Here is a look at recent tax-related happenings on the Hill, including new rounds of tariffs and fresh guidance from the IRS.
Lately on the Hill
Tariff Deadline Extended & New Tariffs on the Table
President Donald Trump issued an executive order extending the August 1 tariff deadline to August 7. The order included modified tariff rates for several countries with rates ranging from 10% to 40%. Notable rate modifications include 40% tariffs on Laos and Myanmar, a 41% tariff on Syria, 30% tariffs on Algeria, Bosnia and Herzegovina, Libya, and South Africa, and a 39% tariff on Switzerland, among others. The order increased the baseline tariff rate for all countries not included in the announcements by an additional 10%.
The White House also issued an executive order raising tariffs on Canada to 35% due to concerns surrounding fentanyl flow into the U.S. from the Canadian border. This tariff will not apply to goods that qualify under the United States-Mexico-Canada Agreement and the tariff became effective August 1, 2025. The president granted Mexico a 90-day pause on the 30% tariff scheduled to go into effect for Mexico to allow further negotiations to take place.1
In addition, the White House levied an additional tariff on Brazil to bring its total tariff rate up to 50%. This new tariff does not apply to goods like silicon metal, pig iron, civil aircrafts and component parts, metallurgical grade alumina, tin ore, wood pulp, precious metals, energy and energy products, and fertilizer, among others. For a complete list of exceptions to the tariff, see Annex 1 in the executive order. All the executive orders noted above establish a 40% “transshipment” tariff for goods routed through other countries to escape that country of origin’s less favorable tariff rate.
The president brokered additional trade deals with South Korea, Thailand, Cambodia, and the European Union. The South Korean trade deal lowers the tariff rate from 25% to 15% on goods imported from South Korea. Per the deal, South Korea plans to invest $350 billion in the United States.2 The deals with Cambodia and Thailand come on the heals of a ceasefire between the two countries.3 Under the terms of the deal, the U.S. will levy 19% tariffs on each country. The U.S. also reached a trade deal with the European Union. Read more in our FORsights™ article, “The United States and European Union Trade Deal.”
De Minimis Shipping Exemption Suspended
In tandem with the president’s tariff actions, Trump suspended the duty free de minimis treatment for all countries via executive order. Under the de minimis rule, imported goods valued under $800 were previously exempted from tariff duties. This action ends the favorable treatment of low-cost goods entering the country. The suspension will become effective for all goods entered for consumption or withdrawn from a warehouse for consumption starting on August 29, 2025. All goods will be subject to the applicable tariff rate of the country of origin.
In addition to these rates, goods from countries with a tariff rate lower than 16% will be subject to an additional fee of $80 per item. Goods from countries with tariff rates between 16% and 25% will be subject to additional fees of $160 per item. For goods imported from countries with tariff rates above 25%, an additional fee of $200 per item will be applied. This executive order speeds up the timeline for the end of the de minimis treatment as the One Big Beautiful Bill Act terminated the de minimis treatment for all transactions on or after July 1, 2027.
Tariffs Issued on Copper
The White House announced a 50% Section 232 tariff on imports of copper products, including pipes, wire rods, sheets, and tubes. Effective August 1, 2025, the tariffs do not stack on other §232 tariffs or reciprocal tariffs. For example, if a product is subject to automobile §232 tariffs and is a copper product, then the product would fall under the automobile tariffs.
White House Releases Plan for Taxation of Digital Assets
The White House published a report recommending a plan for the IRS to implement a tax plan for digital assets. The report calls on the IRS to release guidance for how the corporate alternative minimum tax applies to digital assets, the tax treatment of certain investment trusts holding digital assets, and if converting digital assets to blockchain is a taxable transaction.4
Judicial Review
Appellate Court Hearing Tariff Case
Oral arguments were held, related to the president’s authority to issue reciprocal and fentanyl-related tariffs, in the U.S. Court of Appeals for the Federal Circuit on July 31. To issue the sweeping tariffs seen this summer, Trump invoked the International Emergency Economic Powers Act (IEEPA). He claims that a declared international emergency affords the executive branch the power to issue these tariffs. The plaintiffs in the case assert that Congress did not intend to delegate the ability to set sweeping tariffs to the president.5 The hearing lasted more than two hours and ended without a verdict and consisted of arguments before the full panel of 11 judges rather than the customary panel of three. According to reports, the panel of judges seemed skeptical that the president could bypass Congress and implement sweeping tariffs.6
From the Treasury & IRS
Chemicals Added to the List of Taxable Substances
The IRS added 21 chemicals to the list of taxable substances. Items on this list are subject to an excise tax under Internal Revenue Code §4672. Under this section, if a substance consists of 20% or more of the taxable chemicals listed, it will be determined to be a taxable substance. Interested parties may subject various substances to the IRS to determine if they should be taxable substances.
IRS Releases Guidance on Corporate Alternative Minimum Tax
The IRS issued guidance in Notice 2025-28 that increases the options available to taxpayers to calculate their distributive share of a partnership’s adjusted financial statement income (AFSI) for corporate minimum tax purposes. Under the new guidance, taxpayers can take a “top-down” approach. For some taxpayers, this can look like using taxable income as their distributive share. This differs from the “bottom-up” approach outlined in the proposed regulations issued by the IRS in September 2024. Under this approach, distributive share percentages are computed at the partner level and then multiplied by the overall partnership’s AFSI. According to the notice, taxpayers can use any acceptable method in addition to the top-down approach to calculate their distributive share of AFSI. In making the change, the IRS hopes to simplify the calculation for taxpayers.7
Tackling Tax
Be sure to catch this week’s installment of our new show “Tackling Tax,” where we’ll bring you the latest on tax policy and strategies. In our seventh episode, we’ll look at how the One Big Beautiful Bill Act affects international tax concepts with Eric Flueckiger, a partner with our international tax specialty practice, and Michael Cornett, the international tax leader in our Washington National Tax Office.
