State of U.S. Tariff Policy and What’s Next: Focus on EU and Switzerland

It has been a very turbulent four months since 2 April “Liberation Day” when President Trump, invoking emergency powers, announced new “reciprocal” country-specific tariff rates on 57 United States trading partners and a 10% “universal” tariff on all imports from all other U.S. trading partners (except Canada and Mexico). With a new deadline of 1 August for the imposition of these tariffs and despite new developments on almost a daily basis, this alert summarizes the state of play on tariffs, trade investigations and retaliatory measures, with a particular focus on Switzerland and the European Union (EU).

“Reciprocal” Tariffs: As of today, a 10% “baseline” tariff is in place on all goods being imported into the U.S. from its trading partners, with narrow exceptions. Meanwhile, higher country-specific tariffs are paused until 1 August to allow for negotiations between the targeted countries and the U.S. As part of these negotiations, President Trump has sent letters to several trading partners, including the EU, providing for different (often higher) tariff rates compared to those announced on 2 April. These letters are not legally operative documents and appear to instead be a negotiating strategy to pursue the best offers from their recipients.

Below are the announced and threatened tariff rates of the EU and Switzerland:

Some sectors are exempt from the Reciprocal tariffs because they already face Section 232 tariffs (steel, aluminum, autos) or are subject to ongoing Section 232 investigations. Further information on Section 232 tariffs and investigations is provided below.

“Framework” Trade Deals: After announcing the pause in implementation on the reciprocal tariffs, President Trump announced plans to sign “trade deals” with partners. These deals are not comprehensive free trade agreements (FTAs). So far, they are limited to “framework agreements” primarily imposing requirements on U.S. trading partners on the topics of tariff and non-tariff barriers, digital trade provisions, purchases and other issues. To date, four trade deals have been announced. However, details of some of these have not yet been publicly disclosed.

• United Kingdom: On 8 May, the U.S and U.K. announced a framework deal. The deal provides that the U.K. will continue to pay a 10% baseline tariff but will be given alternative treatment for certain Section 232 tariffs. This agreement has not yet been fully implemented by the U.S., including with respect to the promised quotas for steel and aluminum.
• China: On 12 May, following a tit-for-tat that raised the reciprocal tariff rate to 125% between the countries, the U.S. and China announced a framework deal. This deal lowered current reciprocal tariffs (and Chinese retaliation) to 10% until August 12. China otherwise continues to face Section 232, 20% fentanyl and Section 301 tariffs. On 10 June, the two sides announced additional details with a “handshake agreement” made in London. As part of this agreement, the U.S. has promised additional concessions on the export of certain sensitive products to China and restarting Chinese student visas, while China has agreed to ease certain export restrictions on critical minerals. We do not expect the text of the “handshake” agreement to be released.
• Vietnam: On 2 July, President Trump posted that Vietnam agreed to a 20% baseline tariff and 40% on transshipped goods. No further details have been published.
• Indonesia: On 15 July, President Trump announced that the U.S. had reached a trade deal with Indonesia, with Indonesia agreeing to remove tariffs on any imports from the U.S. and pay a 19% tariff on Indonesia exports. President Trump also stated that Indonesia had committed to buying “$15 Billion Dollars in U.S. Energy, $4.5 Billion Dollars in American Agricultural Products, and 50 Boeing Jets, many of them 777’s.” Trump also stated that Indonesian copper was of particular importance, which may signal that the U.S.-Indonesia agreement includes an exemption from future 232 tariffs on copper.

Section 232 Investigations and Tariffs: Section 232 investigations consider the effects of imports on “national security.” Not all investigations result in tariffs, but the Trump administration has signaled increased use of 232 investigations to enact tariffs in specific sectors.

Below are the public Section 232 investigations and actions:

* Dates indicate the statutory deadline for the Secretary of Commerce to submit his report to the President with recommendations.

Administration officials have suggested that at least four or more investigations are ready to be initiated. Expect investigations to be conducted quicker than the 270-day statutory limit.

Section 301 Investigations and Tariffs: Section 301 investigations are intended to address unfair foreign practices affecting U.S. commerce. They may be used to respond to unjustifiable, unreasonable or discriminatory foreign government practices that burden or restrict U.S. commerce. The following Section 301 investigations have been resolved or initiated during the second Trump administration:

• Chinese Shipbuilding: Following an investigation into Chinese shipbuilding practices, the U.S. has announced it will impose fees on Chinese-owned, -operated and/or -built vessels arriving in U.S. ports, starting 14 October 2025.
• Brazilian Trade Issues: On 15 July, the U.S. Trade Representative (USTR) announced that it had initiated an investigation related to “Brazil’s acts, policies, and practices related to digital trade and electronic payment services; unfair, preferential tariffs; anticorruption enforcement; intellectual property protection; ethanol market access; and illegal deforestation.” These topics are very heavily drawn from USTR’s annual National Trade Estimate (NTE) report.

In addition, it is worth noting that, in 2018, the first Trump administration used Section 301 to enact substantial tariffs on China related to technology and intellectual property (IP) theft. The Biden administration maintained and increased these tariffs, which are the subject of an ongoing challenge in U.S. courts.

Further, during the waning days of the prior Trump administration and the early days of the Biden administration, a number of Section 301 investigations were terminated or suspended prior to the imposition of tariffs, pursuant to an agreement with the investigated government addressing the act, policies or practices of concern. Investigations addressing Vietnam’s timber trade,¹  Vietnam’s currency policy,²  digital services taxes (DSTs) maintained by Austria, France, Italy, Spain, the U.K., Turkey and India,³  and the large civil aircraft dispute with the EU were resolved in this manner.⁴  The “monitoring” provision in the Section 301 statute leaves open the possibility that the current administration could identify a flaw in compliance or reject the agreement made by the Biden administration and renew the tariff threat provided by the original investigation.

Litigation: There are several ongoing cases in U.S. courts challenging President Trump’s authority to impose the universal 10% and country-specific reciprocal tariffs, as well as an ongoing challenge to the first Trump administration’s use of Section 301 to impose duties on Chinese goods.

• U.S. Court of International Trade Challenge: On 28 May, the U.S. Court of International Trade (CIT) found that the Trump administration had exceeded its emergency powers authority when it imposed the universal and reciprocal tariffs.⁵  CIT issued a nationwide injunction against collecting further tariffs, which has been stayed.[6] The U.S. Federal Circuit Court of Appeals will hear the appeal on 31 July. It is expected that this case will be appealed all the way to the U.S. Supreme Court and that the government will continue collecting tariffs until it is fully adjudicated.
• U.S. District Court Challenge: On 29 May, the U.S. DC District Court found that the President’s emergency powers did not give any authority to impose the universal and reciprocal tariffs. The court imposed an injunction as to the two named plaintiffs, which is stayed. The U.S. DC Circuit Court of appeals will hear oral arguments on the appeal on 30 September. It is expected that this case will be appealed all the way to the U.S. Supreme Court and that the government will continue collecting tariffs until it is fully adjudicated.
• 301 Litigation: Plaintiffs are awaiting a decision by Federal Circuit to challenge of first Trump administration’s use of Section 301 to impose List 3 and List 4A duties on Chinese goods.

Potential Retaliation: To date, only China and Canada have adopted retaliatory measures against the U.S. tariffs. On 13 July, European Commission (EC) President von der Leyen announced that the application of tariffs to €21 billion of annual U.S. exports to the EU that were due to come into effect on 15 July would be suspended until 6 August while negotiations with the U.S. were ongoing. Meanwhile, the EC is consulting on a second package of tariffs on a further €95 billion of imports from the U.S. Reports suggest that the EU is also starting to consider retaliatory measures against U.S. services and measures on procurement.

Brazil has enacted the Economic Reciprocity Law that provides the authority to adopt retaliatory measures against the U.S. tariffs. The Decree implementing the Law was adopted this week. However, to date, Brazil has not initiated the process to adopt retaliatory measures.

Additionally, several World Trade Organization (WTO) Members have reserved the right to retaliate under the Agreement on Safeguards against some of the U.S. Section 232 tariffs.

What’s Next

• Reports have emerged that Switzerland and the U.S. are nearing an agreement on a “framework” deal, similar to the agreement with the U.K. The timing and specifics of the deal have not yet been published.
• 31 July: The U.S. Federal Circuit Court of Appeals will hear the challenge to Trump’s invocation of his emergency powers to enact the reciprocal and baseline tariffs.
• 1 August: Deadline for the imposition of the reciprocal country-specific tariffs. President Trump has also stated that the Section 232 copper tariffs would be imposed on this date. Tariffs on pharmaceuticals and semiconductors also could be announced on 1 August.
• 6 August: Comments are due on the Section 232 investigations related to Polysilicon and Drones. As noted above, there are likely more 232 investigations to come. The current suspension of EU retaliatory measures expires unless further renewed.
• 14 October: The United States will start imposing fees on Chinese-owned, -operated and/or -built vessels arriving in U.S. ports.

The situation remains extremely fluid. Trade policies and tariffs may change at any moment. We remain at your disposal in navigating these developing events.

This summary is up-to-date through Monday, 21 July, 14:00 CET time.

^{1 USTR, Section 301 Investigation, Vietnam Timber, https://ustr.gov/issue-areas/enforcement/section-301-investigations/section-301-vietnam-timber.}

^{2 USTR, Section 301 Investigation, Vietnam Currency, https://ustr.gov/issue-areas/enforcement/section-301-investigations/section-301-vietnam-currency.}

^{3 USTR, Section 301 Investigation, Various Countries Digital Services Taxes, https://ustr.gov/issue-areas/enforcement/section-301-investigations/section-301-digital-services-taxes. USTR separately terminated digital services taxes investigations against Brazil, the Czech Republic, the European Union, and Indonesia because these countries were found to have not adopted or implemented DSTs during the period of investigation. 86 Fed. Reg. 16,828 (Mar. 31, 2021).}

^{4 USTR, Section 301 Investigation, EU Large Civil Aircraft, https://ustr.gov/issue-areas/enforcement/section-301-investigations/section-301-large-civil-aircraft.}

^{5 This ruling also found that President Trump had exceeded his emergency powers in enacting the Fentanyl tariffs against Canada, Mexico and China, and issued a nationwide injunction. This injunction is also stayed pending appeal.}