21 May 2026 Trade Talking Points | Latest insights from EY's Trade Strategy team (14 May 2026) This edition of Trade Talking Points provides updates on trade policy developments, including the United States (US) Commerce Department publishing procedures for pharmaceutical Section 232 duty reductions, the US Court of International Trade ruling on the US Government's use of Section 122, the US Trade Representative commencing the second review of the 2018 Section 301 tariffs on China, the European Union and Japan committing to enhance supply chain collaboration, and China implementing zero-percent tariffs on 53 African countries, along with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and Costa Rica concluding negotiations on Costa Rica's accession to the CPTPP. US Department of Commerce establishes application process for pharmaceutical Section 232 tariff relief tied to onshoring commitments On 13 May 2026, the US Department of Commerce (Commerce) published a Federal Register notice establishing procedures for pharmaceutical companies to apply for company-specific agreements that may reduce Section 232 tariffs. Eligibility for a company-specific onshoring agreement is limited to companies that market foreign-made patented pharmaceuticals and associated ingredients in the US and are subject to Section 232 tariffs. Approved companies may qualify for a reduced duty rate of 20%, or 0% through 20 January 2029, if additional conditions, including a US Department of Health and Human Services agreement, are met. Applications must be submitted by 12 June 2026 and require detailed investment, production and compliance commitments. For further details, see EY Global Tax Alert, US Department of Commerce establishes application process for pharmaceutical Section 232 tariff relief tied to onshoring commitments, dated 13 May 2026. On 7 May 2026, the US Court of International Trade (CIT) held that the Trump Administration's use of Section 122 of the Trade Act of 1974 to impose a 10% import tariff on US trading partners was invalid. The Trump Administration imposed Section 122 tariffs on 20 February 2026, applying to goods entered for consumption or withdrawn from warehouses for consumption, between 24 February 2026 and 24 July 2026. The US CIT ruled that the US Government's use of the term "balance-of-payments deficits" was not sufficient to justify using Section 122 to address US trade deficits. The ruling resulted in a plaintiff-specific injunction for the State of Washington and the private plaintiffs; however, the ruling does not apply to importers not covered by the decision, which remain subject to the Section 122 tariffs until their expiration on 24 July 2026. On 6 May 2026, the Office of the United States Trade Representative (USTR) announced that it will commence the second four-year review of two actions taken under Section 301 of the Trade Act of 1974 arising from the investigation into China's acts, policies and practices related to technology transfer, intellectual property and innovation. The first step in the review process is for USTR to notify representatives of US industries that benefit from the current application of the actions and provide them with the opportunity to request a continuation of the trade measures. If a request for continuation is submitted, the USTR will proceed to assess the effectiveness of the 2018 Section 301 tariffs and determine whether the use of these trade measures has had any impact on the US economy. From 5 through 8 May 2026, the USTR held public hearings on the Section 301 investigations into the acts, policies and practices of 16 economies relating to structural excess capacity and production in manufacturing sectors. The investigation was first initiated on 11 March 2026 and aims to determine whether the acts, policies and practices of US trading partners are unreasonable or discriminatory, and whether they burden or restrict US commerce. The 16 economies subject to the investigation include China, the European Union, India, Japan and Mexico. On 7 May 2026, the European Union (EU) and Japan held their seventh High-Level Economic Dialogue in Brussels, Belgium. Both parties reaffirmed their commitment to jointly work on enhancing supply chains and thereby deliver on the EU-Japan Competitiveness Alliance established at the EU-Japan Summit in July 2025. As part of this commitment, the EU and Japan will work to build resilient and secure markets across strategic industries, including critical minerals, steel and clean energy sectors such as offshore wind, hydrogen and solar. Furthermore, ministers reiterated their intention to explore further cooperation to develop additional joint critical minerals projects between the EU and Japan. On 1 May 2026, China implemented zero-percent tariffs on imports from 53 African countries with which it has diplomatic ties. The announcement builds upon China's existing policy of removing tariffs on 100% of tariff lines for 33 African least-developed countries (LDCs), which came into effect on 1 December 2024. Under the new arrangement, an additional 20 African non-LDC countries, including Egypt, Kenya and Nigeria, will benefit from zero-percent tariffs for two years. On 6 May 2026, the members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and Costa Rica concluded negotiations on Costa Rica's accession to the CPTPP. Upon ratification, Costa Rica will provide CPTPP members with high levels of market access on goods and services, including financial services and government procurement. The CPTPP is a trade bloc comprising 12 member nations, including Australia, Canada, Japan and the United Kingdom. In addition, the CPTPP is currently in negotiations with Uruguay regarding its accession and plans to commence discussions with Indonesia, the Philippines and the UAE this year.
Document ID: 2026-1112 | ||||
