A pivotal week is on the horizon for global trade.
On April 2, the U.S. government implemented “reciprocal tariffs” on the grounds of trade deficits and non-tariff barriers; On April 10, U.S. President Donald Trump imposed a 90-day moratorium on reciprocal tariffs, during which he significantly reduced them to 10%. On July 9, the 90-day moratorium will end.
There is a suspension period for reciprocal tariffs, but the automobile tariff policy is still in place
On April 2, the United States set specific tariff rates for most trading partners, including a 20% tariff on goods from the European Union, a 24% tariff on Japanese products, and a 25% tariff on South Korean goods.If the United States fails to reach an agreement with partners within the reciprocal tariff moratorium or extend the negotiation time, these tariff rates will reinstate.
The moratorium only applies to the reciprocal tariffs announced by Trump in April, excluding the industry-specific tariffs he imposed on vehicles, parts, steel and aluminum products, but for the automotive industry, the end of the tariff moratorium could have a significant impact, as auto and metal tariffs have been an important topic in U.S. negotiations with many trading partners, and broad agreements with trading partners may include adjustments to tariffs related to the automotive industry. For example, this is the case with the trade deal reached between the United States and the United Kingdom in May. It is not known whether the US trade agreement with other countries will refer to the agreement with the UK.
Image source: White House X account
It is worth noting that automobile tariffs are industry-specific tariffs, and the 25% tariff rate imposed by the United States on imported vehicles has remained unchanged since April 3. Since May 3, the United States has also imposed a 25% tariff on a series of high-value auto parts (some parts in Canada and Mexico are exempt from tariffs).
Similarly, the U.S. benchmark tariff of 10% remains in effect during the reciprocal tariff moratorium. Goods within the scope of automobile tariffs are exempt from base tariffs, but importers of parts that do not fall under the tariff list (such as door handles and electronic controls) are subject to a tariff rate of 10%.
Although the countdown to the moratorium has begun, negotiations between countries and the United States seem to have reached an impasse. At first, Trump and his team envisioned negotiations with dozens of trading partners at the same time, but President Trump and his advisers have said in recent weeks that they will focus only on negotiations with major economies and unilaterally impose tariffs on smaller countries or countries that fail to reach an agreement. According to a Reuters report, Trump said on July 4 that he had signed twelve letters listing the tariffs they would face on exports to the United States to 12 countries, which would be sent on July 7 local time.
Even as the U.S. struggles to reach agreements with other trading partners, it may take some time for companies to figure it out. Jennifer Smith-Veluz, an international trade law attorney at Butzel Law Firm, believes that if the United States reaches agreements with more trading partners in the coming days, these agreements are likely to be broader framework agreements, and the details may be further finalized in the coming weeks or even months. “We need to wait for official announcements from the White House, including executive orders and notices from Customs and Border Protection.”
Here are the tariff rates and negotiations between the United States and major auto trading partners as of July 3:
UK: Get preferential treatment in terms of car quotas
Under the trade agreement reached between the two countries, the United States will impose a 10% tariff on the first 100,000 vehicles shipped from the United Kingdom to the United States. It is reported that this amount should cover all or most of the cars exported by the UK to the United States every year.
However, the 10% tax rate imposed by the United States on British vehicles has sparked criticism from American automakers. Automakers believe that cars made in Canada and Mexico should be given priority by the federal government, not cars in the UK or other regions outside of North America. Unlike cars made in the UK, cars assembled in Canada or Mexico usually contain a large number of U.S.-made parts, said Matt Blunt, chairman of the American Automotive Policy Council.
Blunt said in a statement on May 8: “We hope that this situation where British vehicles are prioritized over North American vehicles will no longer appear in US agreements with other countries. ”
Japan: Difficult to reach an automobile tariff agreement, increasing trade tensions
Recently, trade tensions between the United States and Japan have further intensified. Trump said that if the two countries fail to reach an agreement in the short term, the United States will unilaterally determine the tariff rate. During the G7 summit on June 16, Japanese Prime Minister Shigeru Ishiba met with Trump for 30 minutes. During the meeting, Shigeru Ishiba’s main message was that Japanese negotiators had made the elimination of automobile tariffs a top priority in negotiations with the United States.
In an interview with Fox News on June 29, Trump said: “I can send a letter to Japan: ‘Dear Mr. Japan, your cars will be subject to a 25% tariff. On July 1, Trump again proposed tariffs of up to 35% on Japanese products. Trump told reporters: “I’m not sure we can reach an agreement. I am skeptical about Japan. They are very tough. You know, they are still very willful. ”
But Trump and U.S. negotiators have not made concessions. “They don’t buy our cars, yet we ship millions of Japanese cars into the United States every year,” Trump said. It’s so unfair. ”
On July 6, Shigeru IshibaIn a TV show, he said: “We will not compromise easily. That’s why we need time, and why negotiations are so difficult. In response to Trump’s “unfairness”, Shigeru Ishiba said,“What is unfair? How unfair? We need to review “every U.S. claim.”
EU: Willing to accept a 10% tariff but want car quotas and exemptions
Negotiations between the United States and the European Union are often tense, with Trump threatening to break negotiations and raise tariffs on European products to 50% due to slow negotiations.
On June 30, Bloomberg reported that the EU is open to the US proposal to impose a 10% tariff on a variety of imported goods, but hopes that the United States will implement quotas and exemptions on automobiles, auto parts, steel and aluminum products. In addition, the EU is seeking to reduce tariffs in key sectors such as pharmaceuticals, alcohol, semiconductors, and commercial aircraft.
For EU negotiators, a respite for the European auto industry seems to have become a priority at the moment. According to the Guardian, EU chief trade negotiator Maros Sefcovic said: “Europe’s auto industry is clearly being hit hard. ”
On June 26, European Commission President Ursula von der Leyen said the EU was “ready to reach an agreement with the United States,” but if it could not reach an agreement, the EU would “defend its interests if necessary.” In short, all possibilities are talked about. ”
South Korea: I hope there will be more time to reach an agreement with the United States
South Korean officials are seeking to extend the tariff moratorium and say negotiations may continue after July 8. Just last month, South Korean President Lee Jae Myung was sworn in.
According to Bloomberg, a senior South Korean trade official who asked not to be named said it would be unrealistic to conclude negotiations before the full tariff increase on July 9. The official said that many countries are likely to continue to discuss the details after the deadline, but the current “instability” in the United States complicates the possibility of extending the negotiation period. South Korea, like other countries, is seeking exemptions from tariffs imposed by the United States on automobiles, parts and steel.
Canada: Resumption of negotiations, Mexico: Seeking a metal deal deal
On June 26, Trump suspended negotiations with Canada because Canada’s proposed digital services tax would apply to American tech giants such as Amazon and Google. On June 29, Canada revoked the tax policy, and the two countries later confirmed that they would resume negotiations.
Canada is not subject to reciprocal tariffs and has a different deadline for trade negotiations with the United States: July 21. Also on this day, Canada plans to adjust its response to U.S. steel and aluminum tariffs, which have doubled to 50% in June. Canada is the largest source of steel and aluminum imports from the United States.
At the same time, Mexico is seeking an agreement with the United States to establish a tariff quota system that will reduce tariffs on Mexican steel, according to a report by Bloomberg on June 24. Like Canada, Mexico is a major source of steel imports from the United States. In addition, the United States, Canada and Mexico plan to revisit the USMCA in 2026.
China: Consensus reached
On June 27, a spokesperson for China’s Ministry of Commerce said that the U.S. and Chinese economic and trade teams reached an agreement in principle on the framework for implementing the important consensus reached during the June 5 call between the two heads of state and consolidating the results of the Geneva economic and trade talks, and further confirmed the details of the framework. China will approve the export application of eligible controlled items in accordance with the law, and the United States will lift a series of restrictive measures against China accordingly.
In April, the United States imposed high tariffs of up to 145% on many Chinese products, including rare earths. Currently, the United States sets a reciprocal tariff rate of 30% for Chinese goods, while China sets a tariff rate of 10% for American goods. Importers of Chinese cars are not required to pay the above rates, but they are subject to a 25% car tariff and a 20% fentanyl tariff. In addition, other tariffs (including the Biden administration against ChinaElectric vehicle100% tariff levied) also applies.
Vietnam: Completely eliminate tariffs on U.S. imports
When Trump first introduced the so-called reciprocal tariff policy in early April, he imposed a 46% tariff on Vietnamese products.
On July 2, Trump said on social media that he had reached a trade deal with Vietnam after weeks of intense diplomatic negotiations. The United States will impose a 20% tariff on goods exported from Vietnam to the United States, and a 40% tariff on any goods considered transshipment in Vietnam, and Vietnam has agreed to eliminate all tariffs on goods imported from the United States.
Vietnam’s Ministry of Foreign Affairs said in a statement that Trump promised to continue cooperation to “resolve issues affecting bilateral trade relations,” while To Lam, general secretary of the Central Committee of the Communist Party of Vietnam, proposed that the United States recognize Vietnam as a “market economy and lift export restrictions on some high-tech products.” However, the White House has not released a term sheet or any official statement confirming the arrangement, and some details may still be in the works.
However, increasing U.S. car exports to Vietnam will be a difficult task, as even lower-priced and smaller U.S.-made SUVs can be relatively expensive compared to similar products from other countries. Additionally, Vietnam is a relatively poor country with a per capita income of only about one-twentieth that of the United States, limiting the size of the automotive market in the region. In this region, motorcycles are much more prevalent than cars.
