This executive order declares a national emergency based on the United States' large and persistent trade deficits, which the order characterizes as an "unusual and extraordinary threat to the national security and economy." The order contends that these deficits, which reached $1.2 trillion in 2024, stem from a lack of reciprocity in bilateral trade relationships, evidenced by disparate tariff rates and non-tariff barriers that disadvantage U.S. manufacturers. According to the order, this imbalance has led to the hollowing out of America's manufacturing base, undermined critical supply chains, and rendered the defense-industrial base dependent on foreign adversaries. The order frames the issue as a failure of the post-war international economic system, which incorrectly assumed that U.S. leadership in liberalizing trade barriers would be reciprocated globally without resulting in persistent U.S. trade deficits.
The order establishes an across-the-board 10% tariff on all imports entering the United States, effective April 5, 2025, with country-specific higher rates (listed in Annex I) going into effect on April 9, 2025. Certain exemptions are specified in Annex II, including goods already subject to Section 232 tariffs (steel, aluminum, automobiles), critical minerals, pharmaceuticals, semiconductors, energy products, and copper. The order makes special provisions for Canada and Mexico, stipulating that goods qualifying as originating under USMCA will not face additional tariffs, while non-qualifying goods will be subject to a 12% tariff if existing border emergency tariffs are terminated. The order also specifies that the tariffs will apply only to the non-U.S. content of articles, provided at least 20% of the article's value originates in the United States.
Implementation authority is granted to the Secretary of Commerce and the U.S. Trade Representative, who are empowered to recommend modifications to the tariffs if the action proves ineffective or if trading partners retaliate. The order authorizes them to increase duties against retaliating countries, but also allows for decreasing duties for countries that take "significant steps to remedy non-reciprocal trade arrangements." Regular reporting to Congress on the national emergency is required. The order frames these measures as necessary to restore domestic manufacturing capacity, which it describes as essential for national security, innovation, and economic resilience, citing manufacturing's role in driving 35% of American productivity growth, 60% of exports, and 70% of research and development spending.