBP-authorized electronic data interchange system, with estimated duties attached.[1] See 19 CFR 141.0a. “Entered for consumption” also means the necessary documentation has been filed with CBP to withdraw merchandise from a duty-deferral program in the United States for exportation to Canada or Mexico or for entry into a duty-deferral program in Canada or Mexico (see § 181.53 of this chapter).

Second, CBP’s alert # 64680374 on Tuesday April 8, 2025 outlines the timing as well as applicability of tariffs. Heading 9903.01.28 applies to goods from any country that were (1) loaded onto a vessel and in transit to the United States before 12:01 a.m. EDT on April 5, 2025, and (2) are entered for consumption, or withdrawn from warehouse for consumption, between 12:01 a.m. EDT on April 5, 2025, and 12:01 a.m. EDT on May 27, 2025.[2] For goods from countries subject to additional country-specific tariffs under headings 9903.01.43 through 9903.01.76, products that were (1) loaded and in transit between 12:01 a.m. EDT on April 5, 2025, and 12:01 a.m. EDT on April 9, 2025, and (2) entered for consumption, or withdrawn from warehouse for consumption, before 12:01 a.m. EDT on May 27, 2025, are eligible for a 10% additional duty instead of the full country-specific tariff. These entries must be reported under heading 9903.01.25. To prevent misuse of these in-transit exceptions, US Customs and Border Protection (CBP) will allow use of headings 9903.01.28 and 9903.01.25 only for qualifying goods entered before 12:01 a.m. EDT on May 27, 2025. After that time, CBP will consider these exceptions to have expired due to the reasonable time elapsed for in-transit goods to arrive.

On April 11, 2025, CBP updated its guidance regarding certain tariff exclusions under alert CSMS #64724565. Pursuant to the April 11, 2025 Presidential Memorandum titled “Clarification of Exceptions Under Executive Order 14257 of April 2, 2025, as Amended,” CBP clarified that the President granted a limited number of reciprocal tariff exemptions. Granted by the current administration, these exemptions apply even to products originating from China, Hong Kong, and Macau, notably, smartphones, computers, and certain other electronics. CBP has issued a list of tariff codes excluded from import taxes, with the exemptions applying retroactively to 12:01 a.m. EDT on April 5, 2025. Alert # 64715655 from CPB on April 11, 2025, notified users of a glitch in the system used to exempt freight from tariffs, and tariffs are not currently seemingly being collected.

Product-specific tariffs[3]

Product category	Action
Semiconductors & pharma	25%+ tariffs announced Feb 18; Section 232 investigations launched Apr 14.
Steel & aluminum	Section 232 tariffs raised (Aluminum: 10% → 25%) as of Mar 12.
Autos & parts	25% tariffs authorized via proclamation, effective Apr 3 (autos), before May 3 (parts).
Copper	Section 232 investigation launched Feb 25; report due Nov 22.
Lumber	Section 232 investigation launched Mar 1; report due Nov 26.
Agricultural products	Tariffs began Apr 2, per Mar 3 announcement.

4. Industry-specific tariffs

On April 17, the current administration announced a new maritime tariff regime targeting Chinese-built vessels. Under the United States Trade Representative’s proposal—stemming from a Section 301 investigation and supported by the April 9 Executive Order “Restoring America’s Maritime Dominance”— the US would impose fees of up to $1.5 million per voyage on Chinese-built ships entering US ports. Key details:

Service fees for Chinese vessel operators/owners:

April 17, 2025: $0 per net ton
Oct 14, 2025: $50 per net ton
April 17, 2026: $80 per net ton
April 17, 2027: $110 per net ton
April 17, 2028: $140 per net ton
(Capped at 5 charges per vessel, per year)

Service fees for operators of Chinese-built vessels (non-Chinese owners):

April 17, 2025: $0 per container
Oct 14, 2025: $120 per container ($18/ton)
April 17, 2026: $153 per container ($23/ton)
April 17, 2027: $195 per container ($28/ton)
April 17, 2028: $250 per container ($33/ton)
(Capped at 5 charges per vessel, per year)

Other notes:

Car carriers will be charged based on Car Equivalent Units (starting at $150/CEU).
LNG carriers will face phased-in restrictions over 22 years.
US-built vessel orders may suspend equivalent fees for up to 3 years.
Exemptions apply for Great Lakes/Caribbean routes, US territories, empty ships, and bulk exports (e.g., coal, grain).

Tariffs application per country – reciprocal tariff, adjusted

Algeria - 30%	Falkland Islands - 42%	Madagascar - 47%	Philippines - 18%
Angola - 32%	Figi - 32%	Malawi - 18%	Serbia - 38%
Bangladesh - 37%	Guyana - 38%	Malaysia - 24%	South Africa - 26%
Bosnia and Herzegovina - 36%	India - 27%	Mauritius - 40%	Sri Lanka - 44%
Botswana - 38%	Indonesia - 32%	Moldova - 31%	Switzerland - 32%
Brunei - 24%	Iraq - 39%	Mozambique - 16%	Syria - 41%
Cambodia - 49%	Israel - 17%	Myanmar (Burma) - 45%	Taiwan - 32%
Cameroon - 12%	Japan - 24%	Namibia - 21%	Thailand - 37%
Chad - 13%	Jordan - 20%	Nauru - 30%	Tunisia - 28%
China - 245%	Kazakhstan - 27%	Nicaragua - 19%	Vanuatu - 23%
Cote d’Ivoire - 21%	Laos - 28%	Nigeria - 14%	Venezuela - 15%
Democratic Republic of Congo - 11%	Lesotho - 50%	North Macedonia - 33%	Vietnam - 46%
Equatorial Guinea - 13%	Libya - 31%	Norway - 16%	Zambia - 17%
European Union - 20%	Liechtenstein - 37%	Pakistan - 30%	Zimbabwe - 18

Recommendations & further handling

Roadmap ahead

The administration’s 2025 tariff strategy stems from claims of unfair trade practices and a lack of reciprocity in US trade relationships. Executive Order 14257 cites the persistent US goods trade deficit, higher foreign tariff rates, and non-tariff barriers as justification for imposing a 10% baseline tariff on all imports, with significantly higher rates—up to 145%—on goods from countries like China. The order argues that while the US maintains one of the world’s lowest average MFN tariff rates (3.3%), key trading partners like China maintain much higher rates (around 7.5%), creating an uneven playing field.

However, the durability of these measures is uncertain. On April 16, 2025, California Governor Gavin Newsom and Attorney General Rob Bonta initiated a federal lawsuit arguing that the tariffs imposed by the administration are not legal. The complaint asserts that the president exceeded his authority under the International Emergency Economic Powers Act (IEEPA), resulting in economic harm to consumers, businesses, and the broader economy.

With no formal negotiations underway and growing domestic and international backlash, including retaliatory tariffs from China and a global growth downgrade by the IMF, the long-term viability of these tariffs remains uncertain. Treasury Secretary Scott Bessent has acknowledged the current trade conflict is unsustainable, signaling potential future policy shifts.

How these tariffs affect the insurance industry

Increased costs/claims:
- Higher replacement costs: Tariffs raise prices on imported goods (like auto parts, building materials), which increases claim payouts for damaged or stolen items.
- More expensive repairs: Property and auto insurers may face higher costs to fix or replace covered items.
Market volatility:
- Investment risks: Insurers invest premium dollars in the market. Tariff uncertainty can cause stock market drops and reduce returns on those investments.
- Economic slowdown risk: Tariffs can hurt economic growth, lowering demand for new insurance policies.
Business client impacts:
- Business clients may struggle: Companies affected by tariffs (like manufacturers or exporters) may reduce operations or close, meaning fewer policies to sell or renew.
- Increased liability exposures: Businesses changing suppliers or logistics due to tariffs may face new legal or operational risks, raising liability coverage needs.
Global supply chain disruption:
- Delays and disruptions: Insurers of goods in transit (marine, cargo insurance) may face more claims due to shipment delays, cancellations, or losses tied to supply chain shocks.
Pricing & underwriting adjustments:
- Premium recalculations: Higher repair and replacement costs may lead to higher premiums.
- Underwriting shifts: Insurers might tighten criteria for certain industries or geographic areas affected by trade policy.

Business strategies for navigating the tariff landscape

Diversify supply chains: Companies should consider sourcing from countries less affected by US tariffs to mitigate risk.
Leverage tariff exemptions: Stay informed about temporary exclusions and seek exemptions where applicable, especially for critical components.
Communicate with CBP: Continue to monitor alerts and explanations posted on their website, and start a communication thread to obtain clarifications and answers.
Monitor policy developments: Regularly track trade policy changes to anticipate and respond to new tariffs or adjustments.
Engage in advocacy: Collaborate with industry groups to advocate for favorable trade policies and provide feedback to policymakers.
Financial planning: Adjust pricing strategies and budgets to account for increased costs due to tariffs.

International responses to US tariffs

China: Implemented a 125% retaliatory tariff on US goods and remains cautious about engaging in negotiations without clearer terms.
European Union: Proposed a "zero-for-zero" tariff deal on industrial goods and delayed retaliatory measures to allow for negotiations.
Japan and India: Engaged in preliminary trade discussions with the US to avoid steep tariffs, though comprehensive agreements are pending.
Other nations: Countries like Israel, Taiwan, Vietnam, and Zimbabwe have offered to eliminate tariffs on US goods in hopes of reciprocal actions.

[1] “CBP” refers to the US Customs & Border Protection agency of the United States Department of Homeland Security.

[2] This CBP alert dated April 8, 2025 offers further guidance on EO 14257. Sub-section 9903.01.28 is part of EO 14257, and the HTSUS because the updated country-specific rates, product exclusions, and modifications to the HTSUS were published along with E0 14257. The amended tariff rates and new Chapter 99 headings were incorporated into Revision 7 of the 2025 Basic Edition of the HTSUS, released on April 4, 2025.

[3] https://taxfoundation.org/research/all/federal/trump-tariffs-trade-war/