U.S. Trade Policy and Tariff Actions
- EU-US Framework Agreement entered into force 1 July; zero tariff on U.S. machinery now in effect: The EU published the US-EU Framework Agreement implementation regulations in the EU Official Journal on 30 June, with the regulations entering into force on 1 July 2026. With the implementation of the agreement, the 1.7% MFN tariff on U.S.-origin food processing and packaging machinery of 8422 and 8438 imported into the EU is eliminated. The provisions below were incorporated by the EU in the implemented agreement:
- The U.S. has until 31 December 2026 to reduce Section 232 tariffs on EU steel and aluminum derivative products to the agreed upon maximum 15% tariff. If not met, the EU Commission may suspend tariff preferences.
- The agreement retains a sunset clause with an expiry date of 31 December 2029 unless renewed.
- USMCA not renewed in current form triggering the 10-year review process: On 1 July, USTR Greer formally confirmed that the U.S. did not agree to renew the USMCA in its current form following the mandatory joint review between the US, Canada, and Mexico. As a result, the agreement now enters annual review cycles and will expire in July 2036 unless all three parties agree to renew. Importantly, USMCA remains fully in force and current preferential duty-free tariff treatment for USMCA-compliant food processing and packaging machinery is unaffected.
- Section 301 forced labor tariff hearings conclude: USTR held three days of public hearings on 7-9 July on proposed Section 301 tariffs of 10%-12.5% on imports from all 60 investigated economies for failure to enforce bans on goods produced with forced labor. Multiple target countries, including Mexico, Canada, India, and EU member states, formally contested the findings, arguing their existing regulatory frameworks constitute effective enforcement. Canada called the findings legally groundless and Mexico argued its existing labor reforms under the USMCA satisfy U.S. standards. India further pushed back on what it characterized as a mischaracterization of its labor practices. With the conclusion of public hearings, USTR is expected to finalize the proposed tariff action soon. A specific date of implementation is not yet known, but it is anticipated to be near the 24 July expiration of the Section 122 10% tariff.
