On August 29, the United States Court of Appeals for the Federal Circuit upheld a lower court’s ruling that many of President Donald Trump’s tariff measures were enacted unlawfully without consent from Congress. The court has ordered the Trump administration to rescind the tariffs by October 14 or appeal the case to the U.S. Supreme Court, with the administration taking the latter action on September 2. It is unclear at the time of writing whether the Supreme Court will decide to take up the case and when that decision could be made.
This court case only affects tariffs declared through the International Emergency Economic Powers Act, including global reciprocal tariffs and President Trump’s tariffs on Canada, Mexico, and China that were declared in response to the alleged import of illicit drugs from those countries. Product-specific tariffs on goods such as semiconductors and pharmaceuticals were declared under a separate Department of Commerce authority that is not subject to this recent court ruling.
Increased U.S. tariffs on India and end to de minimis tariff exemptions come into effect
Following the previous announcement of many new U.S. tariffs on August 1, two related measures came into effect at the end of August. On August 27, the U.S. doubled its 25% tariff rate on Indian imports to 50% in response to India’s purchases of Russian oil. After this measure came into effect, India joined Brazil as the two nations with the highest U.S. tariff rate. However, Indian products that are subject to ongoing U.S. sector-specific tariff investigations including pharmaceuticals and consumer electronics will not be charged reciprocal tariffs until the results of these investigations are complete.
Additionally, on August 29, the U.S. ended its de minimis tariff exemption for all countries. The exemption previously enabled low-cost parcels valued at under $800 (€688) to enter the U.S. with no additional tariffs and with decreased customs scrutiny. Under the new order, foreign postal services are now responsible for individually assessing duties required on each package and paying the duties to U.S. customs. This change has caused over 47 postal companies around the world to halt shipments to the U.S. until further notice while these changes are addressed. Major postal service providers that have halted package services to the U.S. include Japan Post, Canada Post, India Post, Korea Post, Correos de Mexico, United Kingdom-based Royal Mail, Germany-based Deutsche Post, France-based La Poste S.A., and Taiwan-based Chunghwa Post.
Countries establish details of trade agreements following reciprocal tariff announcements
After many countries rushed to make agreements with the U.S. ahead of President Trump’s August 7 deadline for reciprocal tariffs, new details between the U.S. and several of its trade partners have since been ironed out. On August 21, the U.S. and the European Union announced a written framework agreement for the previous agreement reached on July 27 detailing a maximum 15% tariff on most European Union imports, including on goods subject to potential future sectoral tariffs such as pharmaceutical goods, semiconductors, and lumber. The U.S. will also lower tariffs to an unspecified rate below 15% for specific goods including aircraft and aviation components, generic pharmaceuticals and pharmaceutical ingredients, and natural resources unavailable in the U.S. including cork.
In response, the E.U. will eliminate all tariffs on American industrial goods and open market access for American agricultural goods. The U.S. will decrease automotive tariffs from 27.5% to 15% after the E.U. formally enacts legislation to this effect. Additionally, the E.U. committed to purchases of U.S. energy products valued at $750 billion (€645 billion), artificial intelligence chips valued at $40 billion (€34 billion), and an unspecified amount of military equipment. The U.S. and the E.U. further agreed to consider lowering tariffs on steel and aluminum products under a quota system for which no further details have been released.
Although the U.S. previously settled upon a 19% tariff rate for Indonesian imports, the U.S. agreed in principle to exempt Indonesian exports of cocoa, palm oil, and rubber from reciprocal tariffs. It is unknown when the tariff exemption will come into effect. Additionally, U.S. officials indicated that an announcement on the details of the U.S.-Japan trade deal should be expected shortly. Furthermore, after the U.S. increased tariffs on Canada to 35% on August 1, Canada decreased its retaliatory tariffs on U.S. goods covered by the United States-Mexico-Agreement (USMCA) effective September 1 in hopes of furthering negotiations with the U.S. Canadian tariffs on U.S. automotive, steel, and aluminum products remain at 25%.
U.S.-China trade tensions flare amid ongoing export controls
Although trade negotiations remain ongoing between the U.S. and China, tensions are on the rise again as issues related to export controls on rare earth shipments and advanced chip technology have emerged. While Chinese rare earth material exports to the U.S. largely resumed in July following a U.S.-China agreement, China continues to exert regulatory control over the materials and released new guidance on August 22 to include products made from imported rare earth raw materials in its export controls. Following this announcement, President Trump threatened on August 25 to charge China a 200% tariff if they refuse to supply the U.S. with rare earth minerals. It is unknown when this measure would come into effect or what further Chinese supply guarantees the U.S. is seeking.
Meanwhile, the U.S. has cracked down on exports of advanced semiconductor manufacturing technologies by revoking permission for Intel Corporation, SK Hynix Inc., Samsung Electronics Co., Ltd., and Taiwan Semiconductor Manufacturing Corporation to export these products to China. Effective January 1, 2026, these chipmakers will have to apply for export licenses through the U.S. government like other manufacturers without waivers. Although the reasoning for the move was not disclosed, U.S. export controls on these technologies remain part of U.S.-China negotiations.
Additionally, on August 28, Mexico’s legislature introduced a bill to implement a 50% tariff on imports from China. The proposal would aim to protect domestic manufacturing while also responding to U.S. concerns over the transshipment of Chinese goods through Mexico amid ongoing tariff negotiations. It is unknown when these Mexican tariffs could come into effect.
United States threatens tariffs on countries regulating or taxing digital service companies
In addition to the tariffs already proposed and enacted, President Trump suggested that further tariffs could be imposed on countries that regulate and tax digital services companies including Google LLC and Meta Platforms, Inc. It is unclear when this tariff could come into effect and what level it would be set at. The measure is likely intended to target the E.U., which maintains increased regulations on these companies and applies a digital service tax in some member states, as well as South Korea, where new regulations have recently been proposed in the legislature.
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