On Sept. 5, President Donald Trump issued an executive order (EO), “Modifying The Scope of Reciprocal Tariffs and Establishing Procedures for Implementing Trade and Security Agreements.” This EO updates the “Annex II” list of products (largely industrial and pharmaceutical inputs as well as aircraft parts) that are exempt from reciprocal tariffs and establishes a process through which the U.S. trade representative (USTR) and secretary of commerce can implement new trade agreements—including additional, albeit limited, tariff relief.
A day earlier, on Sept. 4, President Trump issued a separate EO to implement the U.S.-Japan Trade Agreement and the 15% tariff on Japanese imports. Subsequently, on Sept. 12, the Department of Commerce issued a notice to update certain tariff rates for Japan, effective on Sept. 16.
Below provides additional details on and an analysis of these executive orders.
MODIFYING THE SCOPE OF RECIPROCAL TARIFFS AND ESTABLISHING PROCEDURES FOR IMPLEMENTING TRADE AND SECURITY AGREEMENTS (Executive Order, Fact Sheet)
Through this EO, the president delegates the authority of implementing new trade agreements to the secretary of commerce and USTR. The agency heads are directed to take all necessary actions to implement trade deals, which may include the implementation of tariff exclusions. Despite this formal delegation of authority, President Trump will almost certainly remain the key decision maker with regard to tariff policy.
Although recent trade agreements have included tariff exemptions, this EO is the most significant expression of President Trump’s willingness to offer targeted tariff relief to date, though he also made it clear that any tariff relief would be connected to the national interests of the United States. Businesses and countries may have more of an opening to advocate for additional exemptions if they can frame them appropriately.
- Implementation Process. Following the establishment of a trade agreement between the United States and a trading partner, the secretary of commerce and USTR are directed to determine what actions are necessary to implement such an agreement and “take the necessary and appropriate actions” to do so. These officials, along with the commissioner of U.S. Customs and Border Protection (CBP) and the chair of the United States International Trade Commission (USITC), are empowered to update the Harmonized Tariff Schedule of the United States (HTSUS) through notice in the Federal Register. This appears to imply the president may not issue EOs to implement additional trade deals, as he has done to date.
- Opportunities for Tariff Relief. The EO states that the president is “generally unwilling for framework agreements to narrow the scope of the reciprocal tariffs or modify any relevant section 232 tariff,” but “final agreements with the United States may include such modifications.” This suggests that the administration is open to considering some arguments around exclusions for countries that have agreed on trade frameworks with the United States.
- Basis for Relief. The EO explains that any future tariff relief will depend on “numerous factors,” such as “the scope and economic value of a trading partner’s commitments to the United States in its agreement on reciprocal trade” and “the national interests of the United States.” The recent framework agreements reached with different nations notably include different exemptions to U.S. tariff policies, highlighting that any tariff relief will be targeted, rather than widely applied.
- Existing Tariff Exemptions. The EO updates Annex II, first issued alongside the EO that imposed reciprocal tariffs on all nations, to revise which imports are exempt from reciprocal tariffs. According to the White House Fact Sheet, the update adds “bullion-related articles and certain critical minerals and pharmaceutical products subject to pending Section 232 investigations” and removes “certain aluminum hydroxide, resin, and silicone products.” Products that no longer appear on the list will be subject to country-specific reciprocal tariffs beginning on Sept. 8. In determining whether an imported product has been exempted, it is important to consider including a determination of whether the product was listed in the original Annex II from April 2, 2025, and whether it appears on the list of excluded items in the updated Annex II of Sept. 5, 2025.
- Potential Tariff Exemptions. The EO creates a new Annex III, “Potential Tariff Adjustments for Aligned Partners” (PTAAP), that includes a list of products for which the administration will “consider” reducing the reciprocal tariffs to 0% based on the agreements that various trading partners reach with the United States. This annex is intended to contain products that “cannot be grown, mined, or naturally produced in the United States or grown, mined, or naturally produced in sufficient quantities in the United States to satisfy domestic demand; certain agricultural products; aircraft and aircraft parts; and non-patented articles for use in pharmaceutical applications.” As a result, some trading partners, but not others, will likely receive tariff relief for the outlined products.
- Refunds. If a framework or final agreement “requires a refund of duties collected, Customs and Border Protection (CBP) is directed to provide a refund of duties that “shall be processed pursuant to applicable law and CBP’s standard procedures for such refunds.”
IMPLEMENTING THE UNITED STATES–JAPAN AGREEMENT (Executive Order, Fact Sheet)
On Sept. 4, President Trump issued an EO to finalize the U.S.-Japan Trade Agreement reached on July 22. Japanese imports will be subject to a 15% tariff—a decrease from the proposed 25% duty that President Trump threatened to levy on Japan. The U.S.-Japan Agreement is the latest trade framework to be finalized, with several trade frameworks still outstanding, and many more in the works.
- 15% Tariff. The 15% duty will include all existing duties on Japanese goods and apply retroactively to goods entered for consumption or withdrawn from warehouse for consumption on or after 12:01 a.m. EDT on Aug. 7, 2025.
- Tariff Exemptions. The agreement notably provides Japan exemptions from the U.S. sectoral-specific tariff regime, which has largely remained separate from the U.S. reciprocal tariff regime levied under IEEPA.
- Automotives. Japanese automotive exports will be subject to a 15% tariff as opposed to the 25% tariff in effect on most nations. This was a top priority for Japanese negotiators as they sought to reach an agreement with the United States.
- Aircraft. Japan will remain subject to other Section 232 tariffs on steel, aluminum and copper; however, goods covered under the World Trade Organization Agreement on Trade in Civil Aircraft, except unmanned aircraft, will be subject to the lower 15% IEEPA-rate, exempting steel, aluminum and copper content from the higher Section 232 duties.
- Natural Resources. Natural resources “unavailable (or unavailable at sufficient scale to satisfy domestic demand) in the United States” will be exempt from the 15% reciprocal duty.
- Pharmaceuticals. Generic pharmaceuticals, generic pharmaceutical ingredients and generic pharmaceutical chemical precursors will be exempt from U.S. tariffs entirely, meaning these products will be exempt from the 15% base rate, as well as any future Section 232 tariff levied on pharmaceuticals.
- Japan Commitments. Japan agreed to increase imports of key American goods, including agricultural products, automobiles, commercial aircraft, defense equipment and energy. Japan will also invest $550 billion in the United States, which President Trump says will be used to expand domestic manufacturing.