US trading partners race to secure exemptions from Trump's tariffs

Mint

3 days ago

Dozens of exemptions and carve-outs have already been approved for a variety of products exported to the U.S.
U.S. trading partners are lobbying the White House for exemptions to sweeping new tariffs due to come into force on Thursday, as countries seek ways to muffle the impact on their economies of President Trump's push to reorder global trade.
The diplomatic effort shows months of trade talks are far from over despite the run of agreements trumpeted by the White House in the past month.
The European Union, Japan and South Korea are among those that have agreed pacts with Trump, while behind the scenes their negotiators continue to argue their case with U.S. officials for further relief for prized export sectors. Dozens of exemptions and carve-outs have already been allowed, for products including Brazilian orange juice and Chilean copper.
At the same time, negotiators are seeking further clarity on U.S. tariff plans, which are still in flux. Key details of many of the pacts agreed so far are still not finalized, or in some cases are being interpreted differently by each side.
The president said Wednesday that tariffs on imported semiconductors would be set at around 100%—with exemptions for companies such as iPhone maker Apple that invest in U.S. manufacturing. Promised new levies on other sensitive sectors such as pharmaceuticals are still to be officially announced.
This confusion—and the president's willingness to adjust tariffs spontaneously in pursuit of a variety of political goals—mean that uncertainty over access to the U.S.'s vast domestic market is becoming a key feature of the emerging economic order, with knock-on effects for business investment, hiring and prices. Trump on Wednesday said imports from India would be hit with an extra 25% levy as punishment for buying Russian oil, on top of a 25% tariff it already faces.
Administration officials for months insisted there would be 'no exemptions, no exceptions" to country-specific tariffs that Trump in April announced were coming down the pike, targeting allies and adversaries alike in what the president said was the U.S. hitting back at decades of unfair treatment in international trade.
Even so, in April the White House said smartphones, laptops and other consumer electronics would be exempted from higher duties on imports from China and other Asian producers. It also exempted energy, gold bullion and some critical minerals, while excluding some other imports such as steel, aluminum, drugs and copper from new tariffs assigned to individual countries because they are covered by different tariff orders.
As more trade deals were agreed, more exemptions were announced. Trump signed an executive order last week implementing a 50% tariff on goods from Brazil, but major Brazilian exports including airplanes, some metals, fuels and orange juice were excluded. In all, the White House listed 694 exempted products, accounting for about 43% of Brazil's $42.3 billion exports to the U.S., according to the American Chamber of Commerce in Brazil.
Chile is another country that persuaded the Trump administration to exempt a key export from tariffs. Chile is a major copper supplier to the U.S., and succeeded in winning relief from a 50% tariff that Trump said he would levy on copper imports. About 65% of U.S. imports of refined copper come from Chile, according to the U.S. Geological Survey.
'We are moving from no exemptions to limited exemptions, especially for products that cannot be made here," said Everett Eissenstat, who served as deputy director of the National Economic Council in Trump's first term.
Now, the rush to secure further exemptions is on.
The EU accepted a 15% baseline tariff on most U.S. imports from the bloc as part of what it described as a political agreement with the White House.
The bloc said it anticipates that some products will be excluded from the 15% baseline tariff because the U.S. views them as strategic goods. Aircraft and components are expected to be on a list of goods that won't face additional U.S. tariffs when further details are announced, EU officials have said, and they are still jockeying to secure more carve-outs for products including chemicals, generic drugs and even wine and liquor.
European companies are making their case, too. Volkswagen Chief Executive Oliver Blume said last week that the company would continue talks with the Trump administration about support for a multibillion-dollar investment package that might help compensate for higher tariffs. BMW said it would carry on pushing for an export-rebate program, under which exporters are typically able to claw back tariffs paid or other taxes when they export products from U.S. factories.
Efforts to secure exemptions are only a part of a push to keep negotiations with the U.S. open, amid anxiety in foreign capitals about further swings in Trump's trade policy. Trump has said that steep new tariffs on pharmaceuticals could be set as high as 250%.
South Korea, which struck a trade pact with Washington last week, is already preparing for further talks, Finance Minister Koo Yun-cheol told legislators on Wednesday.
Japan's top trade negotiator, Ryosei Akazawa, flew to the U.S. on Tuesday to continue discussions with U.S. officials. Among Tokyo's questions is when exactly an agreed reduction in U.S. auto tariffs will take effect, he said.
Smaller nations also are still working to improve their deals. Cambodia is hoping for carve-outs on its 19% tariff for several sectors, including garments, footwear and luggage, said the country's chief negotiator in the trade talks with the U.S., Deputy Prime Minister Sun Chanthol.
'19% is not, I don't think, set in stone, because we have the ability to go back and carve out certain sectors," he said. He added that many other countries are seeking similar exemptions.
'I feel sorry for them," he said of the U.S. negotiating team. 'There are so many countries to talk to."
Write to Jason Douglas at [e-mail], Kim Mackrael at [e-mail] and Gavin Bade at [e-mail]