TrumpIssuesDecreeGrantingTariffRelief to Nations with Trade Agreements with US

In a move aimed at reordering the global trading system and reducing US trade deficits, President Donald Trump signed an executive order on Monday. This order offers tariff exemptions for trading partners who strike deals on industrial exports, including nickel, gold, and other metals, as well as pharmaceutical compounds and chemicals.

The order creates new carveouts for some agricultural products, aircraft and parts, and non-patented articles for use in pharmaceuticals. It encompasses various types of gold imports, from powders and leaf to bullion, a key import from Switzerland, which has been struggling under US tariffs of 39% as it has not yet reached a trade deal.

The exemptions for countries with US trade deals are set to begin at 12:01am EDT/0401 GMT on Monday. However, no new specific countries have been publicly confirmed to have signed trade agreements with the USA exempting import duties on over 45 categories, including graphite and nickel. Existing exceptions apply to Canada and Mexico under USMCA, and the EU and USA are still negotiating a framework agreement not yet legally binding.

The tariff exemptions cover items that cannot be grown, mined, or naturally produced in the United States or produced in sufficient volume to meet domestic demand. Covered are compounds used in generic pharmaceuticals, including the anaesthetic lidocaine and reagents used in medical diagnostic tests.

The order brings US tariffs in line with its commitments in existing framework deals, including those with allies such as Japan and the European Union. It permits tariffs to be scrapped on natural graphite, neodymium magnets, light-emitting diodes (LEDs), and eliminates previous tariff exemptions on certain plastics and polysilicon, a key component of solar panels.

The order does not specify the duration of the tariff exemptions or the conditions for their renewal. It does not mention any specific countries or trading partners by name. In situations where a country has struck a "reciprocal" trade deal with the United States, the US Trade Representative, the Commerce Department, and customs can waive tariffs on covered imports without a new executive order from Trump.

The cuts are part of Trump's efforts to negotiate more favourable trade terms with other countries. The willingness to reduce tariffs depends on the "scope and economic value of a trading partner's commitments to the United States in its agreement on reciprocal trade" and US national interests.

The order is a significant step in Trump's ongoing efforts to reshape international trade relations. As negotiations continue, it remains to be seen how this executive order will impact the global trading system and US trade deficits.