US trading partners race to secure exemptions from Trump’s tariffs
Key details of many of the trade pacts agreed so far are still not finalised, or in some cases are being interpreted differently by each side.
US trading partners are lobbying the White House for exemptions to sweeping new tariffs that went into force on Thursday, as countries seek ways to muffle the impact on their economies of President Trump’s push to reorder global trade.
The diplomatic effort shows months of trade talks are far from over despite the run of agreements trumpeted by the White House in the past month.
The European Union, Japan and South Korea are among those that have agreed pacts with Trump, while behind the scenes their negotiators continue to argue their case with US officials for further relief for prized export sectors. Dozens of exemptions and carve-outs have already been allowed, for products including Brazilian orange juice and Chilean copper.
At the same time, negotiators are seeking further clarity on US tariff plans. Key details of many of the pacts agreed so far are still not finalised, or in some cases are being interpreted differently by each side.
Referring to the reciprocal tariffs that took effect at midnight, Trump said in a social-media post that “billions of dollars in tariffs are now flowing into the United States of America.”
The president said Wednesday that tariffs on imported semiconductors would be set at around 100 per cent — with exemptions for companies such as iPhone maker Apple that invest in US manufacturing. Promised new levies on other sensitive sectors such as pharmaceuticals are still to be officially announced.
This confusion — and the president’s willingness to adjust tariffs spontaneously in pursuit of a variety of political goals — mean that uncertainty over access to the US’s vast domestic market is becoming a key feature of the emerging economic order, with knock-on effects for business investment, hiring and prices. Trump on Wednesday said imports from India would be hit with an extra 25 per cent levy as punishment for buying Russian oil, on top of a 25 per cent tariff it already faces.
Administration officials for months insisted there would be “no exemptions, no exceptions” to country-specific tariffs that Trump in April announced were coming down the pike, targeting allies and adversaries alike in what the president said was the US hitting back at decades of unfair treatment in international trade.
Even so, in April the White House said smartphones, laptops and other consumer electronics would be exempted from higher duties on imports from China and other Asian producers. It also exempted energy, gold bullion and some critical minerals, while excluding some other imports such as steel, aluminium, drugs and copper from new tariffs assigned to individual countries because they are covered by different tariff orders.ora
As more trade deals were agreed, more exemptions were announced. Trump signed an executive order last week implementing a 50 per cent tariff on goods from Brazil, but major Brazilian exports including aeroplanes, some metals, fuels and orange juice were excluded. In all, the White House listed 694 exempted products, accounting for about 43 per cent of Brazil’s $42.3 billion exports to the US, according to the American Chamber of Commerce in Brazil.
Chile is another country that persuaded the Trump administration to exempt a key export from tariffs. Chile is a major copper supplier to the US, and succeeded in winning relief from a 50 per cent tariff that Trump said he would levy on copper imports. About 65 per cent of US imports of refined copper come from Chile, according to the US Geological Survey.
“We are moving from no exemptions to limited exemptions, especially for products that cannot be made here,” said Everett Eissenstat, who served as deputy director of the National Economic Council in Trump’s first term.
Now, the rush to secure further exemptions is on.
The EU accepted a 15 per cent baseline tariff on most US imports from the bloc as part of what it described as a political agreement with the White House.
The bloc said it anticipates that some products will be excluded from the 15 per cent baseline tariff because the US views them as strategic goods. Aircraft and components are expected to be on a list of goods that won’t face additional US tariffs when further details are announced, EU officials have said, and they are still jockeying to secure more carve-outs for products including chemicals, generic drugs and even wine and liquor.
European companies are making their case, too. Volkswagen Chief Executive Oliver Blume said last week that the company would continue talks with the Trump administration about support for a multibillion-dollar investment package that might help compensate for higher tariffs. BMW said it would carry on pushing for an export-rebate program, under which exporters are typically able to claw back tariffs paid or other taxes when they export products from US factories.
Efforts to secure exemptions are only a part of a push to keep negotiations with the US open, amid anxiety in foreign capitals about further swings in Trump’s trade policy. Trump has said that steep new tariffs on pharmaceuticals could be set as high as 250 per cent.
South Korea, which struck a trade pact with Washington last week, is already preparing for further talks, Finance Minister Koo Yun-cheol told legislators on Wednesday.
Japan’s top trade negotiator, Ryosei Akazawa, flew to the US on Tuesday to continue discussions with US officials. Among Tokyo’s questions is when exactly an agreed reduction in US auto tariffs will take effect, he said.
Smaller nations also are still working to improve their deals. Cambodia is hoping for carve-outs on its 19 per cent tariff for several sectors, including garments, footwear and luggage, said the country’s chief negotiator in the trade talks with the US, Deputy Prime Minister Sun Chanthol.
“19 per cent is not, I don’t think, set in stone, because we have the ability to go back and carve out certain sectors,” he said. He added that many other countries are seeking similar exemptions.
“I feel sorry for them,” he said of the US negotiating team. “There are so many countries to talk to.”
Wall Street Journal
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