This is an update shared by Nicolas Guzman, Partner at Faegre Drinker Biddle & Roth LLP.

• As of 12:01 am ET 4/10 the Reciprocal Tariff imposed on China of 34%, which was elevated to 84%, is now set at 125%.  This is in addition to any Section 301 tariffs and the IEEPA Fentanyl tariffs on China of 20% (10+10).
• The other country specific tariffs, i.e., those tariffs previously applied at a rate higher than 10%, are paused.  Tariffs of 10% will take or remain in effect for imports from all countries other than China.
• While the President indicated that the reduction to 10% would only last 90 days via social media, it is worth noting that there is no automatic triggering language of such a deadline in the message.
• No changes were made to the interpretation that when Section 232 tariffs on steel & aluminum and their derivatives apply, the Reciprocal Tariffs can be exempted.
• There is no change mentioned for the 25% Fentanyl tariffs or Mexico and Canada, meaning that for now, USMCA preferential treatment qualification continues to exempt those tariffs.

All other exceptions and exclusions from the Reciprocal Tariff scheme reported previously continue apply to the new 125% Reciprocal Tariff on China, as well as the across the board 10%.

Source: Cargo Systems Messaging Services (US Customs and Border Protection (CPB))

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As of 10 April, the tariff rate for China is a total of 145% on goods entering the U.S. 

Who is Impacted?

Impacted: Companies importing tangible goods through U.S. customs.
Not Impacted: Businesses solely providing consulting, software, or digital services.

Strategies to Mitigate Your Tariff Exposure:

Consider distributing your goods by establishing a U.S. distribution subsidiary if you have not already done so.

• Reduce customs valuation (tariff base) by applying a distributor margin.

If you have a US subsidiary, conduct or update your Transfer Pricing study.

• Review and adjust the pricing structure to separate exempt services from tariffed goods.

Invoice goods and services separately.

• • If invoice design, engineering, installation, and embedded software services are not directly related to the fabrication of the product, then separate the software value from the value of the goods and invoice separately. Customs duties are levied on goods only, at this time, not on services.
• • Engineering and design costs must remain in the intercompany sales price (import value) along with some profit. The value of the product must include all of the direct costs involved in its production, including design and engineering services directly related to making the good. However, US-based costs are not subject to tariff duties: transportation, assembly, sales, etc.

Next Steps for Your Business

• ☑️ Review current pricing, invoicing, and product bundles.
• ☑️ Consider a transfer pricing analysis to optimize tariff exposure.
• ☑️ Clearly document the separation of goods and services.
• ☑️ Ensure full compliance with updated tariff regulations.

How We Can Help You

Schedule a Personalized Consultation with our Executive Team
Contact our IMS transfer pricing specialist to discuss your specific situation:

• • Hugues Retif: hretif@intlms.com
• • Antoine Guillaud: aguillaud@intlms.com
• • Richard Shapland: rshapland@intlms.com

Stay Informed & Prepared

Tariffs present both risks and strategic tax-planning opportunities. IMS is committed to guiding your business through these evolving challenges.