IEEPA Tariffs Explained: What Every Importer Needs to Know

In April 2025, the United States imposed tariffs on virtually every country in the world through an executive order citing the International Emergency Economic Powers Act (IEEPA). These tariffs — sometimes called "Liberation Day" tariffs after the announcement date — fundamentally changed the landed cost equation for importers beyond just those sourcing from China.

If you import from Europe, Southeast Asia, Mexico, Canada, or almost anywhere else, IEEPA tariffs may now be part of your cost structure. Here's what you need to understand.

What Is IEEPA?

The International Emergency Economic Powers Act (50 USC §§ 1701–1708) grants the President broad authority to regulate international commerce when a national emergency has been declared. Historically, it was used to freeze assets of hostile governments, impose sanctions on terrorist organizations, and cut off financial flows to adversaries.

Using IEEPA to impose broad tariffs on friendly trading partners was legally novel in 2025. The statutory text allows the President to "regulate" international commerce during a national emergency, and the administration interpreted this as including tariff imposition. Predictably, the authority was challenged in federal courts, but import obligations continued during litigation.

For importers, the legal debate is secondary to the practical reality: IEEPA tariffs are being collected, and you must account for them in your landed cost calculations.

The Tariff Structure

The IEEPA tariff regime that took effect in 2025 established a 10% baseline tariff on imports from most countries, with significantly higher rates for countries with which the US has large trade deficits.

Rates vary by country and have been subject to modification. The baseline 10% applies to imports from the European Union, the United Kingdom, Japan, South Korea, Australia, New Zealand, and dozens of others. Higher country-specific rates were announced for certain major trading partners.

Important: IEEPA tariff rates have been subject to executive modification, pauses, and negotiations since their initial announcement. Always verify current rates with CBP or a licensed customs broker before making import decisions. Rates published here reflect our best understanding at the time of writing and may not reflect the current position.

How IEEPA Stacks With Other Tariffs

The critical thing importers must understand is that IEEPA tariffs stack on top of existing duties — they don't replace them.

Example — German-origin machinery (HTS 8457.10.0000):

Component	Rate	Amount (on $500,000)
Base HTS duty	4.4%	$22,000
IEEPA (EU)	10.0%	$50,000
MPF	0.3464%	$575 (capped)
Total	14.4%+	$72,575

A piece of German machinery that previously carried only a 4.4% duty now carries 14.4% — more than tripling the duty cost.

For Chinese-origin goods, the stacking is even more severe:

Example — Chinese-origin furniture (HTS 9403.60.8081):

Component	Rate	Amount (on $100,000)
Base HTS duty	Free	$0
Section 301 (List 3)	25.0%	$25,000
IEEPA (China)	varies	varies
MPF	0.3464%	$346
Total	35%+	$35,346+

Chinese-origin goods were already subject to Section 301. IEEPA added another layer on top of that, in some cases making Chinese-origin goods effectively uneconomical for many importers.

USMCA and IEEPA

Mexico and Canada are covered by the United States-Mexico-Canada Agreement (USMCA), which established a free trade zone with preferential duty rates. IEEPA tariffs raised questions about how they interact with USMCA.

The current position is that USMCA-qualifying goods — those meeting the applicable rules of origin — may be exempt from IEEPA tariffs or subject to reduced rates. Non-USMCA goods transiting through Mexico or Canada without genuine origin do not receive this treatment.

This distinction has made origin verification and USMCA qualification documentation more important than ever. Importers sourcing from Mexico should ensure they have proper certificates of origin and that their goods genuinely meet USMCA rules, not just routing goods through Mexico to avoid tariffs.

Which Products Are Affected

The breadth of IEEPA tariffs is one of their defining characteristics. Unlike Section 301, which targeted Chinese goods specifically, IEEPA tariffs apply globally. Affected categories include:

European goods — German industrial machinery, Italian fashion, French wine, pharmaceutical ingredients from Ireland
Southeast Asian goods — Vietnamese textiles and footwear, Thai electronics, Malaysian semiconductors
Indian goods — pharmaceutical APIs, jewelry, textiles
Japanese goods — automotive components, precision instruments, electronics
Consumer goods across all origins — clothing, electronics, appliances, food products

Industries that had diversified away from China specifically to avoid Section 301 tariffs now find that their alternative sourcing countries also carry IEEPA tariffs, though generally at lower rates than the Section 301 regime.

Compliance Considerations

Classification accuracy is now more important than ever

With duty rates elevated across virtually all origins, the financial consequence of misclassifying a product has grown proportionally. A product incorrectly classified at a 2% rate instead of a correct 5% rate, plus Section 301, plus IEEPA, can mean the difference between a small duty bill and a very large one. CBP audits and penalty exposure scale with the underpayment.

Record country of origin carefully

Because IEEPA rates vary by country, accurate country of origin documentation is essential. Goods with ambiguous origin — assembled in multiple countries, using components from various sources — need proper substantial transformation analysis.

Watch for modifications

IEEPA tariffs are set by executive order and can be modified, suspended, or eliminated with a stroke of the pen. Many importers have experienced sudden rate changes mid-shipment — goods that were duty-planned at one rate arrive under a different rate. Building a rate-change buffer into your contracts and pricing is prudent.

Strategies for Managing IEEPA Exposure

Re-evaluate total landed cost. With IEEPA tariffs added to the calculation, many sourcing decisions made in 2023 or 2024 may no longer be optimal. Run the full landed cost calculation — including base duty, Section 301 where applicable, IEEPA, MPF, and HMF — for your current sources.

Investigate USMCA qualification more aggressively. For goods sourced from Canada and Mexico, confirming USMCA qualification could eliminate or reduce IEEPA exposure. Rules of origin analysis requires detailed knowledge of your supply chain.

Consider duty drawback. If you're exporting finished goods that incorporate imported materials subject to IEEPA tariffs, drawback applies. As with Section 301, IEEPA duties paid on imported goods used in exported products can be recovered at 99%.

Stay in dialogue with your customs broker. The IEEPA tariff environment is the most fluid it has been in decades. Rate changes, country exemptions, and negotiated carve-outs are announced with little notice. A broker who monitors these changes can alert you before they affect your cost structure.

What to Tell Your Suppliers and Customers

If you're passing IEEPA tariff costs to customers, be explicit in your contracts and invoices. Tariff costs that were built into a fixed-price contract may now be your problem if the contract doesn't include a tariff adjustment clause.

For future contracts, consider:

Tariff adjustment clauses — allow prices to be renegotiated if tariff rates change by more than a defined threshold
Country-of-origin representations — require suppliers to warrant the origin of goods so that if tariff liability arises due to incorrect origin, you have a contractual remedy
Force majeure review — tariff changes may or may not qualify as force majeure under your contracts; review with counsel

Key Takeaways

IEEPA tariffs impose a baseline 10% on most US imports globally, with higher rates for certain countries
They stack on top of base HTS duties and Section 301 tariffs — total duty burdens can exceed 35–50% for Chinese-origin goods
USMCA-qualifying goods from Canada and Mexico may be exempt or reduced — origin qualification matters more than ever
Rates are subject to executive modification without notice — build flexibility into contracts
Duty drawback applies to IEEPA tariffs on goods used in or exported as finished products

Use the TariffClassify landed cost calculator to compute your full duty burden — base rate, Section 301, IEEPA, MPF, and HMF — for any product and origin combination. No sign-in required.