The USA announces a 10% tariff on all imports

On 2 April 2025, President Donald Trump announced significant changes to U.S. trade policy, introducing a 10% baseline tariff on all imported goods, effective on 5 April 2025. Additionally, higher “reciprocal” tariffs will be imposed on specific countries, starting on 9 April 2025. 

In an attempt to address U.S. trade deficit, the authority granted by the International Emergency Economic Powers Act of 1977 (IEEPA) is being exercised and new tariffs affecting various sectors and businesses are established. In addition, to the baseline tariff of 10% higher tariffs are introduced for the following countries that are considered to have a significant trade surplus with the U.S.:

• European Union: 20%
• China: 34%
• Japan: 24%
• Vietnam: 46%
• South Korea: 25%
• Taiwan: 32%

The tariffs are supposed to remain in effect until it is determined that the threat posed by the trade deficit and underlying nonreciprocal treatment is satisfied, resolved, or mitigated. They may be increased if trading partners retaliate or decreased if trading partners take significant steps to remedy non-reciprocal trade arrangements and align with the United States on economic and national security matters.

Certain goods, including steel, aluminum, copper, pharmaceuticals, semiconductors, lumber, energy, and automobiles/automobile parts already subject to certain tariffs / limitations, fall within the exemption. 

These tariffs may lead to increased costs for imported goods, potential supply chain disruptions, and heightened volatility in global markets. As a result, businesses engaged in international trade should assess the impact on their operations and consider strategic adjustments. Companies may need to explore alternative suppliers, renegotiate contracts, or diversify their supply chains to mitigate risks.

Furthermore, businesses should stay informed about changes in trade policies and tariffs to adapt their strategies accordingly. It is also advisable for companies to engage in proactive communication with stakeholders, including customers and partners, to manage expectations and maintain strong relationships during periods of economic uncertainty.

Should you require further clarifications concerning the above, please contact our trusted advisors in the Indirect Tax Department at KPMG Cyprus.

KPMG’s Indirect Tax team provides advice and assistance at the Cyprus and international level. We structure our effort to dovetail with your business issues and strategy. Our focus is on supplying value adding and pragmatic advice rather than just a list of recommendations.

Our tax professionals are able to review your company’s current tax position and provide relevant advice and planning on a range of green initiatives, indirect taxes, including VAT, customs duties and excise taxes (such as tax audits, reorganizations and acquisitions, etc.). Furthermore, we can help your company with its administrative obligations and contacts with administrative bodies.