The week has wrought the first major legal attack on US president Donald Trump’s tariffs.
There’s progress towards finalising wide-ranging exemptions to the EU’s Carbon Border Adjustment Mechanism (CBAM). And could the UK be about to sign a controversial trade deal with the Gulf States?
The big picture: A whirlwind week in tariff news, as Trump’s trade measures faced their first major legal challenge.
In what seemed like a potential reprieve for international business and growth forecasts, a US federal court ruled that president Trump does not have the authority to impose most of his proposed tariffs yesterday.
The US Court of International Trade held that Trump’s attempts to impose tariffs using the International Emergency Economic Powers Act (IEEPA) 1977 was not lawful. The panel of judges said that the IEEPA could not be read as “authorising the president to impose whatever tariff rates he deems desirable”.
The ruling gave the administration ten days to rescind the tariffs. However, a federal appeals court today (30 May) stayed this order while the administration appeals the decision, enabling Trump to continue collecting import taxes.
Ahead of the decision White House press secretary, Karoline Leavitt, criticised judges for attempting to “usurp the authority of president Trump”. She added that:
“America cannot function if president Trump, or any other president, for that matter, has their sensitive diplomatic or trade negotiations railroaded by activist judges.”
Jeffrey Schwab, senior counsel at the Liberty Justice Center, one of the organisations that brought the case against the government, said that the successful appeal is “merely a procedural step” ahead of a further hearings.
In a statement emailed to the Daily Update, Schwab added that:
“We are confident the Federal Circuit will ultimately deny the government's motion shortly thereafter, recognizing the irreparable harm these tariffs inflict on our clients.”
The case addresses tariffs which were imposed under the IEEPA, including the 10% baseline tariff on all imported goods, 25% rates applied to Mexico and Canada, as well as the remaining 30% duty set to be charged on Chinese imported goods.
Tariffs imposed Chinese imports, and on steel and aluminium, under US Section 301 and 232, can remain in place.
Good week/Bad week: A positive week for many European firms, who could no longer find themselves subject to reporting requirements and payments under the EU’s CBAM.
This follows the European Council’s announcement that it will adopt the measures proposed earlier this year as part of the EU’s ‘omnibus package’ of regulatory changes, reducing the impact of environmental and social legislation.
Up to 90% of firms could be exempted under proposals to only require firms importing over 50 tonnes of CBAM-affected goods to adhere to reporting requirements.
Whether the legal challenges to Trump’s tariffs succeeds, the de minimis tax loophole will remain closed, which is bad news for Temu.
The Chinese e-commerce giant’s parent company, PDD holdings, reported a 47% drop in profits this week, which chairman Chen Lei attributed to a “radical change in external policy environments such as tariffs”.
Both Temu and rival company Shein relied on the US waiving import duties on parcels worth less than US$800. However, this practice ended earlier this month.
Following US-China trade talks held in Geneva, parcels are subject to a 54% duty rate.
How’s stat: 10 Association of Southeast Asian Nations (Asean) countries, six Gulf nations and a Chinese delegation. That was the attendee list for a gala dinner held this week in Kuala Lumpur, following a meeting of both ASEAN and the GCC, the FT reports.
Chinese premier, Li Qiang, was also in attendance, with a message on the potential of those assembled to boost trade between their nations, particularly in light the US’ revanchist trade policy under Trump.
“Amid rising protectionism and unilateralism, we can unleash enormous market opportunities when we continue to open wider,” Li told guests.
The week in customs: This week, HMRC issued new guidance on the Customs Declaration Service (CDS), ahead of the next release of the service in June. The department also provided new advice on the process for clearing ‘short shipments’ from temporary storage.
These updates were shared in this week’s member-exclusive Customs Corner, with commentary from our customs practice director Anna Doherty.
Quote of the week: “Negotiations on a trade deal with the GCC are ongoing. Our priority is to get the right deal, and we’re not setting a deadline.”
A Department for Business and Trade spokesperson on a £1.6bn trade deal the UK is negotiating with the Gulf Cooperation Council (GCC), which includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.
The Guardian reports that the deal is likely to benefit car manufacturers and financial services, although farmers and consumers may be unhappy with the agreement’s poultry provisions, in light of lower animal welfare standards.
Already prompting outcry is the GCC’s poor human rights records, with trade unions and human rights organisations already criticising the absence of modern slavery, human rights and environmental content.
“Our view on trade deals is consistent – the government should not agree deals with countries that abuse human rights and workers’ rights, and violate international law. It was right for the government to suspend trade talks with Israel,” said Paul Nowak, the Trade Union Council’s general secretary.
What else we covered this week: Members can also gain Doherty’s insights on new simplified processes for moving goods between Northern Ireland and Great Britian, shared earlier this month at our Customs Special Interest Group.
Amid tariff uncertainty, we’re still offering tips on how you can minimise duties. This week expert Garima Srivastava explained how valuing your goods correctly can prevent unnecessary charges.
In light of the spate of recent trade deals, we also weighed up which country was most likely to next to sign an agreement with the UK.
True facts: Foreign secretary, David Lammy, visited the Arctic this week, coinciding with a government announcement that almost £1m will be committed to two projects designed to support better security in the polar region.
The investment follows increased Russian activity in ever-expanding Arctic waters, with Putin’s shadow fleet of ships designed to evade EU sanctions using the new routes.
UK Funding worth £400,000 will support climate research jointly conducted by British and Norwegian scientists in the region, while the Alan Turing Institute received £554,000 to boost Arctic monitoring capabilities.
Lammy described the region as “an increasingly important frontier for geopolitical competition and trade”.
“We cannot bolster the UK’s defence and deliver the Plan for Change without greater security in the Arctic.
“This is a region where Russia’s shadow fleet operates, threatening critical infrastructure like undersea cables to the UK and Europe, and helping fund Russia’s aggressive activity.”
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