Valuation Outlook

On July 4, 2025, President Trump signed into law H.R. 1 of the 119th Congress, better known as the “One Big Beautiful Bill Act” (“OBBBA”). As part of the tax reforms included within OBBBA, Congress has repealed the Section 321 (19 U.S.C. § 1321) de minimis provision. This exemption, which previously allowed imports valued at less than $800 to enter the United States duty and tax free, will now cease to be available to importers starting July 1, 2027.

Separately, OBBBA establishes penalties for “any person who enters, introduces, facilitates, or attempts to introduce an article into the United States using [the de minimis provision], the importation of which violates any other provision of U.S. Customs law”.¹  Effective on August 3, 2025, first-time offenders will be assessed a civil penalty of up to $5,000, and up to $10,000 for each subsequent violation of the act.

In parallel, President Trump has been accelerating his negotiations with U.S. trade partners in anticipation of his self-imposed August 1 deadline for new deals, while also threatening new tariffs both under the IEEPA and Section 232 authorities.

1. US-Japan Trade Deal:² On July 22, 2025, the President announced a framework trade deal with Japan. As part of that framework Japan promised to invest $550 billion in the United States across numerous industries, including aerospace, defense, agriculture and semiconductors. The President separately announced that the U.S. “will receive 90% of the profits” of such investments, the mechanics of which were not specifically defined. In return, the U.S. will reduce its threatened 25% Reciprocal IEEPA tariff rate to 15%, inclusive of imports of Japanese origin automobiles and auto parts.

2. US-Vietnam Trade Deal:³ On July 2, 2025, the President announced a framework trade deal with Vietnam. As part of that framework Vietnam promised to provide duty-free access to all U.S. exports to Vietnam (with a specific focus on agricultural and industrial products), while at the same time cracking down on transshipment. In return, the U.S. will reduce its threatened 46% Reciprocal IEEPA tariff to 20%, maintaining a 40% tariff rate on all imported merchandise found to have been transshipped through Vietnam.

3. US-Indonesia Trade Deal:⁴ On July 15, 2025, the President announced a framework trade deal with Indonesia. As part of that framework, Indonesia promised to purchase $15 billion in U.S. energy products, $4.5 billion in U.S. agricultural products, and 50 Boeing jets. In return, the U.S. will reduce its threatened 32% tariff on Indonesian exports to 19%.

4. Reciprocal IEEPA Tariff Threats:⁵ On July 7, 2025, the President extended the final deadline for Reciprocal Trade negotiations to August 1, 2025 and simultaneously issued letters to U.S. trading partners notifying them of their final tariff rates in lieu of an agreement. Among the most notable tariff threats aimed at U.S. trading partners are the following:

• Philippines: 20%
• South Korea: 25%
• European Union: 30%
• Mexico: 30%
• Sri Lanka: 30%
• Canada: 35% on all non-USMCA qualifying goods.
• Cambodia: 36%
• Brazil: 40%
• An additional 10% tariff on all BRICS nations separate from other reciprocal measures under IEEPA

It is not clear from a review of the letters sent to each trading partner whether the President will maintain any consistency in whether such tariffs will be additive to or precluding the application of sectoral tariffs, such as those imposed under Section 232.

5. Proposed Section 232 Tariffs on Copper and Pharmaceutical Imports:⁶ At a July 8, 2025, Cabinet meeting, President Trump threatened tariffs of up to 50% and 200% on imports of copper and pharmaceutical products, respectively. While the President did not specify a timeline for the implementation of the proposed tariffs, the announcements suggest that the Department of Commerce’s Section 232 national security investigations into imports of such articles may be nearing completion. The President later clarified that such pharmaceutical tariffs would not go into effect until 2027, citing the need to “give [pharmaceutical producers] a certain period of time to get their act together.” However, Commerce Secretary Lutnick clarified in a later television interview that copper tariffs will take effect August 1, 2025.

Next Steps and Guidance for Importers

Given the impending effective date for penalties, importers who have previously utilized the de minimis provision to make entry of merchandise into U.S. commerce should consider alternative tariff mitigation strategies. We imagine that the Foreign-Trade Zones and Bonded Warehouse programs, with their duty-deferral and re-export benefits, will receive renewed interest from such importers.

Separately, as previously noted the legal viability of the President’s proposed reciprocal tariffs under the IEEPA remains unclear. The U.S. Court of Appeals for the Federal Circuit is holding oral arguments in the Administration’s appeal of the Court of International Trade’s invalidation of the IEEPA tariffs starting July 31, 2025. Should the appellate court uphold the lower court’s prior decision, it remains to be seen if or when the matter could make its way to the Supreme Court.

In the meantime, importers should begin to proactively identify 1) entries of merchandise upon which IEEPA tariffs have already been paid, and 2) entries of copper and pharmaceutical products as identified by their Harmonized Tariff Schedule of the United States (HTS) classification. Imported merchandise for which IEEPA tariffs have already been paid may be eligible for refunds in the event the tariffs are invalidated. Additionally, supply chain planning and thoughtful mitigation strategies may enable significant savings in an increasingly complex tariff environment.

Sources:
¹ See OBBBA, Chapter 5, subchapter C – Other Reforms. Section 70531. Modifications to de minimis entry privilege for commercial shipments.
² "Trump announces ‘massive’ trade agreement with Japan”. CNN. https://www.cnn.com/2025/07/22/business/japan-trade-agreement-us. July 23, 2025.
³ “US and Vietnam reach initial tariff deal”. Politico. https://www.politico.com/news/2025/07/02/u-s-and-vietnam-have-reached-loose-framework-for-further-trade-talks-00437236. July 2, 2025.
⁴ “Striking trade deal with US was an ‘extraordinary struggle,’ Indonesia says.” CNN. https://www.cnn.com/2025/07/15/economy/trump-says-trade-deal-with-indonesia. July 16, 2025.
⁵“Trump Pushes Global Trade War Back to the Top of His Agenda”. Wall Street Journal. https://www.wsj.com/economy/trade/trump-tariffs-deadline-august-trade-war-e916eb77?mod=hp_lead_pos2&mod=article_inline. July 7, 2025.
⁶ “Trump says copper, pharmaceutical tariffs coming ‘very soon’”. Supply Chain Dive. https://www.supplychaindive.com/news/trump-copper-pharmaceutical-tariffs-coming-soon/752495/. July 8, 2025.