A Cruel Summer? Tariff Deals are Slow to Materialize, Offering Little Guidance for U.S. Businesses

As summer begins, tariff news remains unpredictable.  The chief takeaway for most small U.S. businesses is that tariff and supply chain strategies are likely to remain difficult to predict through the summer months. During the continued uncertainty, small companies may wish to devote resources negotiating or re-negotiating key provisions in supplier or customer agreements, namely provisions covering sourcing, timing and quantity of deliveries, quality standards, approvals, termination rights and renewal triggers, shipping terms, and pricing. 

Background

The U.S. started out the month of May with much fanfare surrounding trade deals with the UK and China. The Trump Administration championed these deals as leveling the playing field and promised more details to come. The administration also signaled that the agreements with the UK and China would serve as templates for other trade deals to be struck in quick succession around the world.  However, the White House has not released new Fact Sheets offering more specifics about how the UK and China deals will be implemented to date.  Instead, the month of May closes out with three slower-moving developments, covered below.

UK and China Preliminary Details

Before discussing the most recent developments, it is important to summarize the preliminary details of the UK and China trade deals. Highlights of each are as follows:

The U.S.-UK Economic Prosperity Deal (EPD):

• The UK has agreed to remove a 20% tariff on a quote of 13,000 metric tons of U.S. beef and 1.4 billion liters of U.S. ethanol. In return, the U.S. will lower the tariff on 13,000 metric tons of beef from the UK.
• The U.S. reduces the tariff to 10% on 100,000 automobiles from the UK and their accompanying auto parts. 
• The U.S. will give UK steel and aluminum exports the Most Favored Nations duty rates. 
• Both the U.S. and UK agree to continue to negotiate “significant preferential treatment” on pharmaceuticals and pharmaceutical ingredients. These negotiations include improving the “overall environment” for pharmaceutical companies operating in the UK. 

The U.S.-China Economic and Trade Meeting

• The U.S. has agreed to modify the ad valorem duty rate on Chinese goods by 115% for a period of 90 days with a baseline ad valorem duty rate of 10% to remain in place. 
• The U.S. tariff existing prior to April 2, 2025, including those under Sections 301 and 232, will remain in place. 
• China has agreed to modify the ad valorem duty rate on U.S.  goods by 115% for a period of 90 days with an ad valorem duty rate of 10% to remain in place. 
• China has agreed to remove all countermeasures tariff measures taken against the U.S. since April 2, 2025.
• Both the U.S. and China agreed to ongoing dialogue to produce sustainable, long-term, and mutually beneficial economic and trade relationship.

Recent Developments

Against this background, there are several key updates.  First, the administration has threatened, then announced a delay until July of, 50% tariffs on the EU, to allow time to reach a deal with the economic bloc.  The EU is a key trading partner of the U.S. Current talking points include both sides taking tariffs back to zero for industrial goods, and the EU purchasing more energy supplies from the U.S.  Timing and specifics of any such trade deal between the U.S. and the EU remain uncertain as of this date. 

Second, the president has escalated a public spat with large American retailers including Amazon, Apple, and Wal-Mart for their stance on tariffs.  President Trump has publicly rebuked retailers who stated that they would add a tariff surcharge line in the prices displayed to consumers.  For example, he has threatened to impose a new 25% tariff on smartphones if Apple does not “eat the tariffs” on its products  instead of  passing them along to U.S. consumers.   

Third, the administration faces legal action from a broad coalition of small U.S. companies fighting its “Liberation Day” tariffs in the International Trade Court as an overreach of power (on the basis that the trade deficits do not constitute an “emergency” under the International Emergency Economic Powers Act).  The most recent development is that the International Trade Court held its first round of arguments on the merits of these “emergency powers” tariff policies in mid-May.  It should be noted that it is unclear how the administration would treat an adverse ruling by the International Trade Court. 

It is important to note that conversations are presumably ongoing between the respective parties for any of the aforementioned trade deals before they reach final form. However, the common theme appears to be that the administration is seeking a mutual reduction of duties in its negotiations with other countries that may benefit the agricultural, manufacturing, and pharmaceutical industries.  As such, the most prudent approach for businesses in these industries is to fortify their contractual positions relating to tariffs while keeping a close eye on the most recent developments during these summer months.