Update on the US-Japan Memorandum of Understanding Regarding Trade and Investment

We reported on the July 22 announcement that the United States and Japan had reached a bilateral trade agreement here and the execution of a Memorandum of Understanding signed by representatives of the United States and Japan on September 4 and President Trump’s related EO here.

We outline the CBP’s updated guidance below.

Key Provisions of the EO and Implementing Guidance

Reciprocal Tariff Framework and Refunds

Effective as of August 7, 2024, most Japanese imports into the United States are subject to a reciprocal tariff regime in correlation to the import’s Most Favored Nation (MFN) rate. The MFN rate refers to the standard tariff rate that the United States applies to imports from other members of the World Trade Organization (WTO), as implemented in the Harmonized Tariff Schedule of the United States (HTSUS).

The reciprocal tariff structure applies to entries made on or after August 7, 2025, and is retroactive to that date. For Japanese-origin goods with an MFN rate of 15% or higher, the existing MFN rate applies without any additional reciprocal tariff. For Japanese-origin goods with an MFN rate below 15%, the total amount due is adjusted to a flat 15% by applying a supplemental tariff.

Importers who paid higher reciprocal tariffs on imports from Japan on or after August 7 may be eligible for a refund due to the retroactive implementation of the US-Japan Agreement. For unliquidated entries (entries that have not yet been finalized by CBP), importers can request a refund by filing a Post Summary Correction (PSC) through their customs broker. For entries that have already liquidated, a refund can be requested by filing a protest under 19 U.S.C. 1514, which can be done either through your broker or with our assistance. It is important to continue tracking entry dates and liquidation status, as outlined in previous client alerts, to ensure timely and accurate refund requests.

Sector-Specific Treatment

Aerospace: Civil aircraft and parts covered by the WTO Agreement on Trade in Civil Aircraft (excluding unmanned aircraft) are exempt from additional tariffs under the Agreement, including both reciprocal tariffs and Section 232 measures, subject to Federal Register notice and applicable HTSUS notes.

Automobiles and Automobile Parts: For passenger vehicles and light trucks, as well as their parts, that have an HTSUS classification that is covered by the Section 232 auto tariff:

• If the MFN duty rate of the vehicle or part is 15% or higher, only the MFN rate applies, and no additional Section 232 tariff is imposed. The vehicles and vehicle parts under this category are considered “not subject” to Section 232 auto tariffs, and thus may still be affected by other Section 232 trade measures such as those on steel, aluminum, or copper if relevant. If the MFN rate of the vehicle or part is below 15%, a supplemental Section 232 auto tariff is applied so that the total duty equals 15%. The vehicles and vehicle parts under this category are considered subject to the Section 232 auto tariffs, and thus would be exempt from Section 232 trade measures on steel, aluminum, or copper if relevant.

Exemptions and Discretionary Relief

Civil Aircraft and Parts: Aircraft and related components that are covered by the WTO Agreement on Trade in Civil Aircraft, with the exception of unmanned aircraft, are not subject to additional tariffs under this Agreement, including both reciprocal and Section 232 tariffs. The goods subject to this exemption are listed by HTSUS tariff classification in US note 35 of HTSUS Chapter 99, as well as in the Federal Register Notice issued by the US Department of Commerce on September 16.

Natural Resources and Pharmaceuticals: The US Secretary of Commerce retains the authority to exempt certain imports from Japan — such as natural resources not sufficiently available domestically, as well as generic pharmaceuticals and their key ingredients — from tariffs.

Other Exemptions: Additional exemptions, including those for critical minerals and other categories specified in the HTSUS or EOs, remain in effect.

Key Takeaways

EO 14345 establishes a 15% baseline via reciprocal tariff provisions with sector-specific mechanisms (including detailed HTSUS treatments for automobiles and auto parts) and key exemptions for civil aircraft and certain critical inputs.

While recent implementation guidance by CBP and Commerce provide operational details for claiming refunds on reciprocal tariffs and lower rates for certain sectors, more details are expected as the agreement continues to evolve. For example, the agreement details have not yet covered the Section 232 tariffs on the steel and aluminum industry, as referenced in the September 5 White House fact sheet, or the rules for determining Japanese-origin products as referenced in EO 14345. Based on the available details to date, importers should:

• File Refund Requests for Reciprocal Tariffs: Identify Japanese-origin entries that paid reciprocal tariffs on or after August 7, and file PSCs for unliquidated entries or protests for liquidated entries to claim the refunds.
• Track Entry and Liquidation Dates: Maintain detailed records of all entries of Japanese-origin goods, including entry summaries, tariff classifications, and duty payments, especially for entries made on or after August 7, which will impact how the refund claims can be made.
• Monitor CBP and Federal Register Guidance: Closely monitor CBP Cargo Systems Messaging Service messages and Federal Register notices for updates on other benefits established from the agreement, additional implementation details, and any special program indicators or eligibility requirements, including the establishment of any rules of origin.
• Preserve Documentation for Preferential Treatment: Retain all origin documentation, certificates, and supporting records to substantiate claims for preferential tariff treatment or refunds and be prepared for potential CBP audits.
• Monitor Sector-Specific Developments: For sensitive sectors such as automotive, steel, aluminum, copper, semiconductors, critical minerals, and pharmaceuticals, track both United States and Japanese regulatory announcements for changes in tariff rates, quota allocations, and compliance requirements.
• Engage in Ongoing Monitoring and Advocacy: Stay engaged with legal counsel and government relations contacts to advocate for clear, timely, and equitable implementation, and to remain informed about further negotiations or changes to the agreement.

We are available to help navigate the refund process — advising on PSCs for unliquidated entries (which you can file through your brokers) and preparing and filing protests for liquidated entries (with us or through your brokers) — and can coordinate with brokers or handle filings directly to ensure all deadlines and procedural requirements are met. Please contact us for support with tracking entry dates and liquidation status, documentation, and any aspect of the process.