SPECIAL EDITION #4: Trade Tidbits - Wednesday, April 23, 2025
ON DECK:
- USTR finalizes container ship fees, proposes new tariffs on containers, chassis, cranes
- Section 232 critical minerals investigation drops, on a shorter timeline than others(?)
- Trump Administration floats a Section 301 investigation on seafood
- Trade talks could include measures aimed at China
- U.S., China still stuck at the starting line as they jockey for position with other countries
- U.S., India announce what seems to be the first formal framework for negotiations as Japan talks also appear in advanced stage – what any of this means for reciprocal/universal tariffs is unclear
- Updates on all the other talks with all the other countries
- DOJ seeks to consolidate IEEPA lawsuits
- All the various ways companies and industries are handling tariffs
- Commerce sends Section 232 steel and aluminum derivative tariff inclusion process to OMB for review
DISCLAIMER: The below is intended to inform, not to be construed as an official statement from the office of Rep. Yakym
Tidbits
Last week, USTR finalized its Section 301 shipbuilding fees. You can find the press release here and the Federal Register notice here. In the interest of space, I won’t detail the original proposal, but you can find that here.
For the first 180 days, the applicable fees are $0, but don’t get too comfy. After that point, fees will phase in on:
- Vessels with a Chinese operator or is owned by an entity of China (as defined in Annex I) at a rate of $50 per net ton, effective October 14, 2025. It rises to $80/NT on April 17, 2026; $110/NT on April 17, 2027; and $140/NT on April 17, 2028. The fee will be charged up to five times per year, per vessel and will only be assessed per rotation or string of U.S. port calls (not per port call).
- Chinese-built vessels (as defined in Annex II) at a rate of the higher of $18/NT or $120 per container discharged, effective October 14, 2025. It rises to $23/NT or $153/container on April 17, 2026; $28/NT or $195/container on April 17, 2027; and $33/NT or $250/container on April 17, 2028. The fee will be charged up to five times per year, per vessel and will only be assessed per rotation or string of U.S. port calls (not per port call). The fee will be suspended if a vessel owner orders and takes delivery of a U.S.-built vessel of equivalent or greater tonnage within three years. Certain Chinese ships are exempted.
- Operators of foreign-built vehicle carriers (as defined in Annex III) at a rate of $150 per Car Equivalent Unit (CEU) capacity of the entering vessel. The fee will be suspended if a vessel owner orders and takes delivery of a U.S.-built vessel of equivalent or greater CEU within three years.
What do the changes mean? Some ships could see fees upwards of $5.2 million by some estimates, compared with a $3.5 million fee under the original proposal. The difference is the $5.2 million would be a onetime fee per voyage, while the $3.5 million would’ve been levied per port call, which would’ve added up quickly.
It will also impose a requirement for the use of U.S.-built vessels for the transport of LNG exports (Annex IV). Effective April 17, 2028, 1% of LNG exports must be carried on U.S.-flagged and U.S.-operated vessels. That rises to 2% in 2031; 3% in 2032; 4% in 2034; 6% in 2036; 7% in 2038; 9% in 2041; 11% in 2043; 13% in 2044; and 15% in 2047. Percentage is based on the prior year’s LNG exports. The requirement will be suspended if a vessel owner orders and takes delivery of a U.S.-built vessel of equivalent or greater LNG capacity within three years.
One analyst estimated that this requirement will necessitate five to seven U.S.-built LNG tankers by the end of the decade. South Korean shipbuilder Hanwha, which acquired Philly Shipyard in 2024, announced it would construct the first U.S.-built LNG tanker.
It also also proposes imposing tariffs of between 20% and 100% on Chinese containers, chassis, and chassis parts and of 100% on Chinese ship-to-shore cranes (Annex V). I *believe* these would be in addition to the existing Section 301 China tariffs from Trump 1.0, which, for ship-to-shore cranes, the Biden Administration increased. The tariffs are subject to a comment period via USTR’s website, with comments due May 19. There will also be a hearing May 19, with requests to testify due May 8.
The announcement was greeted warmly by the United Steelworkers, which had requested the Section 301 investigation alongside four other unions. Ag groups were generally grateful for tweaks made to address their issues though still a little leery. The World Shipping Council and others remained opposed to the fees altogether. China was not happy.
The Last 232 to Drop – For Now(?)
Last week, the only remaining unannounced Section 232 investigation left in my tracker – critical minerals – was released. You can find the Executive Order here and a fact sheet here from the White House. We don’t have the Federal Register notice from the Commerce Department yet, so there are only a few things to flag as yet.
First, it’s worth noting the full title for this investigation is “Processed Critical Minerals and Derivative Products.” The phrase “derivative products” has now popped up in each and every Section 232 investigation of Trump 2.0 except autos and auto parts. I tend to read these as placeholders for expansiveness. Consider the inclusion processes for steel, aluminum, and auto parts (and I assume the others, once announced, will have one as well). Consider also the rigmarole last year week over the “exemption” for phones and electronics, which ultimately boiled down to that they were going to be classified as derivative products for the purposes of the Section 232 investigation into semiconductors.
As it pertains to this investigation, the Executive Order specifically calls out as derivative products “semi-finished goods (such as semiconductor wafers, anodes, and cathodes) as well as final products (such as permanent magnets, motors, electric vehicles, batteries, smartphones, microprocessors, radar systems, wind turbines and their components, and advanced optical devices).”
I also noticed some seemingly weird stuff with the timeframe of this one, at least compared to the copper and lumber. Whereas copper and lumber Executive Orders listed the typical 270-day timeframes, critical minerals does not. Instead, the Commerce Department is supposed to submit a draft interim report to the Treasury Department, Pentagon, USTR, and Peter Navarro within 90 days of the Executive Order (dated April 15, which yields ~June 14). Nothing like that is in the other Executive Orders as far as I could tell. Commerce is also supposed to submit its final report to the President within 180 days of the investigation’s commencement. First flag on that is 180 days not 270. Second flag is that we still don’t know when the investigation commenced, so there could be a date mismatch. Then again, the Federal Register notice for pharmaceuticals just backdated the commencement (it was released on April 16 but listed an April 1 commencement). So this one might be on a faster track compared to the others? But don’t forget that Commerce Secretary Howard Lutnick said semiconductor tariffs would happen “in probably a month or two” so they might all be anyway.
Add Another 301 to the Board?
A few more trade-related items worth flagging were contained in an Executive Order titled, “Restoring American Seafood Competitiveness.” You can find the order here and a fact sheet here. Among the deliverables were for the Commerce Department and USTR to assess unfair trade practices as part of a comprehensive seafood trade strategy (Section 4(b)(e)); for USTR to determine if trade practices of major seafood-producing nations warrants a Section 301 investigation (Section 4(b)(f)); and for the Departments of Commerce, Health and Human Services, and Homeland Security to consider revising or rescinding recent expansions of the Seafood Import Monitoring Program.
Let’s Make a Deal (Wrong Room End-Around Version)
Now that the announcements are over, let’s move on to negotiations, which I’m quadfurcating into overall news, China news, Japan and India news, and everyone else news.
And overall news will lead off with how we got to negotiations in the first place, which apparently involved National Economic Council Director Kevin Hassett sequestering White House trade advisor Peter Navarro in a broom closet across the White House complex so that Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick could have an unscheduled meeting with President Donald Trump so he could truth out the 90-day pause. Navarro also got a NYT profile this week.
And Commerce Secretary Howard Lutnick’s camp wanted to make sure everyone knew both that he’s involved in negotiations and he ain’t going nowhere.
The scope of what’s included in a deal still isn’t quite clear, but it’s starting to become clearer and could be more of a “top line” agreement with high-level principles (more on that later). However, China is expected to factor into negotiations, including “[asking countries] to disallow China to ship goods through their countries, [preventing] Chinese firms from locating in their territories to avoid U.S. tariffs, and not [absorbing] China’s cheap industrial goods into their economies. That could take the form of countries raising tariffs on China.
Treasury Secretary Scott Bessent said the first movers will get the best deals. President Donald Trump also truthed a list of eight non-tariff barriers I imagine are in play in these negotiations. In the meantime, countries continue to hold their fire on retaliation to let things play out.
What relief a deal/top-line agreement with high-level principles brings is also unclear, so in the meantime, folks are still pushing for exemptions.
Let’s Make a Deal (China’s Version)
I’m starting the China section with a clarification because there was a minor freakout last week that seems to be over but is worth addressing anyway. A White House fact sheet trumpeted that China faced “up to a 245% tariff on imports.” Some folks on social media took that and misrepresented it (see this representative example that blared: “The United States announces 245% tariffs on imports from China.”) Was this some new 245% tariff on all Chinese imports? Is everything on Twitter/X true? No. No, it’s not. The 245% applies to a few products, after you add up the IEEPA tariffs (20% fentanyl + 125% reciprocal) and Section 301 tariff, for which it’s 100% for certain products like EVs and syringes (and maybe soon ship-to-shore cranes, containers, and chassis). It appears the fact sheet was updated with that clarification (see this screenshot of an earlier version vs. what’s available now).
ANYWHO. That’s it for the China update. Let’s move on. Wait what’s that? There’s a ton of other China news to go through? Ugh fine.
Last we left things, both sides were channeling Michael Scott’s negotiating tactic of declining to speak first. A week later and…that’s still basically where things are at. President Donald Trump won’t authorize delegates to speak to China. Trump wants to speak to Chinese President Xi Jinping directly. Some context I hadn’t appreciated until I read this WSJ article is that there’s apparently a long history of China not being the one to initiate contact. The lone exception cited in the article was China’s 9/11 condolence call, which even then they say was requested by the U.S. This history irked Trump during his first term, so he’s apparently trying to shift that paradigm.
At any rate, China isn’t interested in setting anything up until it sees a change in tone from Trump Administration officials. It also wants Trump to name a point person for talks who can speak for Trump (which, uhh, have they met Donald Trump?). China did namea lead negotiator, though – Li Chenggang, who was its WTO envoy for the last four years. Li has in the past called the U.S. a “unilateral bully,” while someone else told Reuters, “He’s a bulldog, very intense.” So that’s a signal of where China’s at as it drums up patriotism among its people.
So the shadow boxing continues. White House Press Secretary Karoline Leavitt read a message dictated by Trump last week: “The ball is in China’s court. China needs to make a deal with us. We don’t have to make a deal with them…China wants what we have, what every country wants, what we have — the American consumer.” Trump also truthed his typical gripe about China not living up to the Phase One agreement.
The Administration seems to be banking that the combination of tariffs, companies moving operations out of China, and countries negotiating with the U.S. will force China to cry uncle. But as this stalemate drags on with tariffs of up to 245% in place, is that sustainable? Let’s check in with Treasury Secretary Scott Bessent, who told reporters yesterday that it is not. Market’s rallied on the comment. Trump followed that up with a comment of his own that tariffs “will come down substantially but it won’t be zero.” He also said last week that he didn’t see China tariffs going higher (did you know that they’re up to 245%?)
HOWEVER, Bessent in the same remarks that sent markets higher also noted that there were still no U.S.-China talks. So on the one hand, the situation is unsustainable. On the other, there isn’t a path to a climbdown yet. And in the middle are importers. Which is why the White House is reportedly thinking of standing up a sort of tiger team of advisors to troubleshoot urgent supply chain issues that arise due to the up to 245% tariffs on Chinese imports.
Though the U.S. and China haven’t had direct conversations, they sure are having direct conversations with a lot of other countries. As mentioned earlier, the U.S. is trying to insert objectives into negotiations with other countries that could isolate China’s economy.
For his part, Xi called for “Asian unity” during his recent tour of Southeast Asia, which may have a harder time buying what the U.S. is selling vis-à-vis China due to proximity. On Monday, China warned it would retaliate against anyone that cooperates with U.S. efforts to isolate its economy. Foreign Minister Wang Yi called on the UK and Austria to safeguard the multilateral trade system, while the European Union Chamber of Commerce in China said China’s industrial policy should be changed.
Meanwhile, other trade actions between the two countries pile up. The Commerce Department announced it would require a license for the sale of certain AI-related chips, which hit Nvidia and AMD and even had Nvidia’s CEO on a plane to China. The U.S. also continues weighing kicking Chinese companies off the stock market. Ford halted shipments of F-150s and other models to China since they’d face tariffs of up to 150%. Rep. John Moolenaar (R-MI), the Chairman of the House Select Committee on the Chinese Communist Party, also called on JPMorgan and Bank of America to withdraw from a Chinese IPO. As for China, it’s pulling back from private equity investments, refusing delivery of Boeing jets, and Hongkong Post suspended mail services.
Let’s Make a Deal (India and Japan’s Version)
Next, let’s pull out India and Japan, whose negotiations appear to be the most advanced.
VP JD Vance arrived in New Delhi Monday with his wife and kids for a four-day visit. He met with Prime Minister Narendra Modi and announced today that the U.S. and India had finalized the “Terms of Reference.” USTR Jamieson Greer followed up Vance’s announcement with a statement and fact sheet that provide a little bit of color on what that means. It appears this will be called the U.S.-India Catalyzing Opportunities for Military Partnership, Accelerated Commerce & Technology (COMPACT) for the 21st Century. Its goal is to “drive transformative change across key pillars of cooperation and commit to a results-driven agenda with initial outcomes this year to demonstrate the level of trust for a mutually beneficial partnership.” Goals include market access, reducing tariff and non-tariff barriers, and additional commitments. Finance Minister Nirmala Sitharaman will also meet with Treasury Secretary Scott Bessent this week.
As for Japan, lead Japanese negotiator Ryosei Akazawa came to DC for the first round of talks last week. President Trump met with him for 50 minutes and with the Treasury and Commerce Departments for 75 minutes. Trump hailed “Big Progress!,” and Treasury Secretary Scott Bessent echoed that there was progress “in a highly satisfactory direction.” Talks for a second round are already in the offing for later this month. Japanese Prime Minister Shigeru Ishiba could even visit at the “most appropriate time.”
Akazawa delivered a message from Ishiba that he wants a deal as soon as possible, but other signals are that a deal isn’t imminent. As for what was discussed, Trump raised Japan’s defense budget, which Japan wants to address separately. Nippon Steel’s acquisition of U.S. Steel is probably also separate, per Trump. Exchange rates didn’t come up but could at some point. Japan is reviewing auto and ag non-tariff barriers, potentially eyeing concessions on car safety standards and the oft-cited rice. However, Ishiba said that Japan won’t just keep conceding and conceding, especially as he deals with low approval ratings (he narrowlyremained PM back in November). Japan is also reportedly frustrated that the U.S. asks seem to keep changing.
Let’s take a step back here. India seems to have received the most official trade negotiation announcement thus far, what with its name and pillars and all. It sounds like this is the type of announcement we should expect coming up, according to three unnamed “people close to the White House” who talked to Politico: “memorandums of understanding” or broad structures of a deal. Another “unnamed person close to the White House” told the reporter, “I wouldn’t even call them deals…Basically, [it’s] an agreement that we would like to talk about doing a deal.”
Frameworks are great, but the sources cautioned that final deals “may take months.” So to obvious question becomes: How do these frameworks interact with the 90-day pause on reciprocal tariffs if negotiations extend beyond that? Will frameworks with negotiations that are heading in the right direction get a further extension on the pause? Could a pause suddenly end if talks hit a rough patch or impasse?
I’ll also note that USTR’s India framework fact sheet made reference to “initial outcomes this year,” so some of these could be multi-phase endeavors like the Biden Administration’s Taiwan talks, which had an “early harvest” and were supposed to yield one or more additional phases down the road. Early harvests could demonstrate progress and allow for a declaration of victory for both sides – but could also leave harder stuff for later, which again leads me back to the question about what happens with rough patches and impasses.
Let’s Make a Deal (Everything But China, Japan, and India’s Version)
Finally, we’ll get into some country-by-country news (alphabetical order).
- Argentina: President Javier Milei said his country is “ready” to sign a reciprocal trade agreement.
- Chile: Vice Trade Minister Claudia Sanhueza met with USTR Jamieson Greer.
- The EU: Italian Prime Minister Giorgia Meloni met with President Trump at the White House, with a joint statement saying that the two will work to ensure “beneficial, fair, and reciprocal” trade between the U.S. and EU. It also discussed a “non-discriminatory environment” on digital services taxes. Meloni was supposed to be a sort of go-between/tip-of-the-spear in an EU charm offensive. And though she left without much in the way of substance, Trump still said that he was 100% certain of an eventual deal with the EU. The EU called for “two-way engagement, with both sides bringing something to the table.” It’s also looking at export restrictions should talks falter. Treasury Secretary Scott Bessent met with his counterpart from Spain.
- Indonesia: Coordinating Economic Minister Airlangga Hartarto said the U.S. and Indonesia want a deal in 60 days. Textiles, furniture, shrimp, critical minerals, horticultural products, energy, defense, education, and other non-tariff issues are being discussed.
- Israel: President Benjamin Netanyahu spoke with President Trump, who said trade was among the items discussed.
- Mexico: President Claudia Sheinbaum spoke with President Trump, who called it a “productive” conversation. Sheinbaum toldreporters at her daily press briefing, “We haven’t yet reached an agreement, but there’s communication on the level of ministers of commerce and economy, and on the level of presidents.”
- Norway: Prime Minister Jonas Gahr Stoere and Finance Minister Jens Stoltenberg will meet with President Donald Trump in DC tomorrow.
- Pakistan: The country is looking at cotton and soybean purchases to balance its trade deficit.
- Peru: Trade Minister Úrsula Desilú León Chempén met with USTR Jamieson Greer.
- South Korea: Finance Minister Choi Sang-mok and Industry Minister Ahn Duk-geun are in the U.S. for talks this week. South Korea’s shipbuilding industry could be an asset in talks. Last week, Choi told the National Assembly, “We will not rush into tariff negotiations” and that defense cost-sharing would not be part of talks. The Google Maps issue may be in play, though. South Korea has also cracked down on “Made in Korea” violations to evade U.S. tariffs.
- Taiwan: Foreign Affairs Minister Lin Chia-lung confirmed to the Legislative Yuan that tariff, non-tariff barriers, investment, procurement, and export controls have been discussed with the U.S.
- Thailand: Talks scheduled for April 23 are being rescheduled to a later date so that, in the words of Prime Minister Paetongtarn Shinawatra, the country can “[review] issues.”
- The UK: Prime Minister Keir Starmer spoke with President Trump, with the U.S. readout noting that trade was among the topics discussed. The UK readout also flagged a conversation about the Houthis. VP JD Vance said there’s a “good chance” of a deal with the UK as the U.S. is preparing terms for trade negotiations, with a focus on auto tariffs, ag non-tariff barriers, and rules of origin.
I'll See You in Court
The U.S. Chamber of Commerce opted not to file a lawsuit challenging the tariffs, but California did. The Department of Justice wants all IEEPA litigants to consolidate into one case before the Court of International Trade (CIT), while plaintiffs want the CIT to halt collection of tariffs.. Courts gave deference to the Executive Branch in lawsuits challenging various Trump 1.0 tariffs but began shifting away from executive deference in the intervening years, so we’ll see how this goes. There’s also an unexplored IEEPA challenge on Charming Betsy grounds.
Keeping Up with the Car-Dashians
As always these days, here’s a collection of stories from the business world about how various companies and industries are dealing with the tariffs.
Tariffs may have driven retail sales higher as consumers buy big ticket items and stockpile. But you know what’s tariff-free? Second-hand stuff. President Donald Trump met with CEOs from Walmart, Target, Home Depot, and GE Aerospace.
Honda’s shift in production of the Civic from Japan to Indiana will start this summer. Honda also may (or may not) switch some production from Canada and Mexico to the U.S. Ford said it’ll raise prices this summer if the auto and auto parts tariffs don’t abate. Mack Trucks announced layoffs, blaming tariffs.
Some small businesses are ramping up production. The biofuel industry has corners of supporters and opposition. Eli Lilly said it’d make a new weight loss pill in the U.S. Abbott wants to expand its American manufacturing. Boeing’s global supply chain is a risk. LVMH threatened to move production to the U.S. if Europe doesn’t strike a deal. Botox could be impacted. Socks too.
Quick Hits
- The Commerce Department sent inclusion process procedures for the Section 232 steel and aluminum derivative tariffs to the Office of Management and Budget for review
- The Senate Agriculture Committee will hold a nomination hearing next Tuesday for Luke Lindberg, who was nominated to be Undersecretary for Trade and Foreign Agricultural Affairs
- USTR launched another USMCA Rapid Response Labor Mechanism dispute with Mexico
- The Commerce Department announced final affirmative AD/CVD determinations and rates regarding solar cells from Cambodia, Malaysia, Thailand, and Vietnam
- DHL temporarily suspended business-to-consumer shipments worth over $800
- India announced it will impose a 12% safeguard duty on certain steel products amid concerns about a surge of imports in the wake of renewed Section 232 steel tariffs
- The U.S. struck an oil port controlled by the Houthis
- The U.S. accepted Canada’s request for WTO consultations over the Section 232 auto and auto parts tariffs
- Automakers are having a hard time figuring out the U.S. content calculation
- Six auto industry groups sent a letter to Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and USTR Jamieson Greer urging extreme caution on auto tariffs
- USTR warned Colombia over its plans to require third-party certification on auto parts
- Canada announced a remission framework for automakers that stay in Canada
- Chile, Canada, and Peru were among those urging against Section 232 copper tariffs
- Sen. Ruben Gallego (D-AZ) sent a letter to Commerce Secretary Howard Lutnick urging against withdrawing from the Tomato Suspension Agreement with Mexico
- 68 House Democrats, led by Rep. Nydia Velazquez (D-NY), the top Democrat on the House Small Business Committee, sent a letter to four Trump Administration officials urging them to protect small businesses from the impact of tariffs
