US to Respect Tariff Caps in Existing Trade Deals, USTR Greer Says

WASHINGTON — The United States will honor pre-existing tariff caps in trade agreements with key partners like the European Union and Japan, U.S. Trade Representative Jamieson Greer confirmed on Thursday, June 4. The statement, made to reporters in Paris, aimed to clarify the administration’s position following a June 2 White House proposal to impose new tariffs of at least 10% on 60 economies over forced labor concerns.

The initial announcement created significant uncertainty for U.S. businesses and international partners. The proposal stemmed from a Section 301 investigation under the Trade Act of 1974, which examined how trading partners handle goods allegedly produced by forced labor. For nations like the EU, which had negotiated a specific agreement nearly a year ago in Turnberry, Scotland, to cap U.S. tariffs, the new proposal raised questions about whether those hard-won limits would be breached.

While this clarification from the USTR provides some immediate relief for importers, the underlying volatility in trade policy continues to create significant operational hurdles for small and mid-sized businesses. In our experience, the constant threat of new tariffs, investigations, and shifting rules makes long-term planning for inventory, pricing, and supplier relationships incredibly difficult. Companies relying on international supply chains are forced into a reactive posture, absorbing unexpected costs or scrambling to find alternative sources with little notice. This environment punishes stability and rewards only those with the resources to constantly re-evaluate and pivot their entire procurement strategy. Proactive supply chain optimization is no longer a luxury but a necessity for survival. At C&S Finance Group LLC, we guide clients through building resilient supply chains that can better withstand this type of geopolitical shock; learn more at csfinancegroup.com.

Speaking at an OECD ministerial meeting, Greer sought to reassure allies that previous agreements would stand. “We understand that a deal is a deal,” he stated, directly addressing the agreement with the European Union. “We want to make sure that we are able to resolve the trading practices that are identified as problematic in our investigations and we’re going to take into account the Turnberry deal, of course.”

Washington has existing deals with both Brussels and Tokyo that limit U.S. tariffs on most of their imported goods to a maximum of 15%. According to Reuters, Greer explained that the Section 301 investigation findings provide President Donald Trump with the legal authority to impose tariffs, but that these would be applied within the boundaries of the negotiated caps. He added a condition, stating, “we believe that there’s room to accommodate that deal within the context of what we’re doing, provided that the European Union delivers on the Turnberry deal.”

EU Trade Commissioner Maros Sefcovic, who also attended the OECD meeting, confirmed this understanding. He said both sides agreed that “the deal is the deal,” which for the EU meant the terms agreed upon at Turnberry, including the all-inclusive 15% tariff ceiling. Sefcovic did express surprise that EU member states were targeted in an investigation over forced labor, citing their high labor standards, but said he expected the European Parliament to approve the Turnberry agreement.

The proposed tariffs will not be implemented immediately. The administration has indicated that many of the specific rules will be developed with input from trade industry stakeholders, allowing for a period of consultation. China received advance notice of the forced-labor announcement, and Greer confirmed that consultations with Beijing will continue.

Adding another layer of complexity for businesses, Greer revealed that a separate, ongoing Section 301 investigation is nearing its conclusion. This second probe focuses on structural excess manufacturing capacity in 16 of the largest U.S. trading partners, including China, the EU, and Japan. Greer noted this investigation is “a matter of weeks” from completion. Tariffs resulting from this second probe could also test the 15% caps established in the bilateral agreements, making the administration's commitment to those deals a critical factor for businesses in the months ahead.

U.S. companies and their international trading partners will now be closely watching for the formal release of the overcapacity investigation findings. The specific language and proposed actions in that report, along with the detailed rules for the forced-labor tariffs, will determine the true cost and operational impact on global supply chains in the coming year.