Yesterday the United States marked progress toward honoring the tariff commitments made to the European Union by implementing elements of the parties' July 2025 Framework Agreement, by adjusting U.S. import tariffs applied to certain products of the European Union.
The key changes, as detailed in a Federal Register notice issued by the U.S. Department of Commerce and the Office of the U.S. Trade Representative, include:
- Modification of duties applied to automobiles and automobile parts pursuant to Section 232 of the Trade Expansion Act of 1962 (Section 232);
- Exemption of aircraft and aircraft parts from certain Section 232 duties and reciprocal tariffs, and;
- Exemption of generic pharmaceuticals, their ingredients, and chemical precursors, as well as unavailable natural resources (including cork and certain metals), from reciprocal tariffs.
The specific HTSUS subheadings exempted from reciprocal tariffs are listed in Annex I.
The changes to the HTSUS, as outlined in Annex II of the notice, take effect on September 25, 2025, and apply retroactively to goods entered for consumption or withdrawn from warehouse for consumption as follows:
- Products subject to Section 232 duties on automobiles and parts: Retroactive to entries on or after 12:01 a.m. EDT on August 1, 2025.
- Aircraft and aircraft parts and new products exempt from reciprocal tariffs: Retroactive to entries on or after 12:01 a.m. EDT on September 1, 2025.
Background
The Framework on an Agreement on Reciprocal, Fair, and Balanced Trade announced on July 21, 2025, outlined several tariff commitments for both parties. Among the positions taken by the United States were the modification or removal of the reciprocal tariff rate applied to products of the European Union, and adjustment of the Section 232 tariff rate applied to subject products from the EU. In addition, earlier this month President Trump issued Executive Order 14346, modifying the list of goods exempt from reciprocal tariffs, and signaling that countries with aligned trade agreements may qualify for targeted exemptions.
While implementation of some tariff commitments made by the United States in the Framework Agreement remains to be seen (namely, treatment of products subject to future Section 232 duties such as pharmaceutical products, lumber, and semiconductors), the changes effectuated by this notice are in line with several of the "key terms" of the Framework Agreement and with the updates to Annex II of Executive Order 14346.
Key Provisions
Similar to the methodology for calculating reciprocal tariffs applied to goods originating from the European Union, the specific Section 232 duty rate for automobiles and auto parts will depend on the regular customs (Column 1 (MFN)) duty rate for the specific classification. For goods with a Column 1 duty rate equal to or lower than 15%, the Section 232 duty rate would be 15% minus the Column 1 duty rate. If the Column 1 duty rate is higher than 15%, then the importer would pay the Column 1 duty rate, and no additional Section 232 duties would be owed.
Additionally, products of the European Union that fall under the WTO Agreement on Trade in Civil Aircraft (e.g., civil aircraft; civil aircraft engines; other parts, components, or sub-assemblies of civil aircraft; and ground flight simulators) will be exempt from IEEPA Reciprocal Tariffs and Section 232 tariffs imposed on steel, aluminum, and their derivatives.
Notably, unlike the Section 232 duty exemptions on aircraft and aircraft parts, the application of Section 232 tariffs on steel, aluminum, and copper to all other subject goods currently remains unchanged. Although the United States committed to "consider the possibility to cooperate on ring-fencing their respective domestic markets from overcapacity," and potentially explore "tariff-rate quota solutions," in Executive Order 14346 the President also signaled his reluctance to any major reductions in Section 232 duties writ large. Given the lack of concessions, this indicates that negotiations on metal-related Section 232 duties may not be an option for most trading partners with framework agreements in progress, at least for the foreseeable future.
Themes of Trade Deals and Indicators for Future Framework Agreements
Most of the implemented measures are consistent with the Administration's treatment of these products as laid out in the U.S.-Japan trade deal. As the United States continues to pursue additional trade agreements, it is reasonable to anticipate that future agreements may follow structural patterns similar to those observed in agreements announced thus far. These typically include a standardized baseline tariff, complemented by sector-specific tariff reductions, which are granted in exchange for enhanced access to foreign markets for U.S. exports.
The specific provisions of each agreement remain subject to ongoing negotiations between the United States and its respective trading partners. Thus far, however, the technical specifications have aligned with the initial declarations of agreements in principle, while also elaborating on liberalization measures within sectors deemed strategically significant to each bilateral or multilateral trade relationship.
Tariff Strategy and Legal Insight
The attorneys, licensed customs brokers, compliance professionals, economists, and trade specialists of Cassidy Levy Kent regularly assist companies in evaluating their supply chains to ensure compliant market access and adjust for tariff-related developments, both mitigating burdens and taking advantage of opportunities. Cassidy Levy Kent also leverages its thorough understanding of relevant legal regimes to advise governments on tariff policy and procedures.
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