Thoughts and updates on recent trade news
Please see the following message from Ted Murphy of Sidley Austin LLP reviewing and summarizing trade developments over the past couple of days.
(1) US-Canada & the Future of USMCA
As you may have seen if you have been watching the World Series, the Province of Ontario ran an anti-tariff commercial featuring excerpts from a radio address given by former President Ronald Reagan in 1987. President Trump was not impressed. He said that the ad was a blatant attempt to influence the U.S. Supreme Court’s consideration of the lawsuits challenging the tariffs Trump has imposed under the International Emergency Economic Powers Act (i.e., the fentanyl tariffs and the reciprocal tariffs). In response, he initially announced on social media that “all trade negotiations with Canada are hereby terminated” (of course, President Trump used ALL CAPS). He later announced that United States would increase tariffs on Canada by an additional 10% (can a TV ad contribute to the “national emergency” related to fentanyl imports from Canada?). We expect to see something official from the White House on the additional 10% tariff early this week.
This does not bode well for the United States-Canada-Mexico Agreement (USMCA), which will be under review in 2026 (the Office of U.S. Trade Representative is currently accepting comments on the future of USMCA). Our base case is that the United States withdraws from USMCA by the end of 2026 and replaces it with two bilateral agreements (one with Mexico and one with Canada). On the Canadian side, we are expecting a pretty narrow sectoral-type agreement that covers big issues like energy, aluminum, lumber, maybe autos (although autos will be the reason Trump pulls the USA out of USMCA) and then some smaller issues like dairy. This latest dust up just makes this outcome more likely (in our view).
(2) Agreements with Cambodia, Malaysia, Vietnam and Thailand
President Trump is currently in Asia for various meetings. Thus far, he has announced agreements on reciprocal trade with Cambodia and with Malaysia, and the frameworks for agreements with Vietnam and Thailand.
The agreements on reciprocal trade with Cambodia and with Malaysia are noteworthy for a couple of reasons. First, they appear to be true trade agreements (not just Executive branch agreements) with provisions for tariffs, non-tariff barriers, agriculture, geographical indicators, electronic transmissions, IP, services, labor issues, etc. Since the Constitution gives the power to regulate commerce with foreign nations to Congress, it will be interesting to see if President Trump submits these agreements to Congress for ratification. The President does not have Trade Promotion Authority, so if he does, Congress may try to amend the agreements. If he does not, and relies on IEEPA instead, then the agreements may be at risk based on what the Supreme Court decides in the pending challenge to the IEEPA tariffs. Second, these agreements preserve the parties’ ability to impose new rules of origin if the benefits of the agreement “are accruing substantially to third countries or third-country nationals[.]” This is commonly understood to mean limiting the amount of Chinese involvement (though ownership and/or through content) in the articles that get preferential treatment under the agreement (i.e., a lower tariff rate).
(3) Negotiations with China
The United States and China are at odds on a host of issues. The United States has imposed additional tariffs on products of China, (20% IEEPA fentanyl; 125% IEEPA reciprocal tariff later reduced temporarily to 10%); additional fees on Chinese shipping; imposed additional export controls; threatened additional tariffs of 100%; initiated investigations into China’s compliance with the Phase 1 agreement from Trump’s first term, etc. China, for its part, has imposed corresponding tariffs on products of the United States, tightened its export controls on rare earths, initiated investigations into various U.S. companies and industries; not purchased U.S. agricultural products, etc.
The two sides have been talking, however; and President Trump and President Xi are scheduled to meet this Thursday. It is being reported that the two leaders will review a framework for a deal to reduce trade tensions. While nothing is certain, a deal that includes no new tariffs, the United States lowering the existing IEEPA fentanyl tariff, China agreeing to substantial U.S. agricultural purchases, relaxed/delayed export controls by both sides, and something on the U.S. shipping fees would not be surprising. President Trump is in “deal mode” and is unlikely to let the opportunity of meeting with President Xi in person get away without a deal. For China’s part, we expect that they will drive a tough bargain.
If you have any questions, please contact our office.
Trade Updates with Malaysia, Cambodia, Thailand and Vietnam
Please see the following messages from Accelerate Strategies regarding recent tariff updates.
The Trump Administration has announced new trade agreements with Malaysia and Cambodia and new Frameworks for Agreements on Reciprocal Trade with Thailand and Vietnam. Additional work will need to be done between the U.S. and Vietnam and the U.S. and Thailand before a trade agreement can be signed with either country.
News on China: Also, Treasury Secretary Scott Bessent has been on the morning shows today saying he expects that China will not impose export controls on rare earths and that the United States will not impose 100 percent tariffs on China on November 1.
Additional Information
Tariff rates for the four countries are as follows:
- 19 percent reciprocal tariff rate for imports of Malaysia
- 19 percent reciprocal tariff rate for imports of Cambodia
- 19 percent reciprocal tariff rate for imports of Thailand
- 20 percent reciprocal tariff rate for imports of Vietnam
Also note there is a reference to Annex III in the fact sheets for all four countries. Recall that Annex III contains products that cannot be grown, mined, or naturally produced in the United States or grown, mined, or naturally produced in sufficient quantities in the United States to satisfy domestic demand; certain agricultural products; aircraft and aircraft parts; and non-patented articles for use in pharmaceutical applications, and are were said to be potentially eligible for exemption from future IEEPA tariffs.
- For Vietnam and Thailand, the fact sheets say: The United States will... identify products from the list set out in Annex III, to Executive Order 14346 of September 5, 2025, Potential Tariff Adjustments for Aligned Partners, to receive a zero percent reciprocal tariff rate.
- For Cambodia and Malaysia, the joint statements say: The United States has committed to maintain at 19 percent the reciprocal tariffs first set forth in Executive Order 14257 of April 2, 2025, as amended, on originating goods of [Cambodia/Malaysia], and [has identified/identifies] products from the list set out in Annex III to Executive Order 14346 of September 5, 2025, Potential Tariff Adjustments for Aligned Partners, to receive a zero percent reciprocal tariff rate.
Here are the source documents, which includes details pertaining to the above and other aspects of these agreements or frameworks:
Malaysia:
Cambodia:
Thailand:
Vietnam:
Recap of last week’s tariff news…
Section 232 Tariffs: Medium- and Heavy-Duty Vehicles, Medium- and Heavy-Duty Vehicle Parts, and Buses
President Trump is imposing Section 232 tariffs on imports of medium- and heavy-duty trucks and buses on November 1.
- Duties on medium- and heavy-duty trucks will be 25%. There is an exemption for trucks and truck parts that quality for USMCA preference.
- Duties on buses will be 10%.
Original documents:
- The Proclamation can be here.
- The fact sheet can be found here
- The Federal Register notice can be found here
Section 301 Investigation: Nicaragua
USTR issued the results of a Section 301 investigation into Nicaragua’s acts, policies, and practices related to labor rights, human rights, fundamental freedoms, and the rule of law, concluding there have been extensive violations that constitute an unreasonable burden on U.S. commerce. The original investigation was initiated under the Biden Administration in December 2024 in response to mounting evidence of systemic repression by the Ortega-Murillo regime.
Following its determination, the USTR announced potential responses under Section 301, including:
- Suspension or withdrawal of some or all CAFTA-DR trade benefits for Nicaragua.
- Imposition of up to 100% additional duties on some or all imports from Nicaragua.
These measures could be enacted immediately or phased in over a period of time up to 12 months.
Original documents:
- The Federal Register Notice can be found here.
- The USTR Report is available here
- Comments can be submitted here. Comments are due November 19, 2025.
Section 301 Investigation: China
USTR launched a new Section 301 investigation into China’s trade practices, potentially paving the way for more tariffs on Chinese goods. USTR will examine whether China has fully implemented its commitments under the Phase One Agreement, the burden or restriction on U.S. commerce resulting from any non-implementation by China of its commitments, and what action, if any, should be taken in response.
- The investigation follows on the President’s threat to impose a 100% tariff on Chinese goods on November 1 in response to Chinese export controls.
- The investigation was launched only days before high-level meetings in Malaysia between U.S. and Chinese officials.
- The previously instituted deadline for the United States and China to conclude a trade deal before IEEPA tariffs escalate is November 10, 2025.
Original documents:
- The Federal Register Notice on the initiation of the investigation can be found here.
- Comments can be submitted here starting October 31 through December 1.
- A docket for requests to appear at the public hearing to be held in connection with this investigation will open on October 31 and be available here. The public hearing will be on December 16.
Trade Negotiations with Canada
President Trump pushed out a Truth Social Post on Thursday in which he announced that trade negotiations with Canada are “terminated” in response to an ad being run in the U.S. by the province of Ontario. We are awaiting further news on this.
If you have any questions, please contact our office.
Requests for Inclusion on 232 List
Please see the following message from Ted Murphy of Sidley Austin LLP regarding the list of products that may be affected by the Section 232 Steel and Aluminum tariffs.
Just a quick note to let you know that Commerce has published 95 requests for articles containing steel and aluminum to be added to the list of derivative articles under the Section 232 steel and aluminum tariffs. The updated docket can be found here.
Please note that the comment period will now run until October 21, 2025 (14 days after publishing the requests). There have been no comments published, yet.
Commerce has also published an “Inclusion Guide” for the September 2025 cycle that help you identify potentially relevant requests. Copy attached. The guide lists the requestor, the request type (steel or aluminum or both) and the affected HTS classification.
As before, any company that imports any article containing any amount of steel or aluminum that is not currently subject to the Section 232 steel and aluminum tariffs should be monitoring this process. We expect a large number of tariff subheadings to eventually be added to the derivative list with little-to-no notice before tariffs are imposed.
If you have any questions, please contact our office.