Trump Trade 2.0: Trade Talks and Investigations Continue

New Section 232 Investigations: Pharmaceuticals, Semiconductors, and Critical Minerals

The U.S. Department of Commerce (Commerce) has launched Section 232 investigations into the national security implications of imports in three key industries: pharmaceuticals, semiconductors, and critical minerals. 

The investigation into pharmaceuticals is based on concerns over the United States’ reliance on foreign nations for drug and medical countermeasures production, and whether that could undermine national security in times of crisis. The semiconductor probe is driven by fears of dependence on foreign suppliers for critical tech components essential for defense and other vital sectors. The critical minerals investigation aims to address vulnerabilities in the supply of materials crucial for technologies such as batteries, electronics, and renewable energy systems. 

The pharmaceutical and semiconductor investigations have been opened for public comment by May 7. The Federal Register notice for the critical minerals investigation has not been published. Commerce has 270 days to complete its investigation, though it remains likely that it will publish its findings well in advance. These investigations could result in new tariffs or other trade measures aimed at reducing reliance on imports and strengthening domestic production in these strategic areas.

Countries Come to the Table

Below is an overview of countries of interest and their current negotiation status:

• European Union (Individualized reciprocal rate - 20%): The EU, which has paused its retaliation against U.S. steel and aluminum tariffs, has proposed a “zero-for-zero” approach (eliminating tariffs on both sides for industrial goods) as a basis for talks. The U.S. still maintains a 10% universal tariff and 25% levies on cars, auto parts, steel, and aluminum, and the EU is preparing countermeasures should negotiations stall.
• During Italian Prime Minister Giorgia Meloni’s visit to Washington, President Trump reiterated his interest in reaching a trade agreement with the European Union, stating that he believes a deal is possible and desirable if both sides engage in good faith. His comments come as the EU continues to press the U.S. to engage seriously in tariff negotiations during the 90-day suspension window that extends until mid-July.
• United Kingdom (Individualized reciprocal rate - 10%): Vice President JD Vance expressed optimism about the prospects of a strong trade agreement between the U.S. and the U.K., citing a "cultural affinity" and President Donald Trump's ties to Britain. Vance highlighted the deep relationship between the two countries, with Trump’s admiration for the U.K. and its leaders, and noted ongoing efforts to negotiate with the U.K. government.
• Japan (Individualized reciprocal rate - 24%): Japanese Finance Minister Katsunobu Kato voiced strong concerns about the global economic impact of President Trump’s tariffs, warning they could harm Japan’s recovery by fueling market volatility and trade uncertainty. Speaking ahead of meetings in Washington with Treasury Secretary Scott Bessent, Kato emphasized the importance of stable currency markets and said he would “closely communicate” with the U.S. on currency issues, stressing Japan and the U.S. have long agreed that excessive volatility and disorderly moves are undesirable.
• Argentina (Individualized reciprocal rate - 10%): Argentina and the United States advanced trade negotiations, with Argentina expressing readiness to sign a reciprocal tariff agreement proposed by the U.S. President Javier Milei affirmed his government's commitment to the deal, emphasizing its mutual benefits and Argentina's alignment with U.S. interests in the region.
• India (Individualized reciprocal rate - 26%): India and the United States are actively negotiating a comprehensive bilateral trade agreement, aiming to increase bilateral trade to $500 billion by 2030. Recent discussions include efforts to reduce tariffs on over half of $23 billion worth of U.S. imports, contingent on relief from U.S. reciprocal tariffs.
• Indonesia (Individualized reciprocal rate - 32%): ​Indonesia is actively engaging in trade negotiations with the United States to address a significant trade surplus and avoid potential tariffs. The Indonesian government has proposed increasing imports of U.S. goods, including up to $19 billion in energy products such as crude oil and liquefied petroleum gas, as part of a broader strategy to balance trade.
• Malaysia (Individualized reciprocal rate - 24%): A Malaysian delegation, including the trade and finance ministers, is scheduled to visit Washington by the end of April 2025 to initiate discussions aimed at mitigating the impact of these tariffs on key sectors such as semiconductors and electrical and electronics products, which constitute 60% of Malaysia's exports to the U.S.
• Taiwan (Individualized reciprocal rate - 32%): The initial phase of tariff discussions has proceeded smoothly, with Taiwan proposing a zero-tariff regime and committing to increased U.S. investments and purchases, including a $100 billion investment in U.S.-based semiconductor production. Additionally, a bipartisan delegation of U.S. lawmakers visited Taiwan to reinforce support amid trade tensions, emphasizing cooperation in defense and economic resilience.
• Thailand (Individualized reciprocal rate - 36%): A high-level Thai delegation, led by Finance Minister Pichai Chunhavajira and Commerce Minister Pichai Naripthaphan, is scheduled to meet with U.S. officials today, to discuss strategies for mitigating the effects of a proposed 36% reciprocal tariff on Thai exports.
• Vietnam (Individualized reciprocal rate - 46%): ​Vietnam and the United States have initiated trade negotiations following the U.S. decision to pause the imposition of a 46% reciprocal tariff on Vietnamese imports. In preparation for these talks, Vietnam has instructed its companies to tighten controls over the origin of goods and materials to prevent fraud and avoid potential tariffs.

What’s the Latest on China?

President Trump has indicated that a resolution could be reached within three to four weeks, though Beijing has not confirmed this timeline and has urged the U.S. to cease applying maximum pressure, emphasizing the need for dialogue based on equality and mutual benefit. Negotiations will take time, and great uncertainty continues to exist. The U.S. has imposed a 145% tariff on Chinese goods, while China has retaliated with a 125% tariff on U.S. exports. To address concerns over supply chain disruptions, the U.S. has exempted certain electronics, including smartphones, computers, and semiconductors, from the new tariffs. Additionally, China has appointed a new top trade negotiator, signaling a potential shift in its approach to the ongoing trade dispute.

In addition, the Trump Administration is considering forming a high-level task force, potentially including top economic and trade officials, to address supply chain disruptions from escalating tariffs on Chinese goods. Members of the group are set to include Vice President JD Vance, Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, National Economic Council Director Kevin Hassett, and U.S. Trade Representative Jamieson Greer. While no final decision has been made, the group would focus on mitigating impacts to critical sectors like medicines, semiconductors, and electronics if talks with Beijing stall.

Several Lawsuits Filed to Combat Tariffs

​In recent legal developments, U.S. businesses and state governments have filed lawsuits challenging the constitutionality and economic impact of newly imposed tariffs. California initiated a lawsuit against the Trump Administration, arguing that the 10% tariff on all imports, including a 145% tariff on China, violates constitutional limits on executive authority and could harm the state's economy. Additionally, five small businesses, including a wine importer and a fishing gear shop, filed a case in the U.S. Court of International Trade, contesting the use of the International Emergency Economic Powers Act (IEEPA) to impose tariffs without congressional approval. Other lawsuits have been filed in other venues as well, and the Department of Justice has requested that the actions be consolidated.  

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Are you concerned about the impacts of the outlined trade issues? Please contact Sarah Helton, Michael Best Strategies’ Trade Practice Lead at sarah.helton@michaelbest.com for assistance.