by Craig Brightup, The Brightup Group —
This edition reviews trade agreements from President Trump’s Asia trip; a new investigation into China’s compliance with previous agreements; adding more International Economic Emergency Powers Act (IEEPA) tariff exemptions; and recent Senate votes rejecting President Trump’s tariffs.
President Trump’s Asia Trade Agreements
President Trump’s trip to the Asian-Pacific Economic Cooperation (APEC) summit yielded major trade and tariff deals. In summary, for Japan, the baseline tariff stays at 15% and Japan will make major investments in the U.S. like critical mineral production. For South Korea, the baseline tariff stays at 15% and South Korea will make investments in U.S. shipyards. For Malaysia, Cambodia and Thailand, the baseline tariff stays at 19% (20% for Vietnam), and all have agreed to open their markets to more U.S. industrial goods and agricultural products.
The President’s Asia trip culminated with a China deal that’s a one year “trade truce” in which China delayed new export controls on rare earth minerals and magnets scheduled to start on Dec. 1. Correspondingly, President Trump delayed his retaliatory threat of additional 100% tariffs on all Chinese products scheduled to go into effect on Nov. 1. China now has a monopoly on rare earth minerals and magnets which are crucial to the auto and electronics industries, as well as defense contractors for the America’s F-35 fighter jet and other items. The delay gives the U.S. more time to revive its rare earth minerals and magnet production and to partner with countries such as Japan and Australia.
Other key items in the U.S.-China trade truce include China agreeing to buy 12 million metric tons of U.S. soybeans in the current season and committing to buy 25 million tons annually over the next three years. Also, the U.S. postponed fees on Chinese built or owned ships arriving at U.S. ports, and China postponed retaliatory port fees on vessels of shipping lines with American investors. Finally, in response to China’s stated commitment to halt the flow of precursors used to make fentanyl into the U.S., President Trump lowered the “fentanyl tariffs” on China from 20% to 10%.
Sec. 301 Investigation into China’s Compliance with Previous Agreements
Despite the U.S.-China trade truce, a new USTR Sec. 301 investigation into China’s compliance with a limited agreement made during President Trump’s first term will continue. This could jumpstart the list 4b tariffs that were suspended by President Trump per China’s pledge to buy American soybeans, which it didn’t do during the Biden Administration.
Executive Order Adding More IEEPA Tariff Exemptions
On Sept. 5, the Presidential Action Modifying The Scope of Reciprocal Tariffs and Establishing Procedures for Implementing Trade and Security Agreements was issued that adds more exemptions to the IEEPA reciprocal tariffs announced on April 2. Annex I at the end lists initial exemptions with a link for Annex II and III listing new exemptions. The common theme of these exemptions is that they are raw materials or components and not manufactured products.
Senate Votes to Reject Tariffs
In October, the U.S. Senate approved three resolutions to stop President Trump’s IEEPA tariffs. Several Republicans joined Democrats to terminate IEEPA tariffs on Canada, Brazil, and baseline tariffs on some 200 counties. The measures are not expected to be taken up in the House and the President issued veto threats.
