Tariff Developments: Greenland Framework, Canada–China Warning, and EU–India Deal

Background

With continued developments in US trade policy, please see this week’s key updates in our latest round-up on tariffs, global tax and beyond.

While the Supreme Court decision on the IEEPA tariffs has yet to be announced, this still remains the primary focus of the coming weeks with a decision expected in the short term. Additionally, we await the outcome of recent Section 232 investigations on pharmaceuticals and the aerospace industry to understand the impact which this will have on businesses in the EU. 

The week in summary 

US retracts EU tariffs & signals Greenland deal

Last week, President Trump had pledged to impose significant import duties on eight US allies in retaliation for their backing of Greenland’s continued autonomy under Denmark.

On 21 January, The US President has reversed course on his warning of broad tariffs targeting several European nations, saying a loosely defined “framework” agreement concerning Greenland is now being discussed after what he called a “very productive” meeting with the Nato secretary general.

In a post on Truth Social, Trump stated that Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands and Finland would not face a 10% tariff beginning 1 February, despite his earlier threat to raise the rate to 25% in June.

The announcement eased immediate fears in European capitals. Over the weekend, senior officials had commented on the tariff proposal as “unacceptable” and warned that Europe would not be coerced. Economists, meanwhile, had cautioned that such a move could destabilise transatlantic trade at a politically sensitive moment.

US President threatens sweeping tariffs over Canada–China trade talks

President Trump has warned that he will levy a 100% tariff on Canadian imports if Ottawa forges ahead with a trade agreement with China, saying such a move would put the country at severe risk. President Trump also cautioned Canadian Prime Minister Mark Carney that pursuing closer economic ties with Beijing would “endanger” Canada’s future, writing on Truth Social:

“China will eat Canada alive, completely devour it, including the destruction of their businesses, social fabric, and general way of life. If Canada makes a deal with China, it will immediately be hit with a 100% Tariff against all Canadian goods and products coming into the U.S.A.”

Prime Minister Carney, during a recent trip to China, described the country as a “reliable and predictable partner,” and at the World Economic Forum in Davos encouraged European leaders to welcome investment from the world’s second‑largest economy.

President Trump also accused Beijing of attempting to use Canada as a workaround for existing US trade barriers, stating:

“If Governor Carney thinks he is going to make Canada a ‘Drop Off Port’ for China to send goods and products into the United States, he is sorely mistaken.”

While further comments from Prime Minister Carney has dampened any prospect of a trade deal with China, it is clear that the US will take a keen interest in any trade deals which it’s closest geographical neighbours look to strike.

US targets autos, pharma and lumber in new 25% tariff on South Korea

US President Donald Trump has announced a sharp increase in tariffs on South Korean imports, raising duties to 25% after accusing Seoul of failing to uphold the terms of a trade agreement reached last year.

In a post on social media, President Trump said levies on South Korean goods would rise from 15% and apply to a wide range of products, including automobiles, lumber, pharmaceuticals and “all other Reciprocal TARIFFS”.

According to the president, South Korean legislators have dragged their feet on approving the agreement, while “we have acted swiftly to reduce our TARIFFS in line with the Transaction agreed to”. Seoul responded by saying it had received no formal notification from Washington about the tariff hike and requested urgent consultations with the United States to discuss the move.

Other tariff updates

India and the European Union have concluded a landmark trade agreement after years of negotiations, both sides confirmed on Tuesday, 27 January, marking a major step as each seeks to diversify economic ties amid uncertainty in relations with the US.

According to the EU, the pact is expected to double its exports to India by 2032, driven by the removal or reduction of tariffs on 96.6% of traded goods by value. European companies are projected to save €4 billion in duties as a result.

India’s trade ministry noted that the EU will phase out tariffs on 99.5% of goods traded over a seven‑year period. Tariffs will be reduced to zero on a wide range of Indian products, including marine goods, leather, textiles, chemicals, rubber, base metals, and gems and jewellery. Indian Prime Minister Narendra Modi stated:

“Yesterday, a big agreement was signed between the European Union and India. People around the world are calling this the mother of all deals. This agreement will bring major opportunities for the 1.4 billion people of India and the millions of people in Europe,”

A key element of the accord is greater access to India’s large but traditionally protected market. Under the agreement, New Delhi will reduce tariffs on imported cars, from rates as high as 110%, to 10% within five years, according to the EU. This move is expected to significantly benefit European automakers such as Volkswagen, Renault, Mercedes‑Benz and BMW.  

We’re here to help you

Keeping up to date with US trade policies, trade agreements and new and existing tariff reviews which may lead to further tariff measures is crucial to assessing the risk to your supply chain and the impact these tariffs may have. Understanding your product portfolio and the impact that tariffs may have on your imports is an important first step. We are here to support your business with this analysis and navigating these choppy waters.