U.S. Tariff Negotiations on IEEPA Higher Reciprocal Tariffs
Today, Treasury Secretary Scott Bessent said that the US will announce several trade announcements between Monday and Tuesday starting at 12:00PM ET today. Bessent said that the letters will welcome countries as a trading partner and provide the country with a specific rate unless the country wishes to negotiate. As of 3:00 PM ET, President Trump posted seven letters sent to trading partners noting that the United States would impose a new higher tariff on all goods from these countries starting 1 August. Note, it is being reported the higher rate replaces the 10% baseline rate rather than stacks on top of the baseline rate.
It appears that there are “bands” of tariffs in 5% increments with some countries hit higher or lower than their initially noted higher reciprocal tariff. This may be for ease in CBP to implement.
On Wednesday, 2 July, President Trump truthed that the US and Vietnam have a trade deal. Per President Trump, a 20% tariff will be applied on U.S. imports of goods from Vietnam and Vietnam will let U.S. goods enter their market duty free. Goods designated as trans-shipped will be hit with higher duty of 40%. Given trans-shipment to avoid tariffs is illegal, it is unclear how shipments will be identified as trans-shipped and higher tariff applied. The agreement is expected to be finalized within the coming weeks with more details on implementation forthcoming. Following the announcement, China threatened to retaliate if they are hurt by the US-Vietnam trade agreement.
Please see below for the latest as reported by the press on trade negotiations between the United States and some countries seeking to reduce or avoid higher reciprocal tariffs on their goods.
EU: On Sunday, 6 July, the EU Commission Chief held a call with President Trump after President Trump threatened a 17% tariff on EU food and agricultural exports. Ursula von der Leyen said that she had a “good exchange” with President Trump as the EU is aiming to secure a trade deal by the 9 July deadline.
Canada: On Friday, 4 July, the US ambassador to Canada said that he is optimistic that the US and Canada can reach a trade deal following President Trump and Prime Minister Carney agreeing to reach a deal by 21 July. Note that Canada is not currently subject to IEEPA “baseline” tariffs, and instead imports from Canada are subject to the IEEPA “trafficking” tariffs of 25% on non-USMCA compliant goods.
Indonesia: Last Thursday, 3 July, Indonesia announced that they will commit to $34 billion with business partners this week to boost purchases from the United States in effort to secure a trade deal.
India: Last Wednesday, 2 July, India was pushing the United States for a trade deal following the US’s announcement with Vietnam. However, there were disagreements over U.S. dairy and agriculture.
Thailand: On Sunday, 6 July, Thailand announced that they are offering more trade concessions aimed at boosting bilateral trade volumes with the U.S. and reduce its $46 billion trade surplus by 70% within five years, reaching balance in seven to eight years.
Bangladesh: On Monday, 7 July, Bangladesh’s interim government said that they are anticipating a favorable resolution in trade negotiations.
President Trump Threatens 10% Tariff on BRICS allies: On Monday, 7 July, President Trump said that he would put an additional 10% tariff on any country that aligns themselves with the “anti-American policies of BRICS” countries (which stands for Brazil, Russia, India, China and South Africa). It is unclear which policies President Trump deems “anti-American” or when such tariffs would enter into effect.
The US Big Beautiful Bill Includes Provision to End De Minimis Rule: On 3 July, President Trump signed the Big Beautiful Bill which includes a provision to end the de minimis rule for packages valued at $800 or less for all countries at the end of June 2027. (De minimis is currently terminated for imports from China and Hong Kong.) While nearly two years away, PMMI members should prepare for increased tariff costs as any imported spare parts or components valued under $800 will be treated as commercial shipments and no longer eligible to enter the United States duty-free as of 1 July 2027.
The UK is Working to Secure a Trade Deal to Eliminate Section 232 Tariffs on British Steel: On Monday, 7 July, the UK said that they are working to secure an agreement with the United States to eliminate tariffs on British steel before 9 July. The current agreement between the US and UK applies a reduced 25% tariff on imports of UK steel (rather than 50%) and implements a quota at MFN rates.
EU to exempt Heavy Industry from Carbon Tax on Exports: The European Commission proposed last Wednesday, 3 July, that sectors such as steel and aluminum should be exempt from paying for the carbon emissions of their exports as there is debate whether the EU will be able to meet their climate targets. The new proposal will also allow companies to be refunded for payments that they have made to cover the carbon emissions of their exports under the EU-27’s emissions trading system.
