U.S. Trade Policy and Tariff Actions
- Decision by SCOTUS on IEEPA tariffs likely not to happen before end of the year: On 12 December 2025, Bloomberg reported that the Supreme Court of the United States (SCOTUS) is unlikely to make a decision on the IEEPA tariff case before the end of the year. The Supreme Court held its last public session of the year on 10 December 2025 and has begun a four-week recess. The Supreme Court is expected to sit again on 9 January 2026, and we anticipate a ruling may be announced then. We will continue to monitor and update accordingly.
- Trump threatened 5% tariff on Mexico over water dispute: On 8 December 2025, President Trump truthed that he “authorized documentation” to impose a 5% tariff on Mexico if Mexico does not provide the United States with water from the Rio Grande as mandated under the 1944 Water Treaty. While no official announcement or action has been published, the Truth Social post included a 31 December deadline for Mexico to release 200,000 acre-feet of water to the United States. On 12 December, Mexico agreed to meet the Water Treaty obligations; however, U.S. Agriculture Secretary Brooke Rollins warned that the Trump Administration may follow through with additional tariffs on imports from Mexico if the country continues to violate the water treaty. It is unclear if these tariffs would be implemented under IEEPA, stack on top of the 25% IEEPA trafficking tariff on non-USMCA compliant products or be a flat 5% rate on all imports from Mexico.
- USMCA hearing transcripts available on USTR: On 3 -5 December, USTR held public hearings regarding the United States-Mexico-Canada Agreement (USMCA) in preparation for the first six-year joint review that is taking place on 1 July 2026. Transcripts for each day are now available on USTR’s website. Testimony includes panelists from industry speaking to the effect of the agreement on US manufacturing. Several manufacturers, including the National Association of Manufacturers (4 December Hearing, page 25), advocated in support of USMCA renewal. Select groups, like NAM, the U.S. Chamber of Commerce (4 December Hearing, page 20), the U.S. Council for International Business (4 December Hearing, page 29), used the opportunity to also argue against Section 232 tariffs levied on imports from Canada and Mexico.
- Status of US bilaterial negotiations and discussions: Please see the chart below for the latest on how certain countries are engaging with the United States in effort to reduce reciprocal tariffs and conclude bilateral deals.
Trade Status Updates
Market Status Updates
| Market |
Status Update |
Summary |
| EU |
Agreement Framework released through Executive Order |
EU reduced tariffs on US goods not yet implemented.
28 November: EU adopted negotiating directives on EU-US agreement.
|
| China |
Preliminary Agreement |
1 November: US and China announce trade deal. The Federal register notices include information on US modifying China’s IEEPA tariff to 20% (10% IEEPA fentanyl + 10% IEEPA reciprocal). Higher reciprocal tariff increase paused until next year.
|
| Japan |
Preliminary Agreement |
28 October: Fact Sheet includes additional information regarding Japan’s investment commitments in the United States including Energy, AI infrastructure, and Electronics and Supply Chain.
|
| South Korea |
Preliminary Agreement |
1 December: South Korea introduced legislation in parliament to implement the US-South Korea trade agreement. Retroactive to 1 November 2025, IEEPA duties on South Korea will be 15%.
Fact sheet includes additional information on South Korea’s investment commitments in the US, South Korea’s IEEPA reciprocal tariff rate, and reductions on Section 232 tariffs for auto and auto parts, timber and lumber, pharma, and chips.
|
| Switzerland |
Preliminary Agreement |
5 December: Switzerland adopted negotiating directives on Switzerland-US agreement. US food processing and packaging machinery already MFN duty-free, so additional market access benefits expected for US exports into Switzerland.
|
| India |
Negotiations ongoing |
15 December: Trade negotiations ongoing. No major updates.
|
| Canada |
Bilateral and USMCA negotiations ongoing |
8 December: Negotiations paused, no significant developments.
|
| Mexico |
Negotiations ongoing |
8 December: President Trump threatened 5% tariff on Mexico. See above.
|
| Taiwan |
Negotiations ongoing |
1 December: Trade negotiations ongoing. Taiwan is aiming for a 5% reduction in reciprocal tariffs (15% from 20%).
|
| Brazil |
Negotiations ongoing |
20 November: The White House issued an Executive Order removing IEEPA Brazilian domestic policy tariffs for certain agricultural products. No impact on PMMI machinery.
|
Trade Policy Actions by Other Countries
- China imposes license requirements on steel imports: On 12 December, China’s Ministry of Commerce issued an announcement that starting 1 January 2026, 300 steel products will be subject to export licensing requirements, which may be in part to stem alleged overcapacity by China. The list, which is linked in the official announcement, includes steel bars or rods, hot-rolled wires, and semi-finished products, coils, plates, tubes, and pipes of Chapter 72. This could impact availability of steel products originating from China into various export markets.
- Mexico’s legislature approves proposal imposing up to 50% tariff on imports from countries without a trade agreement: On 10 December 2025, Mexico’s legislature passed a bill introducing tariffs ranging from 5% to 50% on 1,400 products imported from countries that do not have a trade agreement with Mexico, such as China, South Korea, Thailand, India, and Indonesia. The tariffs will be implemented in 2026 and affect several products, including steel of Chapter 72. The draft list does not include packaging and processing machinery of headings 8422 or 8438. The announcement comes just as the US, Canada, and Mexico are preparing for the first six-year review of the United States Mexico Canada Agreement (USMCA) on 1 July 2026. Analysts and the private sector say that Mexico’s announcement is aimed at appeasing the United States ahead of the USMCA review.
- EU scales back sustainability laws: On 9 December 2025, the EU Council and European Parliament announced that they have agreed to simplify the sustainability reporting and due diligence requirements for Corporate Sustainability Reporting (CSRD) and Corporate Sustainability Due Diligence (CSDDD). The EU has agreed to make the following modifications:
- CRSD: Only companies with greater than 1,000 employees are required to report data relating to their environmental, social, and governance (ESG) practices in 2026. Reporting for small and medium sized entities (SMEs) now begins in 2028 as opposed to 2026. These proposals are not yet final and must go through the EU legislative process. Until these changes are finalized, the European Commission has advised companies selling into Europe should continue to prepare detailed sustainability reports accordingly.
- CSDDD: Companies with a minimum 5,000 employees and €1.5 billion net turnover are required to undertake certain due diligence reporting. Due diligence requirements are now limited to a company’s own operations and companies are no longer required to carry out a comprehensive mapping exercise. Additional proposed changes include removing the climate transition plan requirement and the EU harmonized liability regime that would have established a single EU-wide liability rule overriding Member State liability laws. Finally, the deadline for Member States to transpose the directive’s requirements into national law has been postponed by one year to 26 July 2028. These changes will enter into force upon final agreement and after publication in the EU’s Official Journal.
