US trade policy update: Tariff relief, legal challenges, and shifting global partnerships

US and China agree $60bn tariff reduction deal

On Monday, 28 September, China and the United States agreed to reduce tariffs on $60 billion worth of bilateral trade, marking a significant step forward in easing trade tensions. Under the newly established US-China Board of Trade, each country has designated $30 billion of non-sensitive goods to receive more favourable tariff treatment.

According to US Trade Representative Jamieson Greer, the agreement will improve market access for approximately 30% of US exports to China. The tariff reductions were among the key outcomes of the recent summit between President's Xi Jinping and Donald Trump in Washington, which also resulted in a two-month extension of the existing trade truce through 10 January.

China's tariff concessions will apply to a broad range of US products, including agricultural goods such as corn, wheat, sorghum, meat and dairy products, as well as seafood, wood products, cosmetics and medical devices. In return, the United States will lower tariffs on various Chinese imports, including small household appliances, tableware, home textiles, toys and seasonal decorations.

Both governments stated that the extension of the trade truce will provide businesses with a more stable and predictable trading environment while allowing negotiators additional time to address remaining trade and investment issues. Regular discussions are expected to continue on market access, investment opportunities, policy transparency and business concerns.

US trade court questions basis for President Trump’s new global tariffs

The US Court of International Trade is scrutinising the legal and factual basis of President Trump's latest global tariff measures, which were introduced on imports from 60 trading partners, including the EU, over concerns that those countries are not doing enough to address forced labour. 

The tariffs are being challenged by four small businesses and 25 Democratic-led states, which argue that the measures exceed the President's statutory authority and effectively seek to revive the broad tariff powers previously struck down by the US Supreme Court.

During the hearing, the plaintiffs contended that the administration failed to meet legal requirements by imposing tariffs without conducting country-specific assessments or demonstrating why each measure was justified. They contrasted this approach with President Trump's first-term tariffs, which were supported by detailed country-by-country analyses.

The US government defended the measures, arguing that the US Trade Representative conducted a comprehensive evaluation of forced labour in global supply chains and was not required to establish with absolute certainty that such practices burden US commerce. 

A ruling is expected in the coming weeks. The court could either invalidate the tariffs or require the administration to revisit its investigation and provide more detailed justification for the measures.

US issues zero-tariff exemptions for specialty pharmaceuticals under Section 232 measures

On 23 September, The US Department of Commerce's Bureau of Industry and Security (BIS) has published guidance implementing the zero-tariff carve-out for specialty pharmaceuticals. Proclamation 11020, issued on 2 April 2026 under section 232 of the Trade Expansion Act of 1962, imposed a 100% ad valorem tariff on certain patented pharmaceuticals and their ingredients. That tariff has applied since 31 July 2026 to companies listed in Annex III and applies from 29 September 2026 to all other companies. 

Generic products currently remain outside the scope of the tariffs. Under clause 3(d) of the Proclamation, certain specialty products qualify for a zero rate if they come from a jurisdiction with a current or forthcoming trade and security framework agreement, or if they meet an urgent US health need. 

The notice now sets out definitions for the following eligible categories, which also cover investigational drugs: 

• orphan drugs, but only where all approved indications are for rare diseases or conditions;
• nuclear medicines, plasma-derived therapies and fertility drugs;
• cell therapy products, gene therapy products and antibody drug conjugates;
• medical countermeasures against chemical, biological, radiological and nuclear (CBRN) threats; and
• animal health products, excluding animal devices and combination products.

Nineteen jurisdictions are confirmed as eligible, including the European Union, the United Kingdom, Switzerland and Liechtenstein, Japan, the Republic of Korea, India and Taiwan. Products from other jurisdictions can still qualify if the importer obtains Commerce approval on urgent health need grounds. Each must include the HTSUS classification, product details, origin and importer information, and a supporting rationale, such as whether alternative therapies exist and how many US patients use the product. Commerce will decide each request individually, and US Customs and Border Protection will then apply the relief at entry summary filing.  

The notice also makes technical corrections to the HTSUS, which apply to goods entered on or after 29 September 2026.  The definition of "pharmaceutical articles" is narrowed to finished products, active pharmaceutical ingredients (APIs) and the key starting materials for those APIs, which expressly excludes inactive ingredients and excipients.  Unpatented animal health products are now treated as generic. 

Businesses that export to the US, particularly from the EU and the UK, should check product categories, classifications and patent status against the revised definitions. This is especially important for orphan drugs, where a single non-orphan indication rules out relief.

Becton Dickinson commits $19bn to US manufacturing in exchange for tariff relief

On 5 October, President Trump announced on Truth Social that Becton Dickinson (BD) plans to expand its US manufacturing footprint, linking the move to the Administration's proposed medical device tariffs, which are expected to take effect by year-end. Reports indicate the company has committed to invest $19 billion in the US, including $3 billion in manufacturing, as part of an arrangement that includes tariff relief.

The agreement supports the Trump administration’s broader strategy of encouraging healthcare manufacturers to expand US-based production through the threat of tariffs Under the deal, BD's tariff relief will depend on the final scope of Section 232 measures and the company's ability to meet agreed investment milestones.

As part of its commitment, BD plans to increase US production by approximately 5 billion essential medical consumables annually, raising the proportion of products supplied domestically to about 80%. The company also intends to manufacture all needles used in the US from American-made steel.

The announcement expands on BD's previously disclosed $3 billion manufacturing investment plan, including more than $1 billion earmarked for Nebraska. Earlier this year, the company also announced a $110 million investment in its Columbus, Nebraska facility to increase prefillable syringe and cannula production, creating approximately 120 jobs.

Analysts view the agreement as a positive signal for the medical technology sector, suggesting it could pave the way for similar investment and tariff-relief arrangements across the industry.

EU defends Canada partnership proposal amid US tariff threats

The European Commission has clarified that its proposal to make Canada an "associate member" of the European Union is intended to strengthen transatlantic cooperation rather than challenge the United States, following warnings from President Trump of possible trade retaliation. 

On 17 September, EU trade spokesperson Olof Gill said the initiative is aimed at reinforcing ties between Europe and Canada:

"As our president made clear yesterday, the proposed strengthening of our partnership with Canada is not against anyone else, but for our common strength."

European Commission President, Ursula von der Leyen unveiled the proposal during a speech to the European Parliament in Strasbourg - with Canadian Prime Minister, Mark Carney, in attendance – describing the move as an opportunity to deepen cooperation. 

The proposal has drawn up a sharp response from President Trump, who dismissed the idea as "laughable" and warned that the United States could impose significant tariffs on Europe if the initiative were viewed as a hostile act. He suggested that Washington could consider "very serious" or "very heavy" tariffs, and potentially restrict trade, should concerns arise over the intent behind the proposal. 

The initiative come as Canada looks to strengthen its economic and political ties with Europe amid increasing strain in its trade relationship with the United States. Prime Minister Carney is expected to use his visit to Brussels and Strasbourg to further deepen EU-Canada cooperation ahead of the EU-Canada summit scheduled to take place in Montreal at the end of October. 

President Trump announces removal of US tariffs on Irish whiskey

Separately, President Trump announced that the United States will remove tariffs on Irish whiskey. Speaking at the Irish Open prize-giving ceremony in Doonbeg, he said the issue had been discussed with Taoiseach Micheál Martin and Irish Open champion Shane Lowry.

Referring to longstanding calls from Irish industry stakeholders, President Trump told the audience:

"Everyone has been asking me whether I could remove the tariffs on Irish whiskey. On behalf of the United States of America, I am going to take the tariffs off Irish whiskey."

The move is expected to be welcomed by Irish whiskey producers and exporters, for whom the US remains one of the sector's most important export markets.

The announcement follows the removal of US tariffs on Scotch whisky on 24 July, under an agreement secured by the UK government alongside distillers on both sides of the Atlantic after King Charles and Queen Camilla's state visit to the US in April 2026. The deal restored tariff-free trade for Scotch whisky in the US and US bourbon in the UK, while also allowing US bourbon casks to enter the UK without tariffs.

The United States initially imposed a 10% tariff on Scotch whisky in April 2025, with the levy due to rise to 25% on single malts earlier this year before being scrapped under the agreement.

Looking ahead: What’s next for US trade relations?

US trade policy remains largely on hold ahead of the midterm elections, with several major tariff investigations still pending. The Administration continues to consider Section 232 tariffs on industrial machinery and medical devices, while action under the Section 301 excess-capacity investigation has yet to materialise despite expectations of movement following the Trump-Xi summit. Section 338, which underpins current measures against Canada, also remains under review as regulators seek public input on its future application.

US-Canada trade tensions remain elevated following Canada's counter-tariffs and the subsequent US response, including revised Section 338 tariffs, import bans on selected products and restrictions on Canadian access to federal procurement opportunities. In contrast, relations with Mexico continue to progress positively, with speculation that a bilateral agreement could be announced before the midterms. 

The recent Trump-Xi summit delivered few concrete outcomes beyond an extension of the current trade truce to January 2027. Meanwhile, new Russia sanctions legislation has expanded US tariff authority, creating the potential for significant duties on Russian goods and on imports from countries heavily reliant on Russian energy. 

Overall, with Congress adjourned and elections approaching, most major trade issues remain in a holding pattern, with significant policy decisions likely deferred until later in the year.

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