Dozens of Items Carved Out of Reciprocal List; Future Reductions Murky
Nearly 40 minerals -- including gold bullion -- as well as sintered neodymium-iron-boron magnets and LEDs are no longer subject to reciprocal tariffs.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
A list of "Potential Tariff Adjustments for Aligned Partners" released as Annex III to the Sept. 5 executive order also indicates that more than 650 chemicals in Chapter 29, if used for generic medicines, would enter tariff-free from the EU, as well as about 150 generic medicines in Chapter 30, as well as some pesticides, disinfectants and detergents, mixtures, polymers and other materials, if they are used for generic pharmaceuticals. Nothing in the executive order makes the necessary changes to the Harmonized Tariff Schedule to implement these changes.
These items — as well as coffee, tea, tropical fruit, wood and nuts, spices, horticultural products, aluminum, nickel, tin, tungsten, zinc and cobalt ores and concentrates, rubber, cork and cork products, silk, cashmere wool, pearls and jewels -- could also be removed from reciprocal tariffs for other countries if the countries have good enough offers.
Annex III, which is in the same 109-page document as Annex II, also covers 19 products in Chapter 72, including steel scrap, and dozens of products in Chapter 73, covered by the Section 232 tariffs on steel, but the latter only apply if they are for aerospace applications. The last 20 pages of the annex, save seven rare earth HTS codes on page 89, are all goods that are exempt from reciprocal tariffs under the aircraft exemption.
Any of the goods in Annex III could enter reciprocal-tariff-free from other countries with trade deals, if the countries offer broad enough commitments of enough economic value.
"Though I am generally unwilling for framework agreements to narrow the scope of the reciprocal tariffs or modify any relevant section 232 tariff before the conclusion of a final agreement, final agreements with the United States may include such modifications," President Donald Trump wrote.
"Given the complex, fact-specific, and sensitive nature of negotiations," and the trade deficit emergency, "among other relevant considerations, the imports that might receive a reciprocal tariff rate of zero percent may be different for each final agreement between a foreign trading partner and the United States," he wrote.
A few items were removed from the previous Annex excluding them from reciprocal tariffs, including certain aluminum hydroxide, resin and silicone products, a fact sheet said.
Sidley trade co-lead Ted Murphy wrote in a note to clients that the changes to reciprocal tariffs happening between Friday evening, Sept. 5, and 12:01 a.m. on Monday, Sept. 8, is significant.
"If tariffs can change with 3 days’ notice (over a weekend), can a company really plan ahead? Should a company have any confidence that tariffs will not change in the future without notice, even in situations where there is a ‘final’ agreement? Probably not," he wrote.