Following the February Supreme Court ruling that overturned many recent U.S. tariffs, President Donald Trump’s administration is pushing forward with plans to enact comparable tariffs under different legal authorities.
On March 11, the U.S. announced new tariff investigations that will look into allegations of excess industrial capacity in China, Mexico, the European Union, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, South Korea, Vietnam, Taiwan, Bangladesh, Japan, and India. Additionally, the U.S. initiated an investigation into allegations of forced labor in 60 countries, including Algeria, Canada, Norway, Saudi Arabia, China, the E.U., and the United Kingdom.
These investigations will likely be used to implement tariffs similar to those established by previous reciprocal tariffs. The U.S. Office of the Trade Representative will hold hearings on the industrial capacity tariffs beginning May 5 and plans to expedite both investigations to conclude within five months, likely before the current 10% global tariff expires on July 24. If the investigations are successful, it is unknown what rate tariffs could be set at for offending countries.
Additionally, Trump administration officials reiterated their plans to raise the 10% global tariff to 15% very soon. This proposal has raised concerns among many countries that have negotiated lower tariff rates or exemptions under previous trade deals, which may not be honored if the 15% tariff is enacted.
E.U. officials have indicated that the bloc expects to be exempt from the 15% tariff and to keep its tariff rate at a maximum of 10% until a trade agreement is finalized. The E.U. further decided to pause ratification of the U.S.-E.U. trade agreement until further clarity is by the U.S. side on plans to uphold its commitments under the agreement. E.U. officials met to discuss the U.S. tariffs on March 17.
Legal uncertainty persists regarding use of new tariff law and tariff refunds
The Trump administration continues to face new legal challenges to its tariff agenda. On March 5, a coalition of state governments sued the federal government, alleging that the 10% global tariff was also enacted illegally. The tariff was declared under a law titled Section 122, which was intended to expand U.S. federal government authority to address balance-of-payments issues. The plaintiffs allege the Trump administration distorted evidence to demonstrate such a balance-of-payments problem and invoke the law. However, this lawsuit is likely to face greater challenges than the previous case affecting reciprocal tariffs, since Section 122 explicitly acknowledges the President’s ability to enact tariffs unilaterally.
Another remaining challenge is how the administration will return refunds to companies that paid the now-invalid earlier tariffs. On March 4, a U.S. federal judge ordered the Trump administration to start paying refunds immediately by requiring U.S. Customs and Border Protection (CBP) to recalculate the initial duties paid, excluding the tariffs invalidated by the Supreme Court. CBP appealed against the ruling, stating the organization currently lacks the administrative resources and ability to carry out the decision and needs a minimum of 45 days to prepare. Subsequently, the case’s judge temporarily suspended the order. CBP recently stated the agency is between 40-80% done with creating a new system to issue tariff refunds, which could begin as soon as mid-April.
U.S. reconsiders permanent normal trade relations and AI chip sales to China ahead of March trade summit
On February 26, the U.S. International Trade Commission launched a six-month investigation into the potential revocation of China’s permanent normal trade relations status. The results are expected to be announced by August 21.
Under China’s current most-favored-nation status, Chinese imports face duties of about 2.5% in addition to existing tariffs. If the status is revoked, those duties could rise to levels like those applied to countries without normal trade relations, such as Cuba, Russia, and North Korea, where tariff rates currently range from about 10% to 50% and change based on the affected product. While the decision could strain ongoing U.S.-China trade talks, revoking China’s permanent normal trade relations status could enable the Trump administration to threaten or apply more liberal tariffs similar to what was previously imposed under the International Emergency Economic Powers Act.
Separately, the U.S. is further considering imposing limits on sales of certain advanced artificial intelligence accelerator chips to Chinese firms. Under the proposal, sales of Nvidia H200 chips from Nvidia Corporation could be capped at 75,000 units per Chinese customer, with similar limits considered for the MI325 chips produced by Advanced Micro Devices Inc.
Although smaller firms might not experience major supply disruptions, the proposed cap would provide less than half of the supply typically required by major Chinese technology companies, such as Alibaba Group Holding Ltd. and ByteDance Ltd. Officials have not announced when the cap might take effect, though the proposal could be discussed at the upcoming U.S.–China summit beginning on March 31.
U.S. threatens to cut off all trade with Spain over use of military bases in conflict with Iran
On March 3, President Trump threatened to “cut off all trade” with Spain after the Spanish government refused to allow the U.S. to use military bases in Spain for strikes on Iran. Trump indicated that the U.S. could potentially impose a full trade embargo on Spain, though he did not specify whether the administration intends to formally implement such a measure.
Spanish Prime Minister Pedro Sánchez asserted that his administration is not concerned about the threats. It remains unclear how the U.S. could impose unilateral trade restrictions on Spain, as the country’s trade policy is negotiated collectively through the European Union rather than bilaterally with individual member states. Additionally, no further details have been specified on when this policy could be enacted.
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