Liberation Day Special #2: Trade Tidbits

On Deck

PROGRAMMING NOTE: Clearing the decks with what we know thus far.

• Breaking down the universal/reciprocal tariff announcement
• Breaking down domestic and international reactions to Liberation Day
• [Takes deep breath in] Oh also a China de minimis announcement, auto and auto parts annexes, tariffs on beer and empty aluminum cans, and a Senate vote on the IEEPA Canada tariffs
• House Ways and Means Committee makes Wednesday’s Greer hearing official
• And a big ol’ update to the tariff calendar 

DISCLAIMER: The below is intended to inform, not to be construed as an official statement from the office of Rep. Yakym  

Tidbits (Liberated)

We have the announcement, and we have some official docs to go off of, so let’s get to work. You have the Proclamation here, a fact sheet here, Annex I (countries with a reciprocal tariff) here, and Annex II (articles not immediately subject to tariffs) here. There are multiple layers and effective dates here, so bear with me.

Effective April 5 at 12:01am Eastern, a 10% universal tariff will be imposed on all imports from all countries, leveraging IEEPA. There is an exception for goods loaded onto a vessel at the port of loading on the final mode of transit before April 5 at 12:01am Eastern. Let’s spend some time on those “alls,” though, because they’re really more like “all excepts.”

• It’s all imports, except products that are 1) encompassed by 50 U.S.C. 1702(b); 2) subject to Section 232 tariffs on steel and aluminum articles and derivatives; 3) subject to Section 232 tariffs on autos and auto parts; 4) listed in Annex II, which generally includes copper, pharmaceuticals, chips, lumber, critical minerals, and energy projects; and 5) “all articles that may become subject to duties pursuant to future actions under section 232.”
• It’s all countries, except countries subject to Column 2 of the HTS code (Cuba, North Korea, Russia, and Belarus). Canada and Mexico got a stay of execution as well, with the IEEPA tariffs related to fentanyl and the border – and the USMCA carveout – remaining in place. If the IEEPA fentanyl and border tariffs were to be lifted, they’d be replaced by a 12% IEEPA reciprocal tariff, with carveouts for USMCA-compliant products, potash, and energy or energy resources. (That said, the “all countries” does encompass some places that make good trivia questions)

Effective April 9 at 12:01am Eastern, for 57ish countries (depends on how you want to count the EU and the Falkland Islands), that 10% universal tariff will rise to a reciprocal tariff, with the rate customized to each country, leveraging IEEPA. There is an exception for goods loaded onto a vessel at the port of loading on the final mode of transit before April 9 at 12:01am Eastern. The customized rates can be found in Annex I (charts from the Rose Garden ceremony can be found here if you want to see them). It appears that the formula for the rates is half of (Exports to Country X- Imports from Country X)/Exports to Country X, though USTR insists it’s more complicated than that. A White House official said the rates are “based on the concept that the trade deficit that we have with any given country is the sum of all trade practices, the sum of all cheating.”

A few other points from the docs to highlight:

• De minimis is still available, with an asterisk for China (we’ll get into that later).
• The President retains authority to modify tariffs in the event of an increase in the trade deficit, expansion or elimination of non-reciprocal trade arrangements, retaliation, or worsening of U.S. manufacturing capacity or output.
• The Fact Sheet makes clear: “Access to the American market is a privilege, not a right.”
• Not from official docs, but USTR’s X account highlighted ten unfair trading practices.
• Also not in the official docs, but an official-type question, the rate on China appears to be up to 79%, depending on your Section 301 tariff rate. Breaking it down, that’s 25% Section 301 + 20% IEEPA fentanyl + 34% IEEPA reciprocal. Not to mention there’s a potential 25% Venezuelan oil tariff lurking around the corner…
• Also also not in the official docs, but there was a rumor that the External Revenue Service could be part of yesterday’s rollout. Doesn’t appear that was the case.

Let’s get into some observations and outstanding questions:

• If your product is in Annex II, don’t get comfortable. Most/all of these items have been threatened with tariffs down the road.
• It’s unclear to me if Annex II is supposed to be comprehensive or not. I can read it both ways. On the one hand, Section 3(b) of the Proclamation begins, “The following goods as set forth in Annex II to this order, consistent with law, shall not be subject to the ad valorem rates of duty under this order:” – and I leave that colon in there intentionally because then it gets into the various categories. However, some of those categories *seem* to be missing, like steel, aluminum, and autos.
• Really curious to know what “all articles that may become subject to duties pursuant to future actions under section 232” means. Annex II doesn’t *seem* to tip the hand at all.
• Annex II mentions an Annex III, but I see no Annex III. The Proclamation mentions no Annex III. I did receive an email from USTR that indicates an Annex was forthcoming on energy and critical minerals, so maybe that’s it? But the way Annex III is discussed in Annex II, it doesn’t sound like it. It’s also possible there’s an “Annex III” legal concept I’m not aware of (as always, I’m not a lawyer!).
• Based on the above calculation on China, it *seems* like Section 301 tariffs are not part of any carveout, so it’s safe to assume they stack on top of whatever else.
• A White House official told reporters, “This is not a negotiation.” So will any offer lift these tariffs?
• Do country-by-country differentials in reciprocal tariffs + baseline 10% discourage transshipment?

Read and React

The White House put a long list of positive statements in one place for your perusal. I’ll also flag statements from USTR Jamieson Greer, House Ways and Means Chairman Jason Smith (R-MO) (positive), and Ranking Member Richard Neal (D-MA) (negative). I didn’t see anything from the top Republican or Democrat on the Senate Finance Committee. The top Republican and Democrat on the House Select Committee on the Chinese Communist Party were divided. And finally, I’ll flag a few representative statements from the business community – the U.S. Chamber of Commerce and the Distilled Spirits Council of the U.S.The Liberty Justice Center, meanwhile, put out a call for plaintiffs to challenge the IEEPA tariffs in court.

I haven’t seen any retaliation as of writing, but let’s look at world reaction, in alphabetical order.

• Argentina: Foreign Minister Gerardo Werthein will meet USTR Jamieson Greer today to talk about a trade deal.
• Canada: Prime Minister Mark Carney, whose country emerged (all things considered) unscathed from the Liberation Day announcement but who is in election season, saidhis government would “fight U.S. tariffs.”
• China: Foreign Minister Wang Yi said China wants to see tariff removal before holding any talks on a trade deal. The government took steps to restrict domestic companies from investing in the U.S.
• The EU: European Commission President Ursula von der Leyen put out a lengthy statement decrying the tariffs, offering to work together on bad actors, and saying, “We are now preparing for further countermeasures, to protect our interests and our businesses if negotiations fail.” The EU and UK are talking about coordinating their responses. The Chair of the Federal Trade Commission blasted the EU’s tech regs as “taxes on American firms.”
• India: The country is looking at an EV tariff cut as part of a deal with the U.S.
• Israel: Unnamed economic officials were “in complete shock” over its 17% tariff rate despite having eliminated all tariffs on American goods a day earlier.
• South Africa: The Trade Ministry is seeking talks with the U.S., especially in light of the auto tariffs.
• Thailand: Prime Minister Paetongtarn Shinawatra pledged to narrow the country’s trade surplus by buying more energy and food products.

[Billy Mays Voice] But Wait There’s More!

And let’s clear the decks on a few other bits of news.

• De Minimis (China’s Version): As mentioned earlier, there was movement on de minimis. Liberation Day included a Proclamation (and Fact Sheet) ending de minimis treatment for China and Hong Kong, effective May 2 at 12:01am Eastern.
• Section 232 (Autos’ Version): At about 2:00pm, a mere 10 hours before the auto (not auto parts) tariffs were set to take effect, we finally got the Federal Register noticewith annexes. The 130ish parts tariff codes seemed pretty comprehensive to my untrained eye, but don’t forget there’s an inclusion process coming too.
• Section 232 (Aluminum’s Version): Seemingly out of nowhere, we got a Liberation Day surprise that beer and empty aluminum cans were added to the aluminum derivative tariffs, effective April 4 at 12:01am Eastern. Reading the notice, it’s not clear if this means that the inclusion process is live or not. The process isn’t technically due until May 10.
• IEEPA (Canada’s Version): The Senate voted 51-48 to terminate the national emergency that’s the basis for Canada’s IEEPA tariffs. Republican Senators Susan Collins (R-ME), Mitch McConnell (R-KY), Lisa Murkowski (R-AK), and Rand Paul (R-KY) joined Democrats in voting yes. House Democrats are exploring ways to force a vote on the resolution or, failing that, some other measure.

Quick Hits

• The House Ways and Means Committee made its Wednesday hearing with USTR Jamieson Greer official (as a reminder Greer will appear before the Senate Finance Committee Tuesday)

Tarif-Fone

I’m probably going to have to reorganize this at some point, but that’s a problem for Future Mike

On Deck

PROGRAMMING NOTE: Decided to clear the decks on everything in advance of whatever happens today. Will push out an update at the appropriate time (ie once there are official docs to parse through). Hang in there.

• Liberation Day announcement at 4pm but the what is still evolving
• Countries watching and waiting for announcement
• Auto 232 side letters may not be honored, while Senate to force vote on Canada IEEPA emergency
• USTR Greer to appear before Finance and Ways and Means next week 

DISCLAIMER: The below is intended to inform, not to be construed as an official statement from the office of Rep. Yakym  

Tidbits – Liberation Day Sitrep

Yesterday was the deadline for USTR, the Commerce Department, and the Treasury Department to submit reports required by the America First Trade Policy Memorandum to President Donald Trump. It wasn’t clear if we’d see them before a Liberation Day announcement, but it appears the answer is no. I also haven’t seen any official announcement or confirmation that they were delivered, but let’s just assume they were.

One report that was made public Monday that’s worth flagging heading into today is USTR’s National Trade Estimate, which chronicles trade barriers in foreign countries. As a quick side quest, it restored digital trade barriers, which had been largely eliminated from the 2024 report.

All that said, let’s talk turkey regarding Liberation Day. It had seemed like we were getting a decent handle on what today might look like, but it’s all a jumble now. Here’s what all the reporting is as of the sending of this missive.

There will be a Rose Garden announcement at 4:00pm that will be attended by steelworkers and autoworkers, the VP and Cabinet members, and Members of Congress.

White House Press Secretary Karoline Leavitt told reporters yesterday that tariffs would take effect April 3 (again, we’ll wait for the official docs on that). She also reiterated “no exemptions.”

As of Friday, it seemed like things were heading toward an individualized tariff rate for a “Dirty 15” set of countries with maybe sectoral tariffs. But that rapidly evolved over the weekend and has continued to even up to yesterday evening. A 20% universal tariff on “essentially all” trading partners is back on the table. But so is a lower-than-20%, across-the-board tariff on a subset of countries, as of yesterday evening. A variation on that approach is a two-tiered system of 10% and 20% tariffs depending on how bad of an actor a country/bloc is considered to be. Sectoral tariffs are still in the mix too. Aides had thought a universal tariff was the front-runner on Monday, but the lower-than-20%, across-the-board tariff was floated Tuesday, so it’s still clearly evolving. It’s also not clear how any of this would interact with all the other tariffs already in place.

Reporting makes it sound like President Trump told his trade team to go bigger than what had been envisioned coming out of the Friday Tidbits. At the same time, what he wants is something “big and simple.” Hence all these broader across-the-board tariffs and variations thereupon.

Another factor clouding the decision-making process is the tension between revenue and leverage. On the one hand, the Administration wants to raise revenue, so tariffs should stay high. On the other, the Administration wants to secure concessions, and tariffs would need to go lower in exchange. On that note, Bessent told lawmakers yesterday that the tariffs would be a “cap” and that countries could take steps to lower them from there.

And if all this is making your head spin, you’re not alone. An unnamed “White House ally close to Trump’s inner circle, granted anonymity to speak freely” told Politico, “No one knows what the f*** is going on…What are they going to tariff? Who are they gonna tariff and at what rates? Like, the very basic questions haven’t been answered yet.”

Inside the room, Treasury Secretary Scott Bessent, White House Chief of Staff Susie Wiles, and VP JD Vance have been pushing for a narrower regime and for certainty so businesses can plan, while Commerce Secretary Howard Lutnick and White House trade adviser Peter Navarro have been pushing a more expansive vision. Speaking of Lutnick, the knives continue to be out for him.

The Eyes of the World Are Upon You

Next up, let’s take a look at how the rest of the world’s reacting to all this.

The EU has been identifying concessions it’s willing to make despite being told that there’s no way to avoid tariffs. The “term sheet” reportedly includes tariff reductions and the easing of regulations and standards. As the EU works on concessions, it continues to cook up retaliation, with European Commission President Ursula von der Leyen saying the bloc has a “strong plan” ready. The plan could include tariffs and restricting access to government procurement and digital advertising sales. But it’s also looking at targeting American banks and tech companies by leveraging or tightening existing regulations, imposing taxes on banks, financial transactions, and digital flows, or slowing license issuance. It could also raise fees for American planes to land at European airports. There are internal divisionsabout how provocative to be. EU trade ministers are set to meet Monday, April 7, so that may be when you see something more concrete.

Moving on to Mexico, President Claudia Sheinbaum reiterated that she’ll wait until April 3 to respond to whatever’s announced today, adding that she doesn’t believe in an “eye for an eye” approach “because that always leads to a bad situation.” In the meantime, Mexico continues to emphasize its border work as illegal crossings hit another new low in March. Homeland Security Secretary Kristi Noem was in Mexico Friday and met Sheinbaum. Secretary of State Marco Rubio spoke with his Mexican counterpart to talk border as well, with Rubio thanking Mexico for its border efforts. Mexican officials were in DC this week meeting with the State Department and Justice Department. Sheinbaum also talked with Canadian Prime Minister Mark Carney.

Also of note, China, Japan, and South Korea held their first trilateral dialogue in five years. Chinese state media reported that the countries agreed to jointly respond to Liberation Day tariffs, but South Korea called the report “somewhat exaggerated” and Japan said there was no discussion of that.

Let’s check in on a few other countries:

• Israel: The country, which secured the first free trade agreement with the U.S., will cancel its remaining tariffs on American imports.
• Vietnam: Announced tariff cuts took effect Monday for cars (depending on the vehicle 64% to 50% or 45% to 32%), LNG (5% to 2%), ethanol (10% to 5%), fresh apples (8% to 5%), frozen chicken thighs (20% to 15%), unshelled pistachios (15% to 5%), almonds (10% to 5%), cherries (10% to 5%), raisins (12% to 5%), certain wood products (20% or 25% to 0%).
• The UK: Prime Minister Keir Starmer spoke with President Donald Trump over the weekend, but Downing Street still expects tariffs. Starmer’s spokesperson told reporters, “We rule nothing out in response.” Home Secretary Yvette Cooper also refused to rule out retaliation.
• India: White House Press Secretary Karoline Leavitt slammed India’s tariffs during a press briefing Monday.
• Australia: Prime Minister Anthony Albanese said that the country’s biosecurity laws and medicine system are not up for negotiation after being flagged by the USTR’s aforementioned National Trade Estimate report.
• Brazil: Foreign Minister Mauro Vieira tried to get on the phone with USTR Jamieson Greer but schedules didn’t line up (according to the Google translate version of a CNN Brasil article).

All the President’s Threats

And let’s clear the decks on all the other threats out there.

• Section 232 (Autos’ Version): It appears that 2018 side letters signed by Trump 1.0 USTR Robert Lighthizer granting auto and auto parts quotas to Canada and Mexico won’t be honored. The auto tariffs came together so quickly that the White House had to delay afternoon programming to finalize the plan and didn’t get a chance to brief stakeholders beforehand. Automakers are making a last-ditch effort to exclude low-cost car parts from tariffs but have also stockpiled parts in advance of tariffs. President Donald Trump met with the Chairman of Stellantis Monday. An auto part supplier told the Detroit Free Press, “Everything is dead in the water until the rules are more clearly understood.” Buyers are flocking to dealerships, while Porsche and Mercedez-Benz figure out where to go from here. President Trump told NBC news he “couldn’t care less” if foreign automakers raise prices, adding, “The message is congratulations, if you make your car in the United States, you’re going to make a lot of money. If you don’t, you’re going to have to probably come to the United States, because if you make your car in the United States, there is no tariff.”
• IEEPA (Canada’s Version): Sen. Tim Kaine (D-VA) is forcing to vote in the Senate to block the IEEPA emergency that’s the basis for the Canada tariffs. (Recall that the House turned off this through a procedural maneuver a few weeks ago). It appears a few Senate Republicans will vote yes, which President Trump is none to happy about. But the House is unlikely to take up the Senate resolution, per a tweet I swear I saw somewhere but can no longer find despite my best efforts in which a reporter asked a top House Republican about a vote.
• Section 301 (Shipbuilding’s Version): Over 60 House Democrats sent a letter to USTR Jamieson Greer urging “strong action” in the shipbuilding probe.
• Section 232 (Steel’s Version): Tariffs are scrambling nail and screw supply chains.
• Venezuela Tariffs (Russia’s Version): In an interview with NBC, President Trump threatened tariffs on Russian oil that sound similar to what he announced on countries buying Venezuelan oil. The threat has India putting out feelers for alternatives.
• Sectoral (Pharma’s Version): President Trump promised pharma tariffs “soon” but “probably after” Liberation Day as the industry urges a phased-in approach. Industry officials also don’t expect tariffs to be announced today.
• Tariffs-for-TikTok: President Trump floated on Air Force One imposing tariffs to force the sale of TikTok.

Quick Hits

• USTR Jamieson Greer will hit the Hill next week, appearing before the Senate Finance Committee Tuesday and the House Ways and Means Committee Wednesday (not officially noticed yet)
• President Donald Trump truthed that the Houthis are “decimated by the relentless strikes over the past two weeks” and that the strikes will continue “until they are no longer a threat to Freedom of Navigation”
• Agriculture Secretary Brooke Rollins announced that she will visit Vietnam, Japan, India, Peru, Brazil, and the UK during her first six months in office; there will be Agriculture Department missions to Hong Kong, the Dominican Republic, Taiwan, Côte d’Ivoire, and Mexico as well
• The Hong Kong company that owns Panama Canal port assets won’t sign a deal this week as China carries out an antitrust review
• 58 House Democrats sent a letter to President Donald Trump laying out priorities for renegotiating USMCA
• Farmers may get more financial aid to cope with tariff impacts
• Procuring eggs from Europe hasn’t been that easy
• Steelmaker Cleveland-Cliffs laid off 1,200 workers to mitigate tariff impacts

Tarif-Fone

I *think* I got everything, but feel free to point out anything I missed.

Eye on 232 Exclusions