President Donald Trump recently signed an executive order offering some tariff exemptions to trading partners who agree to new deals on industrial exports such as nickel, gold, pharmaceutical compounds, and chemicals. This move is part of his broader strategy to reorder the global trading system and reduce US trade deficits.
Here’s a breakdown of the key points:
Zero-Tariff Categories
The executive order identifies more than 45 categories of goods that will now have a zero-tariff import rate from “aligned partners”—countries that have reached specific agreements with the US. The exempted items include a wide range of industrial and pharmaceutical products:
- Metals and Minerals: Various forms of nickel and graphite, which are crucial for manufacturing stainless steel and electric vehicle batteries.
- Pharmaceuticals: Compounds used in generic drugs, such as the anesthetic lidocaine, and reagents used in medical diagnostic tests. The exemptions apply to non-patented articles for use in pharmaceuticals.
- Precious Metals: Different types of gold imports, including powders, leaf, and bullion. This is particularly significant for countries like Switzerland, which has been facing a 39% tariff and has not yet secured a trade deal with the US.
- Other Industrial Goods: The order also allows for the removal of tariffs on items like neodymium magnets and light-emitting diodes (LEDs).
Conditions and Exceptions
The new exemptions are not across the board. The executive order specifies that the US Trade Representative, the Commerce Department, and Customs can waive tariffs on covered imports only after a country has a “reciprocal” trade deal in place. This streamlines the process without needing a new executive order from the president for each waiver.
The cuts primarily cover items that cannot be produced in the United States or are not produced in sufficient quantities to meet domestic demand. The order also creates new carveouts for certain agricultural products, aircraft, and aircraft parts.
However, the order also eliminates previous tariff exemptions for certain plastics and polysilicon, a key component of solar panels. This indicates a strategic shift in which sectors are prioritized for trade concessions. This new order aligns US tariffs with existing framework deals, including those with major allies such as Japan and the European Union, signaling a targeted approach to trade relations.
