Trump Trade 2.0: Renewed 122 Tariffs on the Horizon, Critical Minerals, USMCA Negotiations

Taiwan Tariffs Officially Reduced, Negotiations Continue

On May 27, the Department of Commerce and USTR released a notice implementing tariff modifications agreed to under the January 15 agreement with Taiwan. The deal caps Section 232 duties on Taiwanese automobile parts, timber, lumber, and wood products at a total rate of no more than 15 percent, bringing Taiwan's treatment in line with the EU, Japan, and South Korea. The modifications are effective retroactively for qualifying goods entered for consumption on or after May 1, 2026.

In exchange, Taiwan committed to eliminate or reduce 99 percent of tariff barriers on U.S. goods, resolve longstanding non-tariff barriers affecting U.S. autos, medical devices, and pharmaceuticals, and purchase over $84 billion in U.S. goods through 2029. Taiwanese semiconductor and technology companies also committed to invest at least $250 billion in U.S. production capacity, backed by an equal amount in government credit guarantees.

Taiwan Vice Premier Cheng Li-chiun stated on May 28 that the U.S. has no concrete timetable for levying Section 232 tariffs on semiconductors, but that preferential terms for Taiwanese chipmakers investing in the U.S. have already been locked in under the January MOU. Under those terms, Taiwanese firms building new U.S. fabrication facilities can import up to 2.5 times their planned capacity without paying Section 232 duties during the construction period, with a lower preferential rate for above-quota imports.

Critical Mineral Deals

On May 26, the U.S. and India signed a bilateral Critical Minerals Framework covering mining, processing, recycling, and investment in critical minerals and rare earths. The agreement was finalized in New Delhi between Secretary of State Marco Rubio and Indian External Affairs Minister S. Jaishankar during Rubio's four-day visit to India. "Vibrant innovation economies such as ours cannot afford to leave the foundational materials of these industries vulnerable to single-source monopolies," Rubio said at the signing. The deal builds on groundwork laid at the February Critical Minerals Ministerial in Washington and India's membership in the U.S.-led Pax Silica initiative.

The same day, the U.S., Japan, India, and Australia unveiled the Quad Critical Minerals Initiative Framework. The initiative commits the four nations to mobilize up to $20 billion in combined government and private sector funding to boost cooperation in the investment, mining, processing, and recycling of critical minerals essential to civilian and defense manufacturing. The framework prioritizes projects with a "Quad nexus," meaning those located in member countries, operated by Quad-headquartered firms, or supplying Quad markets, and equips them with loans, guarantees, equity stakes, and offtake arrangements. The Quad joint statement also committed to investing in critical minerals recycling technologies, building off of a U.S. Defense Department investment in a gallium refinery in Australia. China currently produces nearly all of the world's gallium, a metal essential to semiconductors.

USMCA Negotiations

On May 28, U.S. and Mexican negotiators began the first formal bilateral round of talks to revamp the United States-Mexico-Canada Agreement ahead of the July 1 joint review deadline. Deputy USTR Ambassador Jeff Goettman led the U.S. delegation to Mexico City for the two-day session, which focused on economic security and rules of origin for key industrial goods. USTR announced two additional rounds: June 16-17 in Washington, covering agriculture and "a level playing field," and a third round in Mexico City during the week of July 20. Canada has been excluded from all three rounds.

Automotive rules of origin have emerged as a key element to be addressed. Reporting indicates that the U.S. proposed rules that would require a U.S.-specific minimum level of content for cars and trucks built in Mexico, a significant departure from the current USMCA framework. At the Council on Foreign Relations event on May 27, USTR Greer said he wanted to "strengthen North American rules of origin" and that negotiations would focus on "rules of origin in a way that enhances U.S. content in these goods."

The broader U.S.-Canada trade relationship remains strained. Greer reiterated that tariffs on both Mexico and Canada will remain in place as long as the trade deficit persists, noting the deficit with USMCA partners has decreased 24 percent since April 2025 but that the decline is not sufficient to warrant lifting tariffs. No bilateral negotiating schedule with Canada has been announced.

USTR Greer floats possibility of renewed Section 122 Tariffs

The Administration's 10 percent global tariff imposed under Section 122 is set to expire on July 24. However, U.S. Trade Representative Jamieson Greer suggested on May 27 at an event hosted by the Council on Foreign Relations that the Administration may reimpose the tariff after it lapses. "When you look at that statute, it says they expire," Greer said. "But it doesn't say when you can redo it." Greer added that he could not imagine Congress intended to limit the President's authority under Section 122 to a single use per term, though he acknowledged "some tension" between the statute's temporary nature and potential reuse.

The remarks come as the Administration's legal defense of the existing Section 122 tariffs continues to play out in the courts. On May 7, the U.S. Court of International Trade ruled that the tariffs were unlawful, finding that the Administration failed to identify "large and serious" balance-of-payments deficits as required by the statute. The CIT's injunction was limited to the three plaintiffs found to have standing: the State of Washington, Burlap & Barrel, and Basic Fun. The Administration appealed, and on May 12 the U.S. Court of Appeals for the Federal Circuit issued a temporary stay of the CIT's order, meaning the tariffs remain in effect for all importers while the appeal proceeds.

Meanwhile, USTR is conducting two Section 301 investigations targeting forced labor practices and overcapacity practices. Greer stated investigations remain the primary vehicle for replacement tariffs and that USTR is "highly focused" on concluding them in time for new tariffs to be imposed before or shortly after the Section 122 tariffs expire.

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.