29 July 2025 Trade Talking Points | Latest insights from EY's Trade Strategy team (July 2025)
On 7 July, the Trump Administration sent letters to identified US trade partners, announcing an intention to revise the tariff rates first introduced on 2 April, and later adjusted on 9 April. (See EY Global Tax Alert, US sends tariff letters to various countries ahead of the new negotiation deadline of 1 August 2025, dated 8 July 2025.) Fourteen letters were sent to US trade partners, mostly located in Southeast Asia. The revised tariff duty rates will become applicable from 12:01 a.m. EDT, 1 August 2025.
This means the existing tariff rates (global baseline of +10%) will remain active until the deadline. This extension applies to other countries that were subject to a specific country rate announced on 2 April. The 1 August extension does not relate to the 90-day pause currently in place for originating products of Mainland China, Macao or Hong Kong, which remain subject to separate treatment that occurred from bilateral negotiations conducted by the US and Chinese governments in Switzerland and the United Kingdom. With US tariff rates still active, businesses must remain able to evidence the "US content" value attributable to the components produced entirely, or substantially transformed in, the US. US Customs and Border Protection (CBP) has increased scrutiny of the information and documentation of imported products, including entry filing processes, to ascertain and verify the declared values of US content, and to determine and verify whether an article is substantially finished in the US. These tariffs will continue to apply regardless of any free trade agreement (FTA) with the US (e.g., Australia-United States Free Trade Agreement (AUSFTA)). On 22 July 2025, the US Trump Administration announced a "deal" with Japan to reduce its reciprocal tariff exposure from a scheduled 25% down to 15%. Under the deal, Japan will invest US$550b into the US, and the US "will retain 90% of the profits from this investment," the announcement states. Official guidance on the deal has not been released; however, it is expected that tariffs on Japanese-origin automobiles will be lowered to 15% from their current 25% (imposed under the Trump Administration's changes on 3 April 2025 to Section 232 of the Trade Expansion Act 1962). On 15 July, the Trump Administration announced a "deal" with Indonesia to reduce their reciprocal tariff exposure from a scheduled 32% down to 19%. Under the deal, Indonesia will eliminate tariff barriers on more than 99% of US-origin products exported across various sectors. In parallel to a revised reciprocal tariff rate, the deal will also include provisions to support closer collaboration across digital trade, economic security (across identified sectors such as agriculture, aerospace and energy) and labor standards. On 12 July, 2025, the Trump Administration sent additional revised reciprocal tariff rate letters to the European Union and Mexico. The letters were in addition to the initial letters sent to US trade partners on 7 July (i.e., South Africa, Japan, South Korea, etc.). The EU and Mexico will both be subject to a revised reciprocal tariff rate of 30%, which will become applicable alongside other revised rates from 12:01 a.m. EDT on 1 August 2025. At the time of publishing this edition of Trade Talking Points, the US CBP had not announced new guidance on the practical application of revised reciprocal tariff rates. As a result, businesses should prepare for revised reciprocal tariff rates to apply in addition to most-favored nation rates (unique per Harmonized System code), and other active measures (e.g., International Emergency Economic Powers Act tariffs and Section 301 Trade Act 1974 tariffs).
USTR announces initiation of Section 301 Trade Act 1974 investigation into Brazil's alleged unfair trading practices On 15 July 2025, the Office of the USTR announced the initiation of a Section 301 Trade Act 1974 investigation into Brazil's alleged unfair international trade practices. The investigation will assess whether the Brazilian Government's policy and regulatory measures are unreasonable or discriminatory, and thereby restrictive to US commerce. The USTR had previously alleged that Brazil's long-standing trade policy practices hinder US exporters' access to the Brazilian market. The investigation will consider various aspects of Brazil's trading practices, including assertions that:
As part of the investigation process, the USTR has requested consultations with Brazil and will hold a hearing on 3 September 2025. The USTR encourages interested parties to submit written comments and requests to appear at the hearing by 18 August 2025. On 26 June 2025, the UK Government published its Trade Strategy, with the goal of resetting the UK's approach to international trade. The Trade Strategy aims to leverage free trade agreements to boost economic growth and create mutually beneficial agreements with international partners. The Strategy places an emphasis on the UK's services and advanced manufacturing sectors. The Trade Strategy also strives to improve the UK trade remedies system, increase mutual recognition of qualifications, and build on existing clean energy and green sector agreements. Businesses should engage with the Strategy and identify opportunities for future engagement with the UK Government on how best initiatives can be implemented and leveraged for their benefit. On 24 July 2025, the Prime Ministers of the UK and India met to sign the UK-India free trade deal. Outcomes from the deal are expected to unlock £6b in new investment and export potential across key sectors of the UK economy, such as advanced manufacturing or luxury and consumer goods. Through the deal, India's average tariff on UK-originating products will drop from 15% to 3%. The UK Government stated that a reduction in tariffs, combined with a reduction in regulatory barriers to trade between the UK and India are estimated to:
According to UK Government trade data, total trade in goods and services (exports plus imports) between the UK and India was £42.6b in calendar year 2024, an increase of 8.3% or £3.3b in current prices from the 2023 total.
India was the UK's 11th largest trading partner at the end of Q4 2024 accounting for 2.4% of total UK trade.
On 22 July 2025, the UK Government issued a consultation document outlining proposed changes to the Notifiable Acquisition Regulations (NARs) under the National Security and Investment Act 2022 (NSI Act). The NSI Act entered into force in 2021 and empowers the Government to scrutinize acquisitions that may pose national security risks. The Government is considering changes to the NARs that seek to update the scope of mandatory notifications to ensure the NSI Act continues to capture national security risks in sensitive areas of the economy while still ensuring investors are given clarity on their investments into the UK.
The consultation invites feedback from organizations involved in the 17 sensitive areas of the economy covered by the NSI Act, including Advanced Materials, AI, Energy, Quantum Technologies and Defense. Responses to the consultation are due by 14 October 2025, and will inform the final decisions on amendments to the NARs. The Government anticipates that the changes could lead to an estimated increase of one to five notifications per year in certain sectors, while others may see a decrease. On 2 July 2025, Mercosur and the EFTA announced the conclusion of negotiations for a landmark Free Trade Agreement. This agreement establishes a free trade area encompassing nearly 300 million people and a combined gross domestic product exceeding US$4.3t. More than 97% of exports from both Mercosur and EFTA countries will benefit from improved market access and modernized regulations for customs clearance and cumulation of origin. The agreement awaits signing, as well as internal approval and ratification before entry into force. On 16 July 2025, the Government of Canada announced a set of measures aimed at strengthening the Canadian steel sector, which has been significantly impacted by US-led steel tariffs and rising trade pressures.
(See EY Global Tax Alert, Canada announces additional support for domestic steel sector, dated 28 July 2025.) On 21 July 2025, the European Commission announced the launch of a consultation to define future measures to protect the EU steel sector from unfair trade practices and the adverse effects of global steel overcapacities. The current EU safeguard on steel is set to expire on 30 June 2026, prompting the need for a new legislative proposal. The consultation will remain open until 18 August 2025, and members of the EU steel sector are encouraged to provide their insights on various potential scenarios prepared by the Commission. The Commission has committed to presenting a legislative proposal "by the third quarter of 2025," presumably by the end the third quarter, 30 September. Stéphane Séjourné, Commission Executive Vice-President for Prosperity and Industrial Strategy, stated that the existing safeguard clause will be insufficient to protect European steel producers from "the flow of Chinese steel overcapacities." The Trade Remedies Authority (TRA) has launched a reconsideration of its recommendation to impose anti-dumping measures on excavators imported from China, following requests from businesses. The TRA will evaluate these submissions as part of a single investigation, with the original tariffs of 18.81% to 40.08% remaining in effect during this process. The Commission has imposed definitive anti-dumping duties of 21.3% to 36.1% on imports of multilayered wood flooring from China. Multilayered wood flooring (also known as assembled or engineered parquet flooring) is mainly used for indoor flooring in commercial and private applications. The Commission has imposed definitive anti-dumping duties ranging from 47.7% to 58.2% on imports of lysine originating from China. Synthetic lysine is used as a nutritional enhancer in animal feed, pharmaceuticals and dietary supplements.
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