After U.S. President Donald Trump’s administration appealed the ruling of a lower court to deem many of his tariffs illegal, the United States Supreme Court has agreed to hear the appeal and fast-track the case. Oral arguments on the legality of tariffs declared under the International Emergency Economic Powers Act, including global reciprocal tariffs and President Trump’s tariffs on Canada, Mexico, and China, will be heard in early November. In the meantime, existing tariffs will remain in effect.
U.S. and China continue negotiations amid targeted trade restrictions
U.S. and Chinese officials held their most recent trade summit in Madrid from September 14-15. Unlike previous rounds, the most recent talks focused on the sale of TikTok from China-based ByteDance to a U.S.-based company, a long-running priority of the Trump administration that had caused conflict in previous negotiations. On September 15, U.S. officials indicated that the U.S. and China had made a deal for TikTok’s divestment, clearing the way for future talks to focus on trade and tariff-related issues. U.S. officials indicated that Chinese export controls on rare earth magnets would be a key focus of the next round of negotiations.
Despite the ongoing talks between the two countries, the U.S. and China have continued to initiate investigations and pass trade restrictions targeting companies from the opposite country. On September 3, China enacted anti-dumping tariffs on U.S. optical fibers ranging from 33.3% to 78.2%. Subsequently, on September 5, the U.S. announced plans to restrict the import of medium and heavy duty-trucks and drones from China within the next month. U.S. officials did not specify the nature of the restrictions, but the measure could fully bar imports or bar imports of products containing specific technologies deemed harmful to national security.
Additionally, on September 13, China launched two separate investigations into chip-related products from the United States. One anti-discrimination investigation will focus on whether U.S. trade measures related to the export of chip technologies discriminated against China. The other anti-dumping investigation will look into alleged dumping of analog chips used in certain products, including hearing aids, Wi-Fi routers and temperature sensors. On September 15, China’s State Administration for Market Regulation further indicated that Nvidia Corporation had violated China’s anti-trust laws with its 2020 acquisition of Israel-based Mellanox Technologies. The competing regulations and targeting of companies from the opposite country are likely to continue in the short-term as bilateral tensions continue to run high.
U.S. enacts reciprocal tariff exemptions on certain products and finalizes deal with Japan
Over the past several weeks, the Trump administration has continued to flesh out trade deals reached in late July and early August. On September 5, President Trump issued an executive order detailing potential tariff exemptions for countries that reach trade deals including agreements on key products. Under the measure, if countries reach agreements with the U.S. on trade, the U.S. will eliminate tariffs on a list of 45 key goods, with a focus on goods that cannot be sufficiently produced in the U.S. The list of goods includes certain agricultural products, aircraft and aircraft parts, non-patented pharmaceutical products, neodymium magnets, light-emitting diodes, nickel, graphite, tungsten, uranium, and gold. The measure automatically includes countries that have made reciprocal trade deals with the U.S., effective as of September 8.
Additionally, on September 4, the U.S. and Japan formalized their trade deal. The final agreement indicated a maximum 15% U.S. tariff on most Japanese products, including automotive and aerospace parts and pharmaceutical products. Japan also agreed to invest $550 billion (€463 billion) into the U.S., but no further details were released on the specifics of these investments. Separately, negotiations continue between the U.S. and India to reduce India’s 50% tariff rate. The two countries held talks on September 16, but sources did not specify what trade issues were discussed.
U.S. threatens further tariffs over climate policy proposal and encourages trade restrictions on buyers of Russian oil
In addition to the wide array of existing tariffs, U.S. officials recently considered further trade restrictions on countries that support an international proposal at the United Nations to charge ships for their carbon dioxide emissions. U.S. policy measures could include new tariffs as well as visa restrictions and port levies if the effort moves forward at the U.N.
The U.S. also reportedly encouraged other nations in the G-7 including Canada, France, Germany, Italy, Japan, and the United Kingdom to apply tariffs to China and India for purchasing Russian energy shipments. The proposed tariffs would range from 50%-100%. However, they are unlikely to be passed by E.U. member states given the reluctance of Hungary and other countries in the E.U. to impose harsher measures against Russia. President Trump has also indicated the U.S. would not employ Russia-related tariffs on China unless the E.U. did the same, despite the previous U.S. move to increase tariffs on India for its purchases of Russian oil.
Additionally, on September 16, the U.S. indicated that it would consider further tariffs on specific automotive parts if requested by domestic automotive producers or industry associations. Under the proposal, these entities would submit an application to the government which would then be considered. It is unknown if any current companies or industry associations have pushed for additional tariffs on specific components.
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