Yesterday, September 5, President Trump signed an Executive Order (EO) implementing the U.S.–Japan trade framework, retroactive to August 7, that imposes a 15% inclusive duty on most Japanese imports except those subject to Section 232 actions and aerospace, generic pharmaceuticals, and ingredients that will receive duty-free treatment.

A Fact Sheet detailing the agreed-upon terms can be found HERE.

Notably, the agreement does NOT include an explicit transshipped clause like the overarching implementing order for IEEPA reciprocal tariffs. The EO does however specify that Commerce Secretary Howard Lutnick can issue rules, regulations, guidance and procedures to determine eligibility for what is considered “products of Japan.”

CBP will issue separate guidance within 7 days to effectuate the new duty terms summarized below:

• MFN < 15%: Goods with a MFN duty of less than 15% will have an additional IEEPA reciprocal tariff applied to bring the total tariff to 15%.

• MFN ≥ 15%: Goods with a U.S. MFN duty greater than or equal to 15% will have no additional IEEPA reciprocal tariff applied.

• Sector-Specific Tariff Treatment

o   Aerospace: No IEEPA reciprocal tariffs, or Section 232 steel, aluminum and copper tariffs will be applied to imports of Japanese products covered by the WTO Agreement on Trade in Civil Aircraft.

o   Autos & Auto Parts: A maximum of 15%, as determined by their MFN rate will be applied. For products with a MFN below 15%, additional duties will apply under Section 232, rather than IEEPA, to face a total duty rate of 15%.

o   Unavailable Natural Resources: The Commerce Secretary may determine products of Japan that are natural resources unavailable (or unavailable at sufficient scale to satisfy domestic demand) in the U.S. that may be eligible for a zero IEEPA reciprocal duty.

• Generic pharmaceuticals, generic pharmaceutical ingredients, and generic pharmaceutical chemical precursors will have a zero duty under this provision. (Note the EO does not specify what HTS codes are covered)

• There is no clear process yet for who will determine additional products for this treatment or the basis for determining unavailability.

Please do not hesitate to reach out to team SSA with any questions or additional informational needs.