The announcement of the “America First Trade Policy” by President Trump on January 20, 2025 began what would become one of the most dramatic restructurings of U.S. trade policy in modern history. What started as targeted measures against China evolved into a comprehensive global tariff system that fundamentally altered the landscape of international trade, affecting billions of dollars in commerce across Asia, Europe, and beyond. This year-in-review examines the key developments, turning points, and implications of this unprecedented trade policy transformation.
Phase 1: The China Offensive (September 2024 – January 2025)
The foundation for 2025’s tariff revolution was laid in late 2024. On September 13, 2024, the U.S. finalized significant Section 301 tariff increases targeting China, including raising EV tariffs from 25% to 100%, solar cells and modules from 25% to 50%, steel and aluminum products up to 25%, EV batteries and battery parts from 7.5% to 25%, and critical minerals and cranes up to 25-100%. These measures took effect on September 27, 2024.
The pressure on China intensified as the year turned. On December 12, 2024, additional tariff hikes on clean energy inputs were announced, including solar wafers and polysilicon at 25-50% and tungsten products from 0% to 25%, effective January 1, 2025.
The most significant early 2025 development came on February 4, when the U.S. imposed an initial 10% “fentanyl tariff” on all Chinese imports, which was subsequently raised to 20% on March 3, 2025, cited as a response to fentanyl precursor exports. This marked a shift from sector-specific tariffs to broader, punitive measures against China.
Phase 2: Liberation Day and the “Reciprocal” Tariff System (April 2025)
April 2, 2025, marked “Liberation Day” with the announcement of a reciprocal tariff system that included a 10% universal tariff on all U.S. imports, effective April 5, 2025. This set off a 90-day negotiation window for trading partners to negotiate lower bands, exclusions, or access to the newly created Annex III mechanism.
Just one day later, on April 3, the administration announced Section 232 auto tariffs of 25% on autos and auto parts with global application, effective April 3 for vehicles and May 3 for parts. The rapid succession of these announcements created significant uncertainty in global supply chains and sent shockwaves through the automotive industry.
Shortly after Liberation Day, a coalition of importers caught the administration off guard by filing suit in the U.S. Court of International Trade challenging the President’s use of the International Emergency Economic Powers Act (IEEPA) as the basis for reciprocal tariffs.
Phase 3: The Roller Coaster – Escalation and De-escalation (May – July 2025)
The middle months of 2025 were characterized by dramatic swings between escalation and negotiation. The most significant development came on May 14, 2025, with the U.S.-China “Geneva Truce,” which reduced China’s reciprocal tariff from 125% to 10% for an initial 90-day period through August 10, reducing China’s effective tariff burden from 124% to 51% according to UNDP weighted-average calculations, achieved through partial suspension of reciprocal uplifts and temporary sector exclusions.
However, other sectors faced continued pressure. On June 4, 2025, Section 232 steel and aluminum tariffs were raised to 50% for both materials, effective immediately. This was followed on August 1, 2025, by the imposition of 50% tariffs on copper.
On July 7, 2025, Executive Order 14316 extended the 10% universal tariff through August 1, 2025, keeping negotiation channels open for partners while announcing new country-specific negotiated rates effective August 7, 2025.
To add to the uncertainty, on May 28, 2025, the U.S. Court of International Trade ruled in favor of the importers, finding that the administration exceeded its authority under the IEEPA and issued a permanent injunction against the reciprocal tariffs. However, the very next day, the U.S. Court of Appeals accepted the administration’s appeal and stayed the injunction so that the tariffs remained in effect pending appeal.
Phase 4: Country-Specific Frameworks and Tiered Systems (August 2025)
August 7, 2025, marked a critical turning point when country-specific negotiated reciprocal rates took effect under Executive Order 14329. The administration created a tiered system that differentiated between trading partners based on their negotiating positions and trade relationships.
The lower tier, with rates of 15-20%, included Japan, Vietnam, Thailand, Indonesia, Philippines, and Korea. The higher tier, with rates of 25-40%, included India, Myanmar, and Laos. As of October 2025, the reciprocal tariff matrix showed Cambodia, Indonesia, Malaysia, Philippines, and Thailand at 19%, Vietnam and Bangladesh at 20%, Brunei at 25%, Singapore at 10%, and Laos and Myanmar at 40%.
India faced particularly severe treatment. India was subject to a 25% reciprocal tariff plus a 25% secondary tariff for Russian oil purchases, creating a combined 50% burden under the International Emergency Economic Powers Act (IEEPA), effective August 27, 2025.
A significant innovation was the creation of the Annex III zero-tariff mechanism for aircraft parts, pharmaceutical inputs, scarce resources, and select agriculture, requiring countries to apply and receive approval for specific HS codes. Additionally, a 40% transshipment penalty tariff was established for goods determined to be of Chinese origin routed through third countries.
On August 29, 2025, the de minimis exemption was suspended, eliminating the $800 duty-free threshold for low-value shipments globally, with major impact on e-commerce platforms such as Shein and Temu.
August also saw the 29th, the U.S. Court of Appeals for the Federal Circuit uphold the CIT decision, finding the IEEPA-based tariffs exceeded statutory authority. The Supreme Court granted expedited certiorari to hear the case, and on November 5, 2025, oral arguments were held. A decision is expected in early 2026.
Phase 5: Détente – The KL Summit and Xi-Trump Deal (October – November 2025)
The final quarter of 2025 brought unexpected diplomatic breakthroughs. On October 26, 2025, the Kuala Lumpur Summit produced bilateral framework agreements between the U.S. and ASEAN countries, whereby ASEAN countries agreed to reduce tariffs on U.S. imports in exchange for U.S. guarantees of previously announced reciprocal tariff rates capped at negotiated levels, plus 0% tariffs for selected Annex III goods.
Malaysia claimed that 1,711 products were granted 0% status under Annex III, though the HS list was not published. Cambodia, Thailand, and Vietnam signed bilateral frameworks and began negotiating Annex III 0% access.
The most significant development came at the end of October. The Xi-Trump Deal of October 30-November 1, 2025, extended the Geneva truce through November 10, 2026, maintaining China’s 10% reciprocal tariff rate while reducing the fentanyl tariff from 20% to 10%, bringing the effective rate down from 57% to 47%. On November 7, 2025, China suspended rare earth export controls as part of the broader U.S.-China détente following the Xi-Trump deal.
Phase 6: Sectoral Weaponization (September – November 2025)
Even as diplomatic progress was made, the administration continued to impose sector-specific tariffs. Pharmaceuticals faced up to 100% tariffs effective October 1, 2025, though with an exemption for manufacturers building facilities in America. Wood upholstered furniture was subject to 25% tariffs starting October 15, 2025, rising to 50% on January 1, 2026. Wood cabinets and vanities faced the same schedule: 25% from October 15, 2025, increasing to 50% on January 1, 2026. Wood timber faced a 10% tariff from October 15, 2025. Heavy trucks were subject to 25% tariffs effective November 1, 2025.
Critically, these sectoral tariffs operated differently: heavy trucks and pharmaceuticals were added to reciprocal and other tariffs (stacking), while wood-related tariffs replaced reciprocal tariffs for covered products.
The Complex Tariff Architecture: Understanding the Layers
By year’s end, the U.S. tariff system had evolved into a complex, multi-layered structure. Reciprocal tariffs were additional ad valorem duties under Executive Order 14257 (Annex I) added to Most Favored Nation (MFN) HTS lines unless replaced by another instrument. The 40% transshipment penalty applied in lieu of the reciprocal add-on, though its interaction with other sectoral measures remained uncertain.
The proper calculation of tariff exposure required modeling as MFN (HTS Column 1) plus reciprocal tariffs plus extra penalty tariffs (India’s additional 25%, China’s 20% fentanyl tariff) plus sectoral overlays (trucks, pharmaceuticals, wood) plus Section 301 duties for China, while applying anti-stacking rules for wood and furniture where Section 232 duties replaced reciprocal tariffs for those HTS lines.
Implications and Looking Ahead
The 2025 tariff transformation represents a fundamental shift in U.S. trade policy from multilateral frameworks toward bilateral negotiations backed by the threat of punitive tariffs. The system created strong incentives for countries to negotiate directly with the United States, reduce their own tariffs on U.S. goods, and demonstrate compliance with U.S. policy priorities beyond traditional trade concerns.
The tiered approach rewarded cooperative partners with lower rates while punishing those perceived as adversarial or non-compliant. The Annex III mechanism created opportunities for strategic sectors to maintain tariff-free access, potentially reshaping global supply chains around U.S. preferences.
For businesses, the complexity of the new system—with its multiple layers, stacking rules, and country-specific variations—created significant compliance challenges and uncertainty. The rapid pace of change, with major announcements occurring monthly throughout the year, made long-term planning difficult.
As we move into 2026, key questions remain: Will the Xi-Trump deal hold through November 2026? How many countries will successfully negotiate Annex III access? Will the sectoral tariffs continue to expand? And perhaps most importantly, how will the Supreme Court rule on the IEEPA challenge—a decision that could either cement or dismantle the entire reciprocal tariff framework—and how will this new architecture reshape global trade flows and supply chain strategies in the years to come?
What is certain is that 2025 will be remembered as the year that fundamentally transformed the rules of international trade, with implications that will reverberate for years to come.
Useful Resource: DFDL US-ASEAN Tariff Tracker
Concise Timeline: U.S. Tariff Events (Sept 2024 – Nov 2025)
Phase 1: China Onslaught
| 13 Sept 2024 | Section 301 China tariff increases finalized (EVs, solar, steel, batteries, minerals). Effective 27 Sept 2024. |
| 12 Dec 2024 | Additional China tariff hikes (clean energy inputs). Effective 1 Jan 2025. |
| 20 Jan 2025 | “America First Trade Policy” announced. |
| 4 Feb 2025 | China “Fentanyl” tariff (10% on all imports, raised to 20% on 3 Mar 2025). |
Phase 2: Reciprocal Tariffs & Universal Layer
| 2 April 2025 | “Liberation Day” reciprocal tariff system announced. Initial country-specific rates (up to 49% for ASEAN, 34% for China, 26% for India, 10% baseline for Singapore). 10% universal tariff effective 5 April 2025. |
| 3 April 2025 | Section 232 auto tariffs (25% globally). Effective immediately for vehicles, 3 May for parts. |
Phase 3: Negotiations & Truce
| 14 May 2025 | U.S.-China “Geneva Truce” (China’s tariff reduced from 125% to 10%, truce extended through 10 Nov 2026). |
| 4 June 2025 | Section 232 steel & aluminum tariffs raised to 50%. |
| 2 July 2025 | U.S.-Vietnam tariff framework announced (20% for most exports, 40% for Chinese transshipments). |
| 7 July 2025 | Negotiation extension (universal 10% tariff extended through 1 Aug 2025). |
| 1 Aug 2025 | Section 232 copper tariffs (50%). |
Phase 4: Country-Specific Rates & De Minimis
| 6 Aug 2025 | EO 14329; new negotiated reciprocal rates effective 7 Aug 2025 (lower tier: 15–20%, higher tier: 25–40%). |
| 27 Aug 2025 | India-specific tariffs (25% reciprocal + 25% secondary for Russian oil). |
| 29 Aug 2025 | De Minimis exemption suspended ($800 duty-free threshold eliminated globally). |
| 1 Sept 2025 | Indonesia reciprocal rate finalized (19%). |
Phase 5: KL Summit & Xi-Trump Deal
| 26 Oct 2025 | Kuala Lumpur Summit; ASEAN countries reduce tariffs, U.S. guarantees capped reciprocal rates, 0% for selected Annex III goods. |
| 30 Oct – 1 Nov 2025 | Xi-Trump Deal; Geneva truce extended, China maintains 10% tariff, rare earth export controls suspended. |
Phase 6: Sector Add-ons
| Oct – Nov 2025 | Additional tariffs on heavy trucks (25%), pharma (100%), wood products (25–50%), effectivedates vary by sector. |
*This Client Alert is for informational purposes only and does not constitute legal advice. Specific advice should be sought for your particular circumstances.*
