25 September 2025 Trade Talking Points | Latest insights from EY's Trade Strategy team (September 2025)
On 21 August, the EU and US announced the "Framework to the Agreement on Reciprocal, Fair, and Balanced Trade." Key areas of relevance include:
On 13 August, the US Secretary of Commerce initiated an investigation to evaluate the impact of imports of wind turbines and their components on national security of the US.
Stakeholders with a vested interest in the investigation can submit comments on the investigation, or provide broader industry-specific submissions regarding the investigation. This investigation adds to the eight Section 232 sectors under review by the US Department of Commerce's Bureau of Industry and Security, which include key sectors such as pharmaceuticals, critical minerals and semiconductors. Existing tariffs associated with Section 232 are already in place for automotives and associated parts, steel and aluminum and associated derivatives, and copper. On 29 August, the US Court of Appeals for the Federal Circuit ruled that President Trump had exceeded his authority in imposing certain tariffs under IEEPA. The court, in a 7-4 decision, determined that IEEPA does not authorize the universal tariffs introduced by Trump, nor the fentanyl tariffs on China, Canada and Mexico. The majority expressed skepticism regarding the broader application of tariffs under IEEPA, highlighting that tariffs and duties are not explicitly mentioned in the law. They noted that when considering the broader application of tariffs, a President must adhere to various procedural and substantive requirements outlined in other tariff statutes. The Trump Administration appealed and, on 9 September 2025, the US Supreme Court granted certiorari and a motion to expedite oral arguments. Oral arguments are now scheduled for 5 November 2025. (For background, see EY Global Tax Alert, US Supreme Court will hear oral arguments in tariff case in early November 2025; opening briefs due soon, dated 10 September 2025.) On 29 August, the United States Trade Representative (USTR) extended the product-specific exclusions and 14 exclusions covering certain manufacturing equipment subject to Section 301 duties until 29 November 2025. Importers, customs brokers and filers are provided with instructions on how to submit entries to Customs and Border Protection (CBP) that include the granted exclusions from Section 301 duties. Goods entered for consumption or withdrawn from a warehouse for consumption between 1 September 2025 and 29 November 2025, are required to file under HTSUS 9903.88.69 or 9903.88.70 to claim the applicable exclusions. (See EY Global Tax Alert, US-Japan Agreement updated and public comment period open for Section 301 extensions, dated 18 September 2025.) On 29 August, the Trump administration released a statement that will cancel US$29m worth of WTO funding. The US was the largest contributor to the WTO in 2024, making up 11.3% of the total contribution worth £21.5m/US$28.8m. On 5 September, the Trump Administration issued an Executive Order (EO) updating Annex II in EO 14257 of 2 April 2025 to include additional goods exempt from tariff exposure under the April EO. This update applies to goods that have entered the US for consumption or have been withdrawn from warehouses for consumption since 8 September 2025. The Annex II updates ensure that products that cannot be cultivated, mined or produced in sufficient quantities in the US remain accessible to meet domestic demand. For example, unprocessed critical minerals, aircraft and aircraft parts, as well as non-patented pharmaceuticals have been added to the updated Annex II. The 5 September EO outlines adjustments to the implementation of future tariff rates. For example, following the conclusion of any framework agreement with trading partners, including past agreements with US trading partners such as the UK, EU, Japan and Korea, the authority to determine implementation will now rest with the US Secretary of Commerce and the US Trade Representative. This shift indicates that discussions regarding product exemptions or the adequacy of a trading partner's compliance frameworks will no longer be governed solely by EOs, but rather through detailed revisions to the Customs Code. The September EO also notes that the Administration's willingness to reduce country-specific tariffs to 0%, or modify Section 232 tariffs will depend on several factors, including the scope and economic value of a trading partner's commitments to the US, the national interests of the US and the broader implications of the national emergency declared in EO 14257 on 2 April. Businesses that have pre-filed import entries scheduled after the 8 September effective date should amend entries to reflect the correct tariff within 10 days of release from Customs and Border Protection (CBP) custody. (See EY Global Tax Alert, US Executive Order modifies scope of certain tariffs and establishes procedures for implementing trade and security agreements, dated 15 September 2025.) On 15 September, US Customs and Border Protection (CBP) announced customs guidance for Japanese-originating imports into the US, following the release of an EO outlining the implementation details of the framework agreement struck between the US and Japan on 22 July. The US will apply a baseline 15% tariff on nearly all imports from Japan. The specific tariff rates will be determined based on the product's current ad valorem (or ad-valorem equivalent) rate under the Harmonized Tariff Schedule of the United States (HTSUS):
The tariff adjustment will apply retroactively to all Japanese-originating products that entered the US for consumption or were withdrawn from a warehouse for consumption on or after 12:01 a.m. Eastern Time on 7 August 2025 (for Japanese-originating imports of automobiles and automobile parts, and civil aircraft, the tariff application outlined above will apply on 16 September). Businesses with consistent trade flows between Japan and the US will likely discover an overpayment of duties. This issue has been recognized by CBP, which will make refunds available through the standard refund process. The SPS agreement between the UK and the EU, which was signed in May 2025, is expected to increase exports of food and drink from UK businesses, with an estimated annual contribution of £5.1b to the UK economy. This agreement aims to address agrifood trade with the EU, the UK's largest trading partner. The agreement is part of the UK government's "Plan for Change" and is designed to support small food and drink exporters across the UK by reducing costs and streamlining processes associated with exporting products such as dairy, fish, eggs and red meat, thus contributing to export growth, job creation and an enhanced supply chain. On 28 August, the European Commission reported that products imported into the EU are not always compliant with EU regulations on safety, security or environmental standards. As a result, increased cooperation between customs and market surveillance authorities is needed to prevent noncompliant products from entering the EU Single Market. The EU Customs Reform currently under negotiation between the European Council and the European Parliament is expected to contribute to improved customs controls and risk management. The Commission's document — "E-commerce communication: A comprehensive EU toolbox for safe and sustainable e-commerce" — addresses safety concerns surrounding e-commerce for citizens. The EU Customs Reform will introduce a new EU Customs Authority and Data Hub for more effective risk management and cooperation between customs authorities and other authorities, with the aim of making customs controls more effective, efficient and transparent. On 29 August, the Commission announced three consultations calling for stakeholders to comment on the rules on the methodology for calculating emissions embedded in CBAM goods. On 3 September, the European Commission adopted a second package of its seven sectoral proposals, which together establish the framework for the long-term EU budget for 2028–2034. The Single Market and Customs Programme sector proposal aims to reduce cross-border and cross-country barriers while facilitating cooperation among national administrations. The European Commission has proposed €6.2b for the Programme, which will merge four EU funding streams — Single Market, Customs Union, taxation cooperation and anti-fraud measures — and pool funding to cut red tape, remove barriers and boost cooperation between national administrations. Once fully operational, the Programme will work to minimize the administrative burdens associated with customs, taxation and anti-fraud measures — supporting more efficient, agile and future-proof customs procedures that ensure better protection from unsafe goods and unfair market competition. On 22 August, the UK Trade Remedies Authority (TRA) proposed the following ad-valorem anti-dumping duties on Chinese biodiesel imports: The TRA claims that Chinese biodiesel was being dumped in the UK at low prices, negatively impacting UK producers. Alongside biodiesel fuels, other products that were investigated include fatty-acid mono-alkyl esters (FAME) and hydrotreated vegetable oils (HVO), which is used as road transport fuel in the UK. Currently, there is an online consultation inviting stakeholders to comment or submit additional evidence, which is available until 22 September 2025. On 10 September, the Mexican government announced an increase in tariffs from 20% to 50% on cars of Chinese origin, a decision expected to affect US$52b in imports. The announcement also included a proposed 35% tariff on Chinese origin steel, toys and motorcycles, as well as a 10 - 50% tariff on textiles. As of 2024, China is Mexico's second largest import partner, following the United States, with total imports amounting to US$119.37m, and representing 20.69% of Mexico's total imports.
Document ID: 2025-1931 | ||||||
