Most recent tariff and trade developments impacting the automotive sector
The world of international trade is abuzz with activity as nations grapple with tariffs and trade tensions. Here's a roundup of some key developments:
In the United States, the exemption of 50% tariffs on European Union (EU) imports is set to expire on July 9th. This comes as President Trump has announced his decision to overturn California's attempts to phase out Internal Combustion Engine (ICE) vehicles by 2035, a move that could potentially promote the uptake of Electric Vehicles (EVs).
The auto industry, including major players like Volkswagen, BMW, and Mercedes-Benz, appears broadly supportive of the repeal of EV sales mandates, a move that is expected to help restore a degree of balance to US emissions regulations. However, the news may not be well-received by Original Equipment Manufacturers (OEMs) that have already invested in adapting their production and supply chains for stricter EV requirements.
Meanwhile, the US has doubled its tariffs on steel and aluminium imports, except for those from the UK, to 50%. This move blocks California and the Environmental Protection Agency from approving any similar actions in the future.
Across the Atlantic, the European Commission has approved a proposal to introduce trade countermeasures against the US' steel and aluminium tariffs. Retaliatory tariffs imposed by the EU could take effect in mid-to-late July.
The US-China trade relationship is another hot topic. Trump has announced a "done deal" with China on a trade framework, which includes agreements on magnets and rare earth materials, suppliers of which are predominantly Chinese. However, details of this deal are yet to be revealed.
China has offered expedited export approvals for civilian uses of rare earth minerals, a move that could potentially alleviate some of the trade tensions. However, China's halting of rare mineral exports globally remains an issue, particularly as the US is expected to impose tariffs on pharmaceuticals, copper goods, trucks, commercial vehicles, and critical minerals at a yet-to-be-determined date.
In a significant development, the US has set a deadline of July 8th for all countries for negotiations on reciprocal tariffs. The US is also expected to enforce 55% tariffs on China and 10% for the US.
Elsewhere, Canadian retaliatory tariffs on US steel and aluminium are scheduled to take effect in October. Germany, too, is in negotiations with the US government, with June 2025 marking a significant point in negotiations involving possible tariff relief in exchange for billions in investments in the USA.
Lastly, new US fees on Chinese-operated and manufactured vessels are set to take effect on October 8th, while US semiconductor tariffs are expected within the next 1-2 months during summer 2025.
As these developments unfold, it's clear that the global trade landscape is undergoing significant changes. Stay tuned for more updates as these stories continue to evolve.
