U.S. President Donald Trump has signed an executive order that opens the door for tariff exemptions to countries holding reciprocal trade agreements with the United States. The decision, which takes effect from Monday, is part of Trump’s strategy to reshape global trade by rewarding nations that align with U.S. trade principles while maintaining pressure on others.
What the Order Covers
The order identifies more than 45 categories of imports eligible for zero tariffs, provided they come from “aligned partners” that have negotiated framework pacts with Washington. These categories include critical industrial and pharmaceutical goods that are either not produced domestically or insufficient to meet U.S. demand.
Some of the highlighted exemptions include:
- Metals and Minerals: Nickel, natural graphite, neodymium magnets, and various forms of gold—essential for stainless steel, electric vehicle batteries, and electronics.
- Pharmaceutical Inputs: Compounds used in generic drug manufacturing such as lidocaine and reagents for diagnostic tests.
- Industrial Products: LEDs, aircraft parts, and certain agricultural imports.
The order simultaneously removes previous tariff carveouts for plastics and polysilicon, the latter being a key component in solar panels.
Alignment With U.S. Trade Strategy
The exemptions are limited to countries with reciprocal trade arrangements. Trump emphasized that tariff relief would only be granted based on the “scope and economic value” of a partner’s commitments to the U.S., ensuring national interests remain central to the policy.
This move aligns tariffs with commitments made under existing deals with allies such as Japan and the European Union. For nations like Switzerland, heavily reliant on gold exports to the U.S. and currently facing steep tariffs, the order offers significant relief once a trade deal is finalized.
Implications for Global Trade
Trump has spent the first months of his presidency expanding tariffs under the Section 232 national security statute, arguing that they are necessary to cut trade deficits and rebalance global commerce. This new order, however, signals a shift—using exemptions as an incentive to encourage cooperation from trading partners.
By empowering the U.S. Trade Representative, the Commerce Department, and customs to waive tariffs without requiring a fresh executive order, the administration has streamlined the process. This flexibility could accelerate negotiations with nations eager to secure tariff relief.