In early-March, the U.S. announced new tariff investigations into allegations of excess industrial capacity and forced labor that target over 60 different countries and are expected to be completed by July. These investigations are designed to assist President Donald Trump’s administration in piecing together a new tariff agenda similar to the previous reciprocal tariffs, which were overturned by the U.S. Supreme Court in February.
The ruling initially raised questions about whether countries would comply with new tariffs or seek to renegotiate previous trade agreements. Since then, however, trade partners have largely chosen to retain the previous agreements assuming any new U.S. tariffs are not higher than previously expected.
On March 26, the European Parliament voted to approve the E.U.-U.S. trade deal codifying a 15% U.S. tariff rate on most E.U. products. The deal must now obtain formal approval by all 27 member states, which is expected to be completed in April or May.
The largest pushback on the newest tariff investigations has come from China, which has criticized the U.S. allegations of excess industrial capacity and forced labor as baseless. In response, China initiated two new trade probes into the U.S. on March 27 focused on alleged U.S. discrimination against Chinese companies and trade barriers to renewable-energy products.
While the investigations are intended to send a message to U.S. leadership, it is unclear if they will result in substantive tariff increases. Separately, the U.S. and China were initially scheduled to hold a summit in late-March to discuss a finalized trade agreement, but the visit was delayed by the outbreak of war in the Middle East and has since been rescheduled to May 14-15.
U.S. restructures tariffs on products containing steel, aluminum, and copper
On April 2, the U.S. announced changes to the structure of tariffs on products made with steel, aluminum, and copper effective April 6. Under the previous regulation, manufacturers paid 50% tariffs on the value of the product content composed of the three metals. Following the new structural changes, commodity-grade steel, aluminum, and copper products or other products made nearly entirely of these metals will continue to be charged a 50% tariff.
For products where less than 15% of the content by weight is composed of steel, aluminum, or copper, metal tariffs will be eliminated, and the product will be charged using other tariffs that may apply, such as the 10% global baseline tariff or country and product-specific tariffs. Products for which greater than 15% of the content is composed of the relevant metals will now be charged a 25% tariff on the final value of the finished product.
According to U.S. officials, the changes are designed to reduce confusion about the previous tariffs, following feedback that it was difficult to assess the value of metal content alone within a finished derivative product. U.S. government estimates indicate that no material difference in the amount of tariff revenue is expected. However, the effective tariff rate could increase significantly for manufacturers of high-value products containing more than 15% metal content, which will now be charged tariffs on the whole value of their products rather than only on a fraction.
U.S. increases tariffs on certain branded pharmaceutical products to 100%
The U.S. announced plans to charge a tariff of 100% on imports of patented pharmaceutical products. The 100% tariff will initially become effective on July 31 for a list of 17 major multinational pharmaceutical manufacturers, before coming into effect for all other companies on September 29.
These tariffs are subject to several exemptions. As negotiated in previous reciprocal tariff agreements, tariffs will be capped at 15% for imports from the European Union, Japan, South Korea, Switzerland, and Liechtenstein, while imports from the United Kingdom will be fully exempted.
Additionally, companies that have entered into Most-Favored-Nation pharmaceutical pricing agreements with the U.S. government will be exempted from patented pharmaceutical tariffs through January 2029.
At least 16 companies, including Pfizer Inc., Johnson & Johnson, AstraZeneca plc, Novo Nordisk A/S, and Eli Lilly and Company have reached agreements. More major manufacturers may seek to make agreements before the tariffs are implemented.
Tariffs will be further lowered to 20% on imports from companies that make plans to move production to the United States before January 2029. All generic pharmaceuticals will remain exempted from these tariffs as well. Given that many of the listed exemptions target major manufacturers, smaller pharmaceutical and biotechnology companies located outside of Europe and East Asia will likely be more affected by these tariffs.
U.S. threatens tariffs on suppliers of Iranian military and floats Iran sanctions relief
Amid the recently negotiated ceasefire agreement in the conflict between the U.S., Israel, and Iran, the U.S. has suggested several new related trade policies could be on the way.
On April 8, President Trump threatened 50% tariffs on all countries that supply weapons to Iran, effective immediately. However, the policy process for this is unclear given the recent Supreme Court ruling that limited President Trump’s ability to enact tariffs unilaterally. Additionally, the Trump administration has not specified which countries could be targeted.
Separately, President Trump confirmed that the removal of sanctions and other trade restrictions on Iran is being discussed as part of ongoing peace negotiations. U.S. sanctions have barred Iran from the global financial system as well as from many oil markets. Removing these restrictions could provide strong economic incentives for Iranian leaders to reach a deal. However, sanctions are only one of many political and economic considerations being discussed as part of a permanent peace deal.
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