New Trade Deals, Section 232 Investigations, and More

A flurry of tariff-related developments cascaded down in recent weeks, including the following:

• A final U.S.-EU trade deal;
• A trade deal between the U.S. and Korea;
• Massive tariffs on Switzerland and India;
• Further Section 232 investigations on wind turbines and polysilicon;
• Termination of the de minimis exemption; 
• Canada’s removal of its retaliatory tariffs on U.S. goods
  
  

In addition, the U.S. Court of Appeals for the Federal Circuit on August 29, 2025 struck down President Trump’s IEEPA (International Emergency Economic Powers Act) tariffs as unlawful but stayed the decision until October 14 so the government could file an appeal (for prior coverage, see the trade alert dated September 3, 2025).

U.S., EU Trade Deal

After reaching a final trade deal on July 29, 2025, many details of the U.S.–EU agreement were left unanswered. The fact sheet released by the White House spoke in generalities, such as: “[t]he EU will remove significant tariffs, including the elimination of all EU tariffs on U.S. industrial goods exported to the EU, creating enormous opportunities for American-made and American-grown goods to compete and win in Europe.” Notably absent were the critical pieces of information needed for global traders—the harmonized tariff codes of goods subject to the new duty-free status, as well as the effective date of the accord.

The fact sheet also noted that “the European Union will pay the United States [emphasis added] a tariff rate of 15%, including on autos and auto parts, pharmaceuticals, and semiconductors. However, the sectoral tariffs on steel, aluminum, and copper will remain unchanged—the EU will continue to pay 50% and the parties will discuss securing supply chains for these products.” In reality, only importers of record in the U.S. pay the tariffs not the EU member states. The exemption of, e.g., pharmaceuticals and semiconductors, was not specifically tied to the ongoing Section 232 investigations of these items (including upstream and downstream products). On August 21, further details of the tradw deal were finally agreed to:

• The U.S. committed to apply the higher of the U.S. Most Favored Nation (MFN) tariff rate or a 15% tariff rate, comprised of the MFN tariff and a reciprocal tariff, on EU-originating goods.
• Starting September 1, the U.S. will apply only Normal Trade Relations (formerly “MFN”) duties on various EU-originating goods, including “unavailable natural resources (including cork), all aircraft and aircraft parts, generic pharmaceuticals and their ingredients and chemical precursors.”
• Several Section 232 national security tariffs will be capped at the flat 15% IEEPA reciprocal tariff rate, including those on lumber, semiconductors, and pharmaceuticals. 
• The joint statement released on August 21 noted that the EU intends to eliminate tariffs on all U.S. industrial goods and to provide preferential market access for a wide range of U.S. seafood and agricultural goods. Although this was already covered in the initial July 29 framework, the specific tariff codes for all of these categories of merchandise have yet to be announced. Later, in a press release dated August 27, 2025, the European Commission announced proposals to implement the trade deal: (i) the elimination of tariffs on U.S. industrial goods and granting preferential market access for a range of U.S. seafood and non-sensitive agricultural goods; and (ii) extending the tariff-free treatment of lobster (including processed lobster). The release also confirmed that the EU will continue to engage with the U.S. to lower tariffs, including in the context of negotiations on a future EU-US Agreement on Reciprocal, Fair, and Balanced Trade. These proposals must be approved by the European Parliament and Council before they can become effective.
  
  

Finally, it should be noted that Switzerland—not a member of the EU and a large player in the global pharmaceutical industry—was hit with a whopping 39% IEEPA reciprocal tariff effective August 7, a rate that is more than double the rate on EU products. The situation would become more dire if President Trump decides to levy pharmaceutical tariffs upon the conclusion of the current Section 232 investigation.

U.S.-South Korea Trade Deal

On July 30, South Korea reached a trade deal with the U.S. following several months of negotiations spanning two South Korean administrations. The framework agreement averted the proposed IEEPA reciprocal tariff of 25% before the August 1 deadline and reduced it to 15%, the same rate that applies to vehicle imports from Japan and the EU, but still higher than the 10% tariff rate that applied between April and August. As with many of the previously announced trade deals, details remain unclear because nothing in writing has yet emerged from these oral agreements.

South Korea has pledged a USD 350 million investment in the U.S. in exchange for the tariff reduction. Also, as part of the deal, U.S. automobiles and trucks will enter the South Korean market tariff-free, as is the case under the 2012 U.S.–Korea Free Trade Agreement.

South Korea’s top objective was achieved: reducing the duty rate on exports of vehicles and parts to 15%. However, South Korea did not address its major non-tariff barrier to imports of U.S. vehicles (safety standards), nor did it agree to any concessions to its rules about agriculture imports (especially beef and rice). Other areas of contention left unaddressed are currency manipulation and supply chain restrictions to China.

India Hit With 50% Tariffs

In another surprising move, President Trump hit India with a final IEEPA reciprocal tariff rate of 25% effective August 7, only to double it via an Executive Order in response to a finding that India is “directly or indirectly importing Russian Federation oil.” The combined 50% tariff rate became effective on August 27.

Exemptions from the 25% IEEPA reciprocal tariff for goods of Indian origin are available for donations and informational materials (covered under 50 U.S.C. § 1702(b)); semiconductors (goods listed in Annex II of EO 14257 issued on April 2, 2025, as amended); and (3) goods subject to existing and future Section 232 actions, including the current steel, aluminum, automobiles and auto parts, and copper.

India launched a formal Request for Consultations with the U.S. at the World Trade Organization (WTO) on September 2 over the Section 232 copper tariffs of 50%. India claims that imposition of these tariffs was not done for national security reasons but for “safeguard” reasons, which are permissible under WTO rules. However, procedure requires that the WTO’s Committee on Safeguards be notified before implementing the tariff, a step the U.S. did not take. Because the U.S. failed to notify the WTO to trigger consultation among all WTO members with “a substantial interest as exporters of the product concerned” before imposing the copper tariff, India considers the U.S. action impermissible under WTO rules. The U.S. has yet to respond.

New Section 232 “National Security” Tariff Investigations

Perhaps anticipating push-back from the federal courts on the IEEPA tariffs, President Trump has ordered the Commerce Department to launch new investigations under Section 232 to determine if the importation of certain products threaten U.S. national security that could result in additional sectoral tariffs. (The use of this statute and resulting tariffs imposed beginning in 2017 during President Trump’s first term were challenged in court and found to be a permissible use of the statute.)

Section 232 investigations can take up to 270 days to complete, but the administration has signaled it intends to expedite all of the ongoing investigations. Like other recent Section 232 investigations, three new initiation notices provide unusually short deadlines for public comments and do not reference any plans to hold public hearings. The new investigations and start dates are as follows:

• Polysilicon and its derivatives – July 1, 2025
• Unmanned aircraft systems – July 1, 2025
• Wind turbines – August 13, 2025
  
  

Here is a complete list of all ongoing Section 232 investigations and links to the relevant Federal Register notices:

It should also be noted that, in a post to Truth Social on August 22, President Trump announced an “investigation” of furniture imports that would be concluded “within the next 50 days” but did not specify under what statute the investigation was proceeding. Although an administration official later confirmed that Section 232 was the applicable statute, the website of the Bureau of Industry and Security of the Commerce Department, as shown above, does not list any furniture investigation currently underway.

De Minimis Exemption for Shipments From All Countries

In another development with massive implications for the enforcement and administration of U.S. trade laws, U.S. Customs and Border Protection (CBP) ended the low-value (USD 800 or less) exemption from filing formal or informal entries on August 29. Abuse of this exemption to avoid paying U.S. customs duties by many e-commerce platforms (especially in China, for which the exemption ended on May 2) and use of this exemption by many criminal organizations to smuggle illicit drugs and counterfeit currency into the U.S. prompted this legislative change.

Now, all shipments of any value (including mail shipments) must be reported to CBP and duties must be paid as follows:

• Non-postal shipments will be subject to all applicable duties, taxes, and fees and must be filed using an appropriate entry type (either informal entry for shipments under USD 2,500 or formal entries for those valued about that amount) in the Automated Commercial Environment (ACE) by a party qualified to make entry.
  • All postal shipments will be subject to IEEPA tariffs, which can be assessed using one of two methods:Ad valorem duty: A duty equal to the effective IEEPA tariff for the country of origin of the product, based on the value of the product; or
  • Specific duty: A flat duty ranging from USD 80 per item to USD 200 per item, depending on the effective IEEPA tariff rate applicable to the country of origin of the product.
• Donations and informational materials (as covered under 50 U.S.C. § 1702(b)) remain eligible for duty-free treatment. 
  
  

Canada Ends Retaliatory Tariffs on U.S. Goods

On August 22, 2025, Prime Minister Carney announced that Canada is withdrawing retaliatory tariffs on goods from the U.S. that qualify under the Canada-U.S.-Mexico Agreement (CUSMA) effective September 1, 2025. The adjustment affects a wide range of consumer and industrial imports that had been subject to 25% tariffs since March (click here for a complete list of the covered goods and their corresponding tariff codes). This action has been widely interpreted as a sign that Canada is pushing for a swift ending to the IEEPA tariffs (both “fentanyl” and “reciprocal”) that have been in place for non-USMCA (or “CUSMA” in the Canadian jargon) goods since March 7. It should be noted that Canada’s tariffs on steel, aluminum, and autos remain in effect as the government works with the U.S. to shape a new trading relationship.