United States: Trends and developments

The United States had already announced “reciprocal tariffs” – an alignment of tariffs or trade measures – back in February 2025. The Executive Order of April 2, 2025 then declared that trade deficits constituted a national emergency, imposing country-based blanket tariffs that included a 10% tariff on all imports effective April 5.

A higher duty rate was to apply to selected countries and groups of countries listed in Annex I starting April 9, including a 20% tariff on imports from the EU and a 32% tariff on imports from Switzerland. But the US president backpedaled on the evening of April 9, announcing an immediate 90-day “tariff pause” during which time a universal baseline tariff of 10% would apply. A separate pause was negotiated with China – scroll down to learn more.

Exceptions to the universal tariffs have been granted for the goods listed in Annex II, including copper, pharmaceuticals, semiconductors, wood products, certain critical minerals, and energy and energy products. Nor do the measures apply to steel and aluminum products or to cars and car parts, which are already subject to supplemental tariffs. 

The exemption for goods subject to the United States-Mexico-Canada Agreement (USMCA) remains unchanged. US goods are also exempted from the supplemental tariff. Reduced tariffs can be obtained if it can be demonstrated to the US Customs and Border Protection authorities (CBP) that the imports contain US goods representing at least 20% of their total value.

The EU “tariff pause” was significantly disrupted by an announcement of the US president posted to Truth Social on May 23 in which he threatened import tariffs of 50% effective June 1. The increase was suspended until July 9, however, after a phone call with the President of the European Commission. Negotiations with Brussels are ongoing.

Meanwhile, courts in the US are reviewing whether the tariff increases of April 2 comply with the International Emergency Economic Powers Act. The Court of International Trade in New York ruled the tariffs unlawful on May 28, but the Court of Appeals for the Federal Circuit granted an emergency motion by the US government just one day later. Tariffs imposed under Section 232 of the Trade Expansion Act of 1962 are not affected, however.

Under a proclamation dated June 3, 2025, and entitled Adjusting Imports of Aluminum and Steel, the US began imposing a 50% tariff on steel and aluminum imports effective June 4 – doubling the increases that had been in place since March. Current information can be found on the Cargo Systems Messaging Service website of US Customs and Border Protection (CBP), which has jurisdiction in such matters.

Steel and aluminum imports from the United Kingdom will continue to be taxed at just 25% through July 9 as the US and UK negotiate a free trade agreement.

Uniform tariffs of 25% had been in place for most steel and aluminum imports into the US since March 12. This revoked the previous system of quotas not only for Europe but also for countries such as the UK, Australia, Canada, Mexico, and Argentina.

To put this in perspective: The US imports half of its overall demand for aluminum, and Canada represented the largest single source at 3.2 million metric tons annually. The US also imports about one-quarter of the steel it needs, with most of this coming from Canada, Mexico, and the EU. Although the US is a significant export market for the German steel industry, some 80% of German steel currently stays within the EU single market.

In addition to aluminum and steel, the US has turned its attention to another industry: The White House Proclamation of March 26, 2025, announced an additional 25% tariff on US imports of motor vehicles – from compact cars to sedans to light commercial vehicles – and on motor vehicle parts such as engines, transmissions, and electrical components.

The tariffs on automobile imports took effect on April 3, and the supplemental tariffs on automobile parts came into effect on May 3. The White House Proclamation of April 29, however, already announced tariff relief on imported components assembled in the US, outlining a transition period in the application of the tariffs on automobile parts. Although the tariff is set at 25%, manufacturers are offered an offset of up to 3.75% of the value of a vehicle built in the US in the first year, dropping to 2.5% in the second year before expiring in the third year. The additional tariffs on steel and aluminum are also waived for automobile parts in order to avoid compounding the penalties. The provisions are also intended to apply to foreign car manufacturers that produce vehicles in the US.

Some background: Tariffs on vehicle imports are placing a considerable burden on the German automotive industry, especially since the US is an important sales market. Before the new tariffs, the US only imposed a duty of 2.5% on cars from the EU, while the EU still charges 10% on US automobile imports. US tariffs on pickups and light commercial vehicles were significantly higher, however, at 25%. In response, many car manufacturers have been producing locally in the US for some time, but even these plants mostly import car parts from neighboring third countries. 

Special regulations and tariff suspensions for products eligible for preferential tariff treatment under the USMCA (United States-Mexico-Canada Agreement) are now in place, however. The US hopes that this will bring a significant amount of production back home. The White House Fact Sheet also cites national security reasons under Section 232 of the Trade Expansion Act of 1962.

Negotiations are ongoing: Back in 2018, the EU responded with retaliatory tariffs when the US imposed punitive tariffs on imports of certain iron, steel, and aluminum products. And so, in a press release dated March 12, 2025, the EU Commission announced that it would reinstate these tariffs and take further countermeasures. Brussels then drafted two lists of US products to which tariffs could be applied – a list of goods that had previously been subject to tariffs, and an expanded list.

A brief recap: The dispute had been previously resolved at the G20 summit in October 2021, when the reciprocal measures were suspended until March 31, 2025. During this suspension, goods of EU origin could be shipped duty-free to the US up to a certain volume. This quota system was suspended by the US, however, with the announcement of the 25% tariffs on steel and aluminum imports that took effect on March 12, 2025. The EU, on the other hand, pushed back its own suspension until April 14 with Implementing Regulation (EU) 2025/664 of March 31, and showed itself willing to engage in talks.

Two decisive publications then appeared in the Official Journal of the EU on April 14, 2025: 

1. First, the extended list came into force with Implementing Regulation (EU) 2025/778. With these measures, the EU is changing both the tariffs and the list of goods affected by the original countermeasures in Annex I. For example, whiskey is no longer subject to the supplemental tariffs. The new goods and tariffs are listed in Annexes II and III. The scope of goods covered by Annex IV is to be expanded starting December 1, 2025.
2. These measures, along with those from 2018 and 2020, were lifted by Implementing Regulation (EU) 2025/786, also published on April 14, which suspends “application of the additional ad valorem customs duties imposed by Implementing Regulations (EU) 2025/778, (EU) 2018/886, and (EU) 2020/502” until July 14, 2025.

On May 8, 2025, the United States and United Kingdom released a joint statement on an “Economic Prosperity Deal” containing proposals for better access to markets and designed to pave the way to a new trade agreement. The idea is to grow the quality and volume of the mutually beneficial trade between the US and UK, creating growth and prosperity in both countries, by removing barriers for US and UK businesses so they can more easily operate, invest, and trade in both countries. 

The aim, in short, is to ensure that the special relationship between the two countries is rooted in an enduring economic partnership that is fair, reciprocal, and future-facing. This is emphasized in both the UK government's press release and in the Fact Sheet: US-UK Reach Historic Trade Deal.

The parties are already in agreement on the following points:

• Lower tariffs for selected goods originating in the partner country (list of goods not yet in place)
• Beef quotas of 13,000 metric tons
• UK grants a duty-free quota of 1.4 billion liters for ethanol
• US grants a quota of 100,000 motor vehicles annually at a 10% tariff
• US grants a quota for steel and aluminum products not subject to supplemental tariffs for these groups of goods

Further negotiations on tariffs for pharmaceuticals and pharmaceutical ingredients are planned. The plan is to also reduce non-tariff barriers to trade, open up market access for agricultural products, and introduce procedures for assessing compliance.

In May, trade between the US and China had almost come to a standstill, but negotiators meeting in Geneva managed to achieve a 90-day temporary reduction in reciprocal tariffs. There is already talk of a “fresh start.” The White House Fact Sheet of May 12 says that both sides will lower tariffs by 115%, bringing US tariffs on Chinese imports down to 30% and Beijing's markup on US imports to 10%, effective May 14 in both countries.

But how did such high tariffs come about in the first place? The US began ratcheting up tariffs on imports from the People's Republic of China on February 1, 2025. Initially 10% in February, these tariffs had risen to 20% by March 3. A tariff of 34% was initially due to take effect on April 9, but following a vehement response by China on the day before, it was first raised to 104% and then to 125% with immediate effect on the evening of April 9. Including the 20% import duties from February, this meant that US imports of goods from China were subject to tariffs totaling 145% effective April 9, 2025. On April 11, however, the White House issued a Presidential Memorandum exempting certain electronic products from China, including smartphones and semiconductors, from the reciprocal tariffs. These exceptions do not apply to other pre-existing duties, however, such as the 20% baseline punitive tariffs imposed under the US fentanyl strategy, so even these goods are not completely exempt from tariffs.

The Chinese government had already responded in February by filing a complaint with the World Trade Organization and imposing its own tariffs of 10% on crude oil and agricultural equipment and 15% on liquefied natural gas and coal imported from the US effective February 10. Additional tariffs of 15% were imposed on chicken, wheat, corn, and cotton and 10% on sorghum, soybeans, pork, beef, fishery products, fruit, vegetables, and dairy products effective March 10. Following the announcements by US President Trump on April 2, China initially responded with additional tariffs of 34% before raising them to 84% effective April 10, 2025. The Customs Tariff Commission of China's State Council then published a new measure on April 11, increasing Chinese retaliatory tariffs on US imports from 84% to 125% effective the following day.

This does not affect the elimination of de minimis exemption effective May 2, which primarily targets e-commerce: Since then, imports from China with a value of up to $800 that are cleared for free circulation or transferred from a warehouse to free circulation no longer enjoy any exemptions.

Europe must continue to face a balancing act in trilateral relations between the US, China, and the EU. China remains a vital trade partner as the EU's largest source of imports and third-largest destination for exports, and is increasingly showing geopolitical ambitions. The EU is currently studying and imposing anti-dumping measures on Chinese goods such as electric vehicles, to which China is responding with duties on spirits and pork. At the same time, however, Europe wants to continue pursuing its transition to green energy and benefiting from global trade with renewable energy components from China. The loss of sales markets for Chinese products could also lead to increased activity on the European market.

The US tariffs on Mexico announced on February 1, 2025, were set at 25%. But these tariffs were suspended before they could take effect on February 4 when Mexican President Claudia Sheinbaum immediately took action to stem drug trafficking from Mexico into the US. The suspension was initially set for four weeks. The tariffs then took effect on March 4. The very next day, US President Donald Trump granted a one-month reprieve for US automakers. 

Then, on March 6, after another phone call with the Mexican president, he suspended most of the tariffs until April 2: Mexico currently pays no tariffs on goods covered by the United States-Mexico-Canada Agreement (USMCA) negotiated by the three countries during Trump's first term in office. 

The impact on financial markets is already making itself felt: Tariffs are harming both the Mexican and American economies. European companies that operate production facilities in Mexico to supply the US market are also heavily affected.

Tariffs on imports from Canada were also set at 25%, as with Mexico, and at 10% for imports of energy and potash. But also just as with Mexico, exemptions for goods imported under USMCA have been in place since March 6. Some background: The US is Canada's largest and most important trading partner, with an annual volume of almost one trillion dollars in goods and services.

The Kiel Institute for the World Economy offers ongoing analyses of current tariffs and their impact on the economy in its Kiel Trade and Tariff Monitor.

You can search for US tariffs affecting your goods using the Harmonized Tariff Schedule, a database maintained by the US International Trade Commission that catalogs the tariffs imposed by the United States. Simply enter the six-digit HS code for your goods or search by keyword.

You can also use the EU Commission's Access2Markets database, which lists the current tariffs of all countries. From the main page, enter the six-digit HS code, your country of origin, and the United States under the country of destination.