21 July 2025 Trade Talking Points | Latest insights from EY's Trade Strategy team (June 2025)
June 2025 produced considerable US trade policy adjustments, including updates to tariff measures against China under Section 301 of the Trade Act 1974, increases to tariff values on non-US-origin steel and aluminum under Section 232 of the Trade Expansion Act 1962 and progress on the US-China tariff negotiations. On 10 June, the United States (US) Court of Appeals for the Federal Circuit announced that the International Emergency Economic Powers Act (IEEPA) tariffs will remain active until 31 July. On 31 July, the court will hold a hearing, after which the tariffs may continue or be removed entirely. On 4 June, existing 25% tariffs on steel and aluminum, and associated derivative products, were increased to 50%. Adjustments to the "stacking" of various tariffs have also changed, requiring businesses to consider their tariff exposure beyond specific Section 232 tariffs on steel, aluminum and derivatives. The update reflects a change to the 2 May Executive Order "Addressing Certain Tariffs on Imported Articles." UK-originating steel, aluminum and derivative products will remain subject to the original 25% tariff, in alignment with the 8 May UK-US Economic Prosperity Deal (EPD) that establishes a reduced rate and import quota. The tariff on UK-originating products may be increased to 50% if the UK is found to be noncompliant with the agreed EPD terms. (See EY Global Tax Alert, US increases import tariffs of aluminum and steel, dated 4 June 2025.) On 6 June, Office of the US Trade Representative (USTR) announced a public comment period for proposed changes to certain aspects of Annexes III and IV of a Section 301 Investigation of China's Targeting of the Maritime, Logistics, and Shipbuilding Sectors for Dominance. The changes relate to the basis of the fees charged, data reporting requirements, and the potential impact of eliminating a paragraph providing for the suspension of liquefied natural gas export licenses. Comments were due by 7 July 2025. On 31 May, the USTR announced an extension until 31 August 2025 of exclusions in the Section 301 investigation into China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation. Exclusions had been scheduled to expire on 31 May 2025. (See EY Global Tax Alert, USTR extends certain exclusions from China Section 301 tariffs, dated 3 June 2025.) The US and China engaged in trade discussions in London from 9-10 June. Although there have been no formal publications from the Trump Administration, US and Chinese negotiators have reportedly agreed to progress the pact agreed in Switzerland in May that led to the IEEPA and tariff de-escalation. (For background, see EY Global Tax Alert, US and China reach trade deal, as US Department of Commerce initiates investigation on aircraft and jet engines, dated 13 May 2025.) On 12 June, the US Department of Commerce's Bureau of Industrial Security (BIS) added to the list of in-scope products subject to a 50% duty based on their steel content. From 23 June, manufacturers (and importers of record into the US) are subject to a 50% duty on the steel content of the below products and will be required to report relevant country-of-melt-and-pour evidence.
The rates apply to the steel content of products that are entered into the US for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. ET on 23 June 2025. To fulfil relevant country-of-melt-and-pour evidence it is important for importers, exporters and manufacturers to work together across the supply chain to identify and substantiate the production process for the above products. Though the above list is product specific, this update aligns to broader Section 232 application across steel, aluminum and derivative products - requiring businesses to evidence strict "melt and pour" (steel) and "smelt and cast" (aluminum) requirements. On 16 June, UK Prime Minister Starmer and US President Donald Trump announced the general terms of the UK-US Economic Prosperity Deal that was agreed in principle on 8 May. (For background, see EY Global Tax Alert, US and UK unveil trade deal, 9 May 2025.) The general terms provide a next level of detail for businesses currently subject to (or in scope of future) Section 232 Trade Expansion Act 1962 tariffs. The US will establish an annual tariff-rate quota of 100,000 automobiles under Harmonized Tariff Schedule of the United States (HTSUS) subheading 8703 that will be subject to a 10% tariff (7.5% tariff + 2.5% most-favored-nation). Any import from the UK that goes beyond the 100,000 tariff reduction quota (TRQ) will be subject to the full 25% tariff. On 23 June, the Federal Register was updated to reflect the addition of Executive Order 14309 - Implementing the General Terms of the United States of America-United Kingdom Economic Prosperity Deal. This announcement triggers the seven-day implementation timeline of the TRQ, with application as of 30 June 2025. Automotive parts will also be subject to a 10% tariff (7.5% tariff + 2.5% most-favored-nation) provided they are products of the UK and for use in UK automobiles. The adjustment for automotive parts, like for automobiles, became effective on 30 June 2025. The US will exempt UK products that qualify under the World Trade Organization (WTO) Agreement on Trade in Civil Aircraft from tariffs associated with the following actions:
Like automobiles, the adjustment for aerospace products will become effective within seven days of the Federal Register's being updated, i.e., on 30 June 2025. The Executive Order does not provide additional clarity on the active (announced 1 May) Section 232 National Security Investigation of Imports of Commercial Aircraft and Jet Engines and Parts for Commercial Aircraft and Jet Engines. At a future date, the UK and US will design and establish a TRQ for aluminum and steel articles and derivatives that are originating products of the UK. Any import from the UK that goes beyond the to-be-established TRQ will be subject to the full 50% tariffs that were established after amendments to Proclamations 9704 and 9705. The UK and US will continue to negotiate preferential treatment on pharmaceuticals and pharmaceutical ingredients that are products of the UK. According to the Executive Order, any future preferential treatment will remain contingent on the outcomes of the active Section 232 investigation (announced 1 April 2025) into Pharmaceuticals and pharmaceutical ingredients, and the UK meeting to-be-established supply chain security requirements. (For background, see EY Global Tax Alert, US launches investigation into pharmaceuticals and semiconductors, dated 15 April.) For sectors and products subject to other active Section 232 investigations (e.g., copper and critical minerals), the UK and US will continue to negotiate an approach to address US national security concerns for in-scope sectors. On 23 June, the WTO Dispute Settlement Body (DSB) failed to reach consensus to restart the selection processes for vacant roles at the WTO's Appellate Body. Colombia, on behalf of 130 other WTO member nations, introduced for the 88th time a proposal to start the selection processes for vacant positions. The Colombian justification was linked to a common interest with other WTO members in the benefits of the Appellate Body and the functioning of the WTO's dispute settlement system. The US maintained its position against filling vacancies (consistent since 2009), and noted its concerns that the dispute settlement process was meant to help members resolve specific disputes without creating new rules that alter rights and obligations under the covered WTO agreements Without a fully functioning dispute settlement function, appeals by aggrieved parties to a dispute will be unable to resolve the issue. On 23 June the UK Government published its Industrial Strategy, a "10-year plan to increase business investment and grow the industries of the future in the UK." The strategy focuses on eight sectors — Advanced Manufacturing, Creative Industries, Life Sciences, Clean Energy, Defense, Digital and Technologies, Professional and Business Services, and Financial Services — as well as supporting foundational industries. Policy announcements cover a wide range of topics including: reducing electricity costs and accelerating grid connections; reducing regulatory burdens and removing planning barriers; supporting innovation and capitalizing on the value of data; and accelerating access to talent. Businesses should engage with the Industrial Strategy, identifying areas of relevance and opportunities to engage with relevant UK Government departments on sector-specific topics. On 1 June, the UK and Morocco entered into an Enhanced Strategic Partnership, following Foreign Secretary David Lammy's visit. Both countries have signed several agreements, predominantly memoranda of understanding, to create new business opportunities and drive mutual economic growth. According to UK trade data, trade between the UK and Morocco totaled £4.2b in 2024. As part of the partnership, British businesses are expected to be prioritized as collaboration partners to provide infrastructure for the men's 2030 FIFA World Cup being co-hosted by Morocco. On 2 June, the UK Government announced that border checks on medium-risk fruit and vegetables imported from the EU (including tomatoes, grapes, plums, cherries, peaches and peppers) will continue to be postponed, meaning they remain treated as low-risk and do not need to go through plant health controls. Import checks were due to come into force from 1 July 2025 but are now scheduled to come into force from 31 January 2027. The recently announced plans for a new Sanitary and Phytosanitary (SPS) agreement are expected to remove the need for these import checks as part of the establishment of a UK-EU SPS Zone. While the operational components of the SPS deal continue to be negotiated, traders must continue to comply with the UK's Border Target Operating Model (BTOM). On 28 May, the EU and the United Arab Emirates (UAE) formally launched negotiations for a free trade agreement (FTA). Both parties have agreed on a roadmap, with negotiations expected to begin this month. Initial steps will focus on lowering tariffs for goods and enhancing flows of services, digital trade and investment. An increased emphasis will also be placed on bilateral trade in key strategic sectors, including renewable energy and critical raw materials. According to EU trade data, EU-UAE trade in goods is worth €55b and the UAE is the EU's 19th largest trading partner. The EU's key exports to the UAE include cars, machinery and chemical products, and the UAE's exports to the EU include oil and gas. The highest UAE tariffs are on tobacco, wines and spirits, and confectionery. The free trade agreement is expected to support ties between the EU and the Gulf Cooperation Council, of which the UAE is a member. On 4 June, the Thai government announced its intention to conclude FTA negotiations with the EU by the end of 2025. A sixth round of negotiations was held on 23-27 June. To date, several key chapters have been finalized, including transparency, good regulatory practices, customs procedures, trade facilitation and sustainable food systems. Reports on each round of negotiations are available here. According to EU Trade Data, the EU is Thailand's fourth-largest trading partner, accounting for 7.1% of the country's total trade in goods in 2024. Thailand is the EU's 28th largest trading partner, accounting for 0.8% of total trade in goods in 2024. In 2024, bilateral trade in goods was €42b. Key products between both markets include Thai electronics and rubber products, and EU machinery and pharmaceuticals. The Trade Remedies Authority (TRA) has initiated an investigation into imports of hot-rolled steel plate from South Korea. Parties interested in participating in the investigation were required to register their interest through the Trade Remedies Service by 23 June 2025. On 28 May, the European Commission implemented anti-dumping duties of 13%-62% on Chinese tinplate imports. The duties were imposed following an anti-dumping investigation that found that Chinese tinplate had been dumped on the EU market and was harming domestic tinplate producers. On 19 June, the UK and Japan confirmed a fusion energy partnership to commercialize fusion energy opportunities and accelerate the net zero transition The UK-Japan MoC aligns to existing UK MoCs with the United States (UK-US Strategic Partnership on Fusion Energy), Canada (UK-Canada Memorandum of Understanding on Fusion Energy), and Germany (UK-Germany Fusion Energy Research Agreement). The UK Government intends to leverage the UK-Japan MoC and other agreements to operationalize £410m of investment into fusion research and increase collaboration with partner countries to develop clean, unlimited power and drive economic growth. On 19 June, the UK and Bahrain signed the UK-Bahrain Strategic Investment and Collaboration Partnership to enable £2b worth of Bahrain-led investment into the UK. The SIP will target investment across defined growth sectors including financial services, technology and decarbonization, and align to the recently announced UK Government Industrial Strategy. The SIP will also provide British businesses with opportunities to increase access across Bahrain's business environment, accessing support on innovation, productivity and domestic development. Businesses should await further detail from the SIP to identify how best they can engage with the Bahrain economy. On 18 June, the European Parliament and Council agreed to changes to the EU's CBAM legislation as part of the EU's broader "Omnibus I" package to simplify rules on sustainability and EU investments. (For background, see EY Global Tax Alert, European Parliament approves simplifications to CBAM procedures suggested by European Commission, dated 29 May 2025.) The simplification will create a new de minimis mass threshold, enabling imports of up to 50 tons per importer, per year to be CBAM-exempt. The simplification removes the former threshold on goods of negligible value and will exempt the majority (EU estimates up to 90%) of importers − mainly small and medium-sized enterprises and individuals − who import only small quantities of in-scope CBAM goods. The simplification will also streamline the authorization process, the calculation of emissions, verification rules and the financial liabilities associated with authorized CBAM declarants.
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