Executive summary

This edition of Trade Talking Points provides updates on:

• United States (US) tariff developments
• Resuming United Kingdom (UK)-India trade talks
• European Commission's Omnibus Packages
• Implications of UK and European Union (EU) retaliatory divergence for Northern Ireland
• UK, EU and US trade remedies

US tariff developments

On 4 March 2025, US President Trump signed amendments to the Executive Orders imposing tariffs on goods from Canada, Mexico and China. (For details, see EY Global Tax Alert, United States imposes additional tariffs on Canada and Mexico, raises additional tariffs on China, dated 5 March 2025.)

Canadian and Mexican imports, excluding cars, are now subject to an additional 25% tariff, with certain Canadian energy products taxed at 10%. Any cars traded under the US-Mexico-Canada Free Trade Agreement (USMCA) are subject to a one-month duty exemption (For details, see EY Global tax alert, US adjusts tariffs on Canada and Mexico in response to automotive industry concerns, dated 7 March 2025). Chinese imports incur a further 10% tariff on top of a an additional 10% previously imposed in February 2025.

In response, Canada imposed tariffs on CA$30b of US imports starting 4 March 2025, and is considering additional tariffs on various goods worth CA$125b. (For further details, see EY Global tax alert, Canada imposes new tariffs on US-origin products in response to US tariffs on Canadian steel and aluminum products, dated 17 March 2025). China imposed additional retaliatory tariffs on US agricultural products and has expanded its export control list against US companies.

On 12 March 2025, the US enacted 25% tariffs on steel and aluminum imports. The EU and Canada announced retaliatory measures in response to the US imposition of a blanket 25% tariff on global imports of steel, aluminum and relevant derivatives on 12 March (see EY Global Tax Alert, European Union and Canada counter US steel and aluminum tariffs with retaliatory measures, dated 13 March 2025).

The EU then delayed its response to the US tariffs on steel and aluminum to mid-April 2025 (see EY Global Tax Alert, EU postpones countermeasures to US tariffs to mid-April 2025, dated 24 March 2025).

On 26 March 2025, the US President announced that the US will impose additional 25% tariffs on automobiles, starting from 3 April 2025, and automobile parts, starting no later than 3 May 2025. (See EY Global Tax Alert, US President Trump announces 25% additional tariff on imported automobiles and automobile parts, dated 27 March 2025.)

Additional tariff announcements are expected in early April following the completion of the cabinet-level reviews directed by President Trump's executive memos on the "America First Trade Policy" and "Reciprocal Trade and Tariffs." Further possible developments include:

• Tariffs targeting specific sectors, such as automotive, pharma and semiconductors, as well as reciprocal tariffs
• An additional 25% tariff on imports from the EU
• The lapse in April of exemptions to tariffs on Canada and Mexico, enabling tariff-free trade for goods traded under the US-Mexico-Canada Free Trade Agreement, which could prompt further retaliation by Canada as well as Mexico
• The renewal and imminent conclusion of the Section 301 of the Trade Act of 1974 investigation on trade partners' Digital Services Taxes, which may lead to further tariffs
• Additional trade barriers on copper and imports of timber, lumber and their derivative products, resulting from investigations into national security risks

The new and likely measures and retaliatory actions are detailed and complex. Businesses in affected markets must develop detailed models to map trade flows and assess the direct and indirect impacts on their supply chains. Immediate customs mitigation strategies should be considered, including revising goods origin calculations and valuation procedures for US trade. As retaliatory measures and potential counteractions are quickly announced, businesses must closely monitor updates to stay informed and adapt effectively.

For further details on these and further developments, please register for EY Global Tax Alerts on the Global Tax News Update (globaltaxnews.ey.com).

UK and India relaunch trade negotiations

On 24 February 2025, the UK and India formally relaunched three-track negotiations for a comprehensive Free Trade Agreement (FTA), Bilateral Investment Treaty and Double Contribution Convention (or Social Security Agreement), following a one-year pause due to elections in both countries.

With the relaunch, talks are being held for the first time under the UK's Labour Government, which considers securing a deal a "top priority." Negotiations initially commenced in 2022, with 14 rounds held by April 2024, but an agreement had not been reached. Contentious aspects include agreement on high tariffs in India on Scotch whisky and relaxing fees and visa rules for Indian students and professionals coming to the UK.

In parallel, India has been actively engaging with the EU and the US to pursue stronger trade relationships:

• EU-India: On 28 February 2025, during the new European Commission's (EC) first visit to India, the EC President von der Leyen announced that India and the European Union will push to finalize an FTA this year.
• US-India: During President Trump's visit to India in February, the countries agreed to start talks to settle an early trade deal and resolve their standoff over tariffs.

Businesses trading, or considering to trade, with India should monitor any relevant developments, as the outcomes of these negotiations could significantly impact trade dynamics. Businesses should further map to what extent they could benefit from preferential trade conditions between the jurisdictions.

European Commission releases Omnibus Packages I and II

On 26 February 2025, the European Commission released Omnibus packages I and II as part of its EU Competitiveness Compass. The packages aim to simplify the EU's regulatory landscape, expected to lead to a 25% reduction in administrative burden and a 35% reduction for small and medium-sized entities (SMEs) by the end of its mandate.

Omnibus Package I aims to eliminate overlapping and disproportionate regulations in the drive toward a sustainable transition, enhance EU companies' competitiveness and simplify EU investment programs. Package I includes amendments to the following regulations:

• Corporate Sustainability Reporting Directive (CSRD)
• Corporate Sustainability Due Diligence Directive (CSDDD)
• Taxonomy
• Carbon Border Adjustment Mechanism (CBAM)

Omnibus Package II is a legislative proposal aimed at simplifying and optimizing EU investment programs, including InvestEU. It seeks to enhance the efficiency of the InvestEU Fund by increasing EU guarantees, improving combinations with older financial instruments and reducing administrative burdens, ultimately mobilizing around €50b in additional investments.

Also on 26 February 2025, the Commission unveiled the Clean Industrial Deal, a strategic plan aimed at enhancing the competitiveness and resilience of EU industries while accelerating decarbonization. Key measures include unlocking over €100b for clean manufacturing, promoting demand for EU-made products and securing access to critical raw materials.

Trade remedies update

Over the last weeks, the UK, EU and US have published trade remedy announcements:

• UK

The Trade Remedies Authority (TRA) has made significant recommendations regarding the import of steel products from China in February 2025:

• The TRA proposed extending anti-dumping and countervailing measures on organic coated steel (OCS) until 2029. The current duties on Chinese OCS imports range from 5.9% to 26.1%, with countervailing duties between 13.7% and 44.7%.
• The UK Government accepted the TRA's recommendation to maintain anti-dumping measures on corrosion resistant steel (CRS) for another five years. The TRA found that lifting these measures could lead to a recurrence of dumping, which would negatively impact the UK industry, particularly in its decarbonization efforts. The duties on CRS imports from China will remain between 17.2% and 27.9%.

The UK Trade Remedies Authority (TRA) initiated an anti-dumping investigation and a countervailing investigation into US imports of HVO biodiesel on 18 March 2025. The investigations followed a UK industry petition, noting a change in market conditions since a previous review in 2022.

The TRA revoked anti-dumping duties of 58.9% on chamois leather from China, effective from 22 February 2024. The conclusion followed the completion of a transition review to assess whether dumping would continue or recur without the duty initially imposed by the European Commission pre-Brexit.

• EU

The European Commission imposed countervailing measures on aluminum road wheels from Morocco. The investigation found that Moroccan imports were unfairly subsidized, particularly through subsidies provided under the China's Belt and Road Initiative, in addition to subsidies provided by the Moroccan government. The countervailing duties range from 5.6 to 31.4% and apply on top of anti-dumping duties imposed on the same product in 2023, ranging from 9 to 17.5%.

• US

The US Department of Commerce initiated an "antidumping duty investigation" into methylene diphenyl diisocyanate (MDI) from China.

The US further announced preliminary countervailing measures on thermoformed molded fiber products from China and Vietnam, ranging from 3.4 to 173.5%.

Final measures were announced on disposable aluminum containers from China, ranging from 193.9 to 317.9%.

Businesses impacted by the measures should evaluate how the additional duties impact their operations and monitor further developments.