After the United States implemented its reciprocal tariff policy on August 7, ongoing trade negotiations with many countries have drawn to a close as finalized tariff rates were enacted. Trade discussions have since focused on finalizing agreements made prior to the August 7 deadline between the U.S. and countries such as Japan, South Korea, the United Kingdom or the European Union.
Since the initial announcements of these agreements often lacked specific details, negotiators are now working to establish which products will be exempted or subject to lower tariffs. Several countries have claimed that the U.S. promised to reduce or eliminate product-specific tariffs on goods including steel, aluminum, automobiles, and pharmaceuticals as part of bilateral agreements, but officials have noted that many of these exemptions have not yet been implemented and affected goods continue to be charged at higher rates. More official announcements clarifying the details of these trade agreements are likely to come in the upcoming weeks.
U.S. and China agree to further extend trade negotiations for 90 days
After U.S.-China negotiations led to China’s exclusion from U.S. reciprocal tariff measures, the U.S. and China agreed to extend negotiations for an additional 90 days on August 11. As a result, U.S. tariffs on most Chinese goods will remain at 30% and Chinese tariffs on most U.S. goods will remain at 10% through at least November 9. In line with Chinese promises during the negotiations, the Chinese government has temporarily lifted export controls on 28 U.S. defense and military companies and has temporarily removed 11 others from the Unreliable Entity list, which prevented them from doing business in China. At the time of writing, no further dates have been formalized for U.S.-China trade talks to continue.
In a separate measure, the United States further expanded the list of goods for high-priority enforcement of the Uyghur Forced Labor Prevention Act (UFLPA) to include steel, lithium, copper, caustic soda, and red dates. This will require importers of Chinese goods to further scrutinize these goods to ensure their compliance. It is unknown when this enhanced scrutiny will begin.
U.S. and China continue to negotiate U.S. export controls on advanced chips
One sticking point in U.S.-China negotiations has been U.S. export controls on advanced artificial intelligence and high-bandwidth memory chips to China. In late-July, the U.S. began issuing new export permits to producers including Nvidia Corporation and Advanced Micro Devices Inc. (AMD) following the latest round of U.S.-China negotiations. However, exports of some of the most advanced chip products, including Nvidia Corporation’s Blackwell chips, remain restricted. China has requested that the export controls be formally eliminated in the finalized trade agreement amid concerns that the controls prevent domestic Chinese producers such as Huawei from developing their own artificial intelligence chips. Despite the strategic importance of these chips, the Chinese government has also expressed suspicion towards Chinese companies’ purchases of Nvidia Corporation’s H20 chips over concerns about information risks. The U.S. also continues to carefully monitor shipments of these chips to China, with reports suggesting the U.S. has placed location trackers in recent chip shipments to ensure products are not being diverted to unapproved Chinese recipients.
Amid concerns about the national security implications of advanced chip sales to China, the U.S. government has also proposed new measures to increase government control over chip manufacturers themselves. In their deal to resume chip exports to China, Nvidia Corporation and AMD reportedly promised to pay 15% of profits from chip sales to China directly to the U.S. government. The U.S. government has further expressed an interest in taking a 10% ownership stake in Intel Corporation by converting previous U.S. government grants into equity amid concerns about the chipmaker’s financial stability. The proposal also reflects an interest of the Trump administration in backing domestic chip manufacturing efforts, which could suffer if Intel Corporation was forced to cut costs. Intel Corporation has not publicly responded to the plan.
U.S. promises imminent tariffs on semiconductors and expands steel and aluminum tariffs
On August 15, President Trump reiterated his promise to enact tariffs on imports of semiconductors and indicated that a formal announcement would come within two weeks. Although he initially suggested the tariff would be set at 100%, in recent comments he stated that the tariff could be as high as 200% or 300%. President Trump previously indicated that companies which make commitments to move manufacturing operations to the U.S. would be exempted from the tariffs. E.U. officials noted that as part of the previously announced U.S.-E.U. trade agreement, the E.U. expects its semiconductor exports to be charged at the bloc’s reciprocal tariff rate of 15% regardless of the rate charged for other countries.
Additionally, on August 15, the U.S. expanded existing steel and aluminum tariffs to cover 407 additional tariff schedule codes including mainly derivative consumer goods containing steel and aluminum. Affected products include motorcycles, cargo handling equipment, tableware, and personal care products with metal packaging. Under the new policy, goods will be charged a 50% tariff for the value of their steel and aluminum content, and the remainder of the good’s value will be charged according to the tariff rate assigned to its country of origin.
Everstream clients are receiving more detailed insights and recommendations about this risk.
Don’t miss key supply chain risk updates! Subscribe now to get supply chain news, weather updates, forecasts, and other insights.