Thompson Hine trade lawyer Dan Ujczo, who has expertise in North American trade and, particularly, automotive trade in the USMCA region, said the way the carve-outs to 25% Section 232 tariffs have been shaking out has surprised him -- and, he believes, has surprised countries that are automaking powerhouses.
International Trade Today is providing readers with the top stories from last week in case they were missed. All articles can be found by searching on the titles or by clicking on the hyperlinked reference number.
Former trade negotiators and government trade advisers from both the Office of the U.S. Trade Representative and Canada described the negotiating process of the last three months as one wherein even Cabinet members couldn't promise that a deal was done.
Goods from Mexico that aren't subject to Section 232 tariffs will continue to be excluded from tariffs if they can meet USMCA rules of origin, as will auto parts, President Donald Trump announced about 12 hours ahead of the deadline. For goods outside the Section 232 action, and not eligible for the free-trade agreement benefit, Trump had said the rate would go from 25% to 30%.
The U.S. is raising tariffs on Canada from 25% to 35% effective Aug. 1 because Canada has "failed to cooperate" in stopping flows of fentanyl and other illegal drugs across the border, the White House said in a July 31 fact sheet. Goods qualifying for preferential tariff treatment under USMCA will continue to be exempt from the duties, the White House said, and goods found to have been transshipped to evade the 35% tariff will face a 40% tariff.
Sen. Peter Welch, D-Vt., joined by two moderate Republicans, Minority Leader Chuck Schumer, and other Democrats, introduced a bill this week that would exempt small businesses from paying tariffs levied on Canada under the fentanyl emergency. Small businesses are defined by the Small Business Administration, based on either average employment or recent annual revenues, and some manufacturers can have as many as 1,500 employees. Small retailers, depending on the sector, may qualify with annual revenues at or below $9 million to $47 million.
Although a majority of the Senate voted to end the underlying emergency that allowed the president to impose 25% tariffs on Canadian goods, a vote was blocked in the House.
Two of the lead negotiators in the Cabinet -- Commerce Secretary Howard Lutnick and Treasury Secretary Scott Bessent -- avoided directly answering an interviewer's question about whether 15% is the lowest reciprocal tariff rate trading partners like Taiwan, the EU and South Korea can receive.
Treasury Secretary Scott Bessent, speaking on CNBC, did not say for sure that tariffs will go up on Aug. 1 on trading partners, but said, "I would think that a higher tariff level will put more pressure on those countries to come with a better agreement."
The Senate Appropriations Committee passed a bill to increase funding for the Office of the U.S. Trade Representative by $6 million, more than 10%, and to increase funding for the Bureau of Industry and Security, which handles Section 232 action, by $20 million -- almost 10%.