Trade Agreements

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On March 28, 2023, the United States and Japan signed an agreement on trade in critical minerals used in electric vehicle (“EV”) batteries (“Agreement Between the Government of Japan and the Government of the United States of America on Strengthening Critical Minerals Supply Chains”). The agreement builds on the United States’ limited trade accord with…

The historic infrastructure bill, now approved by the U.S. Congress and pending President Biden’s signature, includes broad policy provisions designed to improve governmental sourcing from U.S. manufacturing sectors.  These new statutory authorities aim to:

  • Expand domestic preference procurement policies applicable to federal financial assistance programs for public works infrastructure;
  • Increase the domestic component content requirements

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Last Friday the United States Trade Representative (USTR) ramped up its tariffs on European aircraft, increasing the duty from 10% to 15%, effective March 18.

It also announced it would make minor modifications to 25% tariffs imposed on cheese, wine, Irish and Scotch whisky, and other non-aircraft products from the EU, namely adding a 25% tax on French and German butcher and kitchen knives and dropping prune juice from the list of taxed items. While the move is hard-hitting, particularly for European aircraft, EU officials had feared more drastic measures in an increasingly fraught trade relationship with the U.S.

Background

The tariffs are part of a 15-year-old complaint over European aircraft subsidies to plane maker Airbus, putting Boeing, its U.S. competitor, at a disadvantage. Last October, the World Trade Organization authorized the U.S. to impose tariffs of up to 100% on 7.5 billion dollars’ worth of EU exports annually to recoup its losses. The imposed duties are lower than those permitted under WTO’s ruling, however, USTR decided against additional escalation after a mid-December public consultation recorded protestations from more than 26,000 U.S. consumers and industries. While USTR’s latest action on tariffs thus could have been significantly more painful, businesses hoping for a relief remain disappointed with the levies, which are expected to continue until the U.S. and EU come to a negotiated resolution. As the two sides cannot agree on terms for starting talks, this remains an uncertainty at least in the short-term.

Potential for Escalation

Further escalation by Washington also is anticipated if Brussels hits U.S. imports with tariffs over unfair subsidies to Boeing. The WTO is expected to rule this spring on damages caused by U.S. plane maker’s state tax breaks, which would authorize the EU to target U.S. goods with retaliatory tariffs. A preliminary list of U.S. goods proposed as targets for EU retaliatory tariffs was drawn up last year, focusing primarily on U.S. farm products. Although Brussels no doubt is mulling over a right response to the most recent U.S. tariff hikes on aircraft, the broader picture for the EU remains to reset its trade relations with the U.S.

Impact on EU-US Trade Agreement

At the beginning of the year, European Commission President Ursula von der Leyen announced that she is seeking a mini trade deal with the U.S. in the next few weeks covering trade, technology and energy. However, the U.S. insists any deal must include EU agricultural concessions – a sticky and politically explosive topic for the EU. EU officials have conceded agricultural concessions could come in the shape of separate commitments lowering EU non-tariff barriers for certain U.S. farm goods. It has been suggested this could include the approval of more genetically modified crops for sale in the bloc, which is of obvious interest to the U.S.
Continue Reading U.S. increases tariffs on European aircraft: EU response a litmus test for transatlantic trade relations

On January 15, 2019, President Trump and Chinese Vice Premier Liu He signed the long-awaited “phase one” trade deal at the White House. The deal represents the first step towards a comprehensive agreement between the two nations and progress in the U.S.-China relationship. The deal will help ease trade tensions signaling a truce in the…

Last week, the United States and China reached an agreement on the long-awaited “phase one” trade deal.  The deal, originally announced in October, will include tariff reductions by the United States and a $200 billion increase of U.S. good purchases by China. According to U.S. Trade Representative Robert Lighthizer, the 86-page agreement is currently…

On December 10, the U.S., Mexican, and Canadian governments signed an updated United States-Mexico-Canada Agreement (“USMCA”) in Mexico City.  The new agreement comes on the heels of months of additional negotiations between the three governments after an original deal was reached last year.  The terms of the new deal respond to criticism that the agreement…

On Tuesday, as “phase one” of the trade negotiations between the U.S. and China nears completion, the Wall Street Journal reported that the interim agreement would not only deter new tariffs, but lessen existing tariffs.  However, the “phase one” agreement reportedly will not include language regarding forced technology transfers.

China’s practice of forcing U.S. companies…

China and the United States continue to move towards finalizing a “phase one” trade deal. Speaking to the Economic Club of New York, President Trump stated that the United States is “close” to a deal and that it “could happen soon.” The President was also quick to note that he would only accept a deal…

On Friday, October 11, 2019, President Trump announced that a “phase one” agreement had been reached with China. Most notably, the U.S. agreed to suspend its plan to increase tariffs from 25% to 30% on $250 billion in Chinese goods, which had been scheduled for October 15. In return, China has agreed to purchase between…