Tax insight

PwC’s US Tariff Industry Analysis: What reciprocal and current tariffs may mean for US companies

Insight
7 minute read
April 22, 2025

What happened?

On April 2, President Trump signed an executive order implementing "reciprocal tariffs." The order establishes a base tariff of 10% on most imported goods from all countries except Canada and Mexico, effective April 5. The order outlines additional country-specific reciprocal tariffs ranging up to 50%, as detailed in Annex I to the order, which were set to take effect on April 9. The order also identifies certain goods that will be exempt from the reciprocal tariffs. These include items set forth in Annex II, such as certain critical minerals, energy commodities, pharmaceuticals, and specific products such as copper, semiconductors, and lumber, as well as goods covered by separate, existing tariff measures. These exempted goods are expected to be addressed in separate forthcoming executive orders on tariffs.

As part of the April 2 executive order, all goods from Canada or Mexico that do not qualify as originating under the United States-Mexico-Canada Agreement (USMCA) continue to be subject to a 25% tariff pursuant to earlier orders. Certain imports from Canada — specifically energy, energy resources, and potash that do not meet USMCA origin requirements — are currently subject to a lower additional ad valorem duty of 10%. Goods that qualify under USMCA continue to enjoy duty free status of the agreement and are not subject to any additional tariffs. The April 2 executive order specifies that upon the termination or suspension of the earlier orders specific to Canada and Mexico, the 25% tariff will revert to a 12% reciprocal tariff rate.

However, on April 9, the President announced a 90-day pause on the implementation of the adjusted country-specific tariffs (i.e., those ranging up to 50%) to allow time for potential individual country trade negotiations. This pause applies to all jurisdictions but does not impact previously existing tariffs on China, Canada, and Mexico, and retains the 10% base tariff for all other countries. Tariffs on Chinese imports were escalated in response to retaliatory measures taken by China. As part of the April 2 tariff announcement, the United States imposed tariffs on China imports of 34%, which increased to 54% when combined with existing duties. Later in the month, China introduced retaliatory tariffs in response. In turn, the United States raised tariffs on Chinese imports to 84% on April 9, and further to 125% on April 10. With existing duties included, some Chinese goods face total tariffs of up to 145%. The rate of change in the tariff space is challenging to manage and the many varying rates and applications can lead to confusion. See Figure 2 below, for a simplified visual representation to help clarify the various rates.

The administration also eliminated the de minimis exemption for low-value imports from China and Hong Kong, subjecting these shipments to standard duties, which will go into effect May 2. Additionally, on April 11, a Presidential Memorandum was issued to clarify exceptions to the April 2 executive order for certain goods, including smartphones.

Why is it relevant?

The outcomes of the administration’s reciprocal tariffs present significant implications for companies operating in or trading with the United States. This Tax Insight serves as an expansion to our April 3 Tax Insight and an update to our March 17 Industry Analysis, which previously included forecasted reciprocal tariff rates.

PwC’s updated Industry Analysis utilizes the tariffs that have been implemented by the United States as of April 15 (based on specific factors explained in the next section) as well as potential tariffs on Annex II products. The Industry Analysis data reflects that the total tariff measures could increase from $76 billion to nearly $989 billion per year, although that figure does not take into account countermeasures that trading partners may impose, or behavioral adjustments that companies may make, in reaction to US policy changes.

The Industry Analysis reflects that the impacts are far-reaching, across a wide range of industries. Some of the industries that could be most impacted include: industrial products; consumer products; automotive; technology, media, and telecommunications (TMT); energy, utilities, and resources; private equity; and pharmaceutical, life science, and medical devices.

Significant challenges are arising for many multinational businesses, such as sourcing disruption and cost increases. This is compounded with the uncertain tariff landscape going forward, as the administration crafts additional executive orders and continues to negotiate with its global trading partners.

Actions to consider

Multinational companies around the world should assess the impact of these trade policies on their global business footprints — with respect to both imports and exports — as well as the potential related opportunities. Close coordination between procurement, supply chain, tax, and other C-suite leaders to formulate short, medium, and long-term strategies is critical, along with data-driven analysis. Advanced tools are available that companies can leverage using their US customs data to quantify the impact — often with unexpected results. This analysis can serve as a powerful foundation to identify “no-regret” actions and to help mitigate risks.