China and the US trade deal
On June 27, the PRC Ministry of Commerce (MOFCOM) announced that the PRC and the US reached a principled consensus on a trade agreement framework.
While the full details of the agreement are yet to be disclosed, the MOFCOM stated that it will review and approve applications for the export of eligible controlled items, likely including rare earth materials, in accordance with applicable laws. In return, the US will lift a series of restrictive measures previously imposed on China. Both sides have committed to maintaining close communication and leveraging the bilateral economic and trade consultation mechanism to enhance mutual understanding, reduce misperceptions and strengthen cooperation.
Impact: The details of this agreement are yet to be finalised. However, it is expected that, despite this development, China’s existing export control measures on rare earth materials will likely remain in effect.
China: upgraded trade deal with Southeast Asia
On May 21, the China-ASEAN Economic and Trade Ministers’ Extraordinary Meeting completed negotiations on the China-ASEAN Free Trade Area 3.0. The upgraded agreement includes nine new chapters, covering areas including the digital economy, green economy and supply chain connectivity.
Formal signing of the trade agreement is now expected before the end of 2025.
Impact: The agreement aims to promote trade and inclusive development by strengthening integration of standards and regulations. Specific measures supporting micro, small and medium-sized enterprises are now included. These focus on practical measures such as simplifying customs procedures and credit data exchange.
EU: new sanctions against Russia
On May 20, the European Commission adopted the 17th sanctions package against Russia. It includes anti-circumvention measures such as listing 189 additional vessels from Russia's shadow fleet. It adds 31 new companies supporting Russia's military and expands individual and entity listings.
New trade measures also restrict exports of dual-use and advanced technology items. These may include chemical precursors to energetic material and spare parts and components of high-precision Computer Numerical Control machine tools. An exemption for Japan's energy security is included.
The EC followed this on July 18, with the announcement of its 18th sanctions package, which includes:
- lowering the price cap for crude oil to USD 47.6 per barrel;
- disconnect additional Russian banks from the SWIFT;
- impose a formal ban on the Nord Stream 1 and 2 gas pipelines;
- impose sanctions on the Russian Direct Investment Fund;
- adopt new trade restrictions worth more than EUR 2.5 billion;
- impose additional measures to target the shadow fleet; and
- impose additional asset freezes.
Impact: Businesses should assess the impact of the additional measures on their global supply operations. This applies particularly to those involving dual-use goods, advanced technologies, or maritime logistics. The restrictions are effective immediately, with limited transitional provisions – such as those related to Japan’s energy security. Companies involved in affected sectors should act to ensure compliance and avoid penalties.
China and LATAM plans to promote trade
On May 13, China and Community of Latin American and Caribbean (CELAC) member states announced a Joint Action Plan for 2025-2027. Measures are aimed at encouraging economic cooperation via trade and investment and enhancing supply chains. It aims to improve collaboration, particularly in transport-related infrastructure and the energy sector.
The plan also aims to deepen agricultural trade and improve food security and promote bilateral industrial development in these areas . Its goal is to foster mutual benefit and sustainable development between China and CELAC countries.
UK and US Economic Prosperity Deal
On May 8, it was announced that the UK and US agreed on an Economic Prosperity Deal (EDP). The new deal focuses on tariffs and non-tariff barriers to trade, digital trade, economic security, and national security. The EPD has since been partially implemented by the US Administration with an Executive Order signed on 16 June 2025, following the announcement at the G7 Summit.
- the US has established an annual quota of 100,000 vehicles for UK automotive imports at a 10% tariff rate; related automotive parts will also be subject to a 10% tariff rate
- UK jet engine and other aerospace products imported into the US are zero rated
- the EDP sets out a mutual intention to reduce import tariff rates for UK- and US-originating steel and aluminium, automotive and aerospace goods; beef; ethanol; and pharmaceuticals; however, details on these are still pending
Impact: The EPD will offer comfort to businesses operating in the impacted sectors, including automotive, agricultural, and steel and aluminium. It presents a welcome promise to bring back economic stability during a time of increased geopolitical uncertainty.
See our briefing for more detail on the EPD.
EU: countermeasures to US tariffs
On May 8, the European Commission (EC) launched a consultation on potential countermeasures against US tariffs. This consultation covers US imports worth €95 billion and possible restrictions on EU exports of steel scrap and chemical products worth €4.4 billion.
In parallel, the EC will also launch a World Trade Order dispute against the US tariffs, on the so-called ‘reciprocal’ tariffs and tariffs on cars and car parts, by formally lodging a request for consultations.
Impact: The consultation closed on 10 June. The EC will now finalise its proposal and consult Member States. Businesses importing targeted products are likely to face increased costs and disruption is possible across their supply chains.
UK and Norway green industrial partnership
On May 8, the UK and Norway signed a memorandum of understanding (MoU) establishing a green industrial partnership. The new partnership aims to boost clean energy investments in the North Sea, including green hydrogen and offshore wind. It includes a commitment to identify collaboration opportunities for clean energy supply chains.
Impact: The MoU will have effect for an initial three year period. It will be renewed automatically unless either country notifies otherwise. Beyond the key focus area of carbon capture usage and storage, the MoU opens up prospects for hydrogen, offshore wind, sustainable energy systems, green supply chains and joint efforts on skills development.
EU and Singapore digital trade agreement
On May 7, the European Union and Singapore signed a Digital Trade Agreement (DTA). This builds on the EU-Singapore Digital Partnership and Digital Trade Principles agreed in 2023. The new agreement is the first to focus exclusively on digital trade. It aims to enhance consumer protection, facilitate trusted cross-border data flows, and provide legal certainty for businesses. The agreement applies to all types of trade by electronic means, with the specific exceptions of audio-visual and broadcasting services and governmental services or activities.
The DTA covers privacy, data protection, electronic transmission customs duties, electronic contract validity, and regulatory cooperation on digital trade. It seeks to prevent protectionism by prohibiting unjustified data localization measures.
Impact: As the first agreement of this kind, the DTA is expected to serve as a model. Future digital trade agreements will likely follow its example. The DTA provides a foundation for harmonizing digital trade principles between the EU and Singapore.
The EU and Singapore will now follow their respective ratification procedures, with the EU requiring the consent of the European Parliament.
UK and India trade deal
On 6 May, the Government announced the agreement of a trade deal between the UK and India, presenting new opportunities for global supply chains. The text of the agreement has not yet been drafted, but provisions will include:
- Indian tariffs reduced on a wide range of products, including whisky, aerospace, cosmetics, medical devices and electrical circuits and conductors – with reductions stated to cover 90% of tariff lines, with 85% of these to become tariff free within 10 years
- automotive tariffs on exports from the UK to India will reduce from over 100% to 10% under a quota
- tariffs on exports from India to the UK of clothes, footwear and food products to be “liberalised”
- Indian customs procedures to be improved to make it easier to supply to the Indian market and to reduce barriers to digital trade
Impact: The text of this agreement is yet to be finalized. Once in force, it will streamline UK access to the rapidly expanding Indian market. Indian businesses will benefit from greater access to UK markets, particularly in competitive sectors such as textiles and food processing. The UK Government states that in the long term the deal is expected to increase bilateral trade by £25.5 billion, UK GDP by £4.8 billion and wages by £2.2 billion each year.
UK: Sanctions update against Russia
On April 24, the UK announced new measures further restricting Russian access to goods, software and technology and imposing additional import bans. Importantly, the new measures prohibit the making available or transferring of ‘sectoral software’ to or for use in Russia. These prohibitions are overly broad, with ‘sectoral software’ being defined by reference to a long list of different types of business-use software. Businesses can continue the provision of such software and technology (as well as related technical assistance) until 23 July pursuant to pre-existing contracts, provided that a mandatory notification is made to UK authorities.
Certain chemicals, certain lithium and polyethylene products, all-terrain vehicles, certain electronics, machinery, plastics, and metals are also now banned for exports. Furthermore, additional prohibitions have been introduced on the importation of Russian-origin synthetic diamonds processed in third countries, as well as Russian helium.
Impact: The new measures are a significant enhancement of the pre-existing sanctions against Russia. They provide a strong indication that UK restrictions against Russia are here to stay, with the UK Government continuing to lead the way in relation to imposing innovative and targeted restrictions. Businesses will need to assess whether any of their products are impacted by the new prohibitions.
Please see our briefing for further details on the types of software caught by the UK’s new sanctions measures.
US: automotive tariffs and increased rates on steel and aluminium
The US administration has increased tariffs on imported automobiles and auto parts. Effective from April 3, 2025, automobiles from all countries will be subject to a 25% tariff. Automobiles under the USMCA will face a 25% tariff on non-US content. The 25% tariff on auto parts is effective from May 3, 2025.
Existing tariffs on imported steel and aluminium doubled from 25% to 50% on June 4, 2025. Imports from the UK were excluded from the new rate under the US-UK Economic Prosperity Deal. A 25% rate will apply until at least July 9, 2025.
On June 12, the United States Department of Commerce announced new procedures for tariff offsets. US manufacturers can apply for offsets on imported automobile parts based on their production volume in the United States.
Impact: The higher tariffs may lead to increased costs. Businesses may experience supply chain disruptions as manufacturers adjust and may seek to source more components domestically.
For more insight on the range of “Liberation Day” tariffs, see our briefing
China: guidance on exports of dual-use items
On June 16, China Customs issued the ‘Notice on Issues Related to Customs Questioning on Export Control of Dual-use Items’, which provides additional guidance concerning how export shipments potentially involving dual-use items but without valid licences would be scrutinised in practice.
Pursuant to the Notice, if China Customs is unable to determine whether a shipment contains dual-use items based on the submitted documentation, the exporter will be issued a Questioning Notice identifying the shipment in question. The exporter must respond within seven working days of receiving the notice, providing supplementary materials such as a declaration form, export supply contract, testing report and other relevant documents. China Customs will use this information to make a final determination regarding the shipment.
Impact: Exporters should ensure that shipments involving dual-use items are accompanied by valid export licences, as the absence of such licences may trigger additional scrutiny by China Customs and result in shipment delays.
China: Government targets illegal export of strategic minerals
On May 9, the People’s Republic of China launched a special operation to combat the illegal export of strategic minerals, including gallium, germanium, antimony, tungsten, and rare earths.
The operation, aims to prevent illegal outflows, safeguard national security, and ensure stable production and supply chains. Authorities will focus on source control, joint enforcement, and cracking down on typical evasion methods such as false declarations and concealment. Efforts will also include improving law enforcement capabilities, enhancing cross-departmental and cross-regional cooperation, and strengthening collaboration between Mainland China, Hong Kong, and Macao
The stated goal is to achieve national export control objectives and protect national security and development interests.
Impact: Enhanced regulatory scrutiny and stricter enforcement measures may mean exporters will face more rigorous compliance processes. This could lead to increased operational costs, and supply chain disruption. Businesses should apply for valid export licences before engaging in any export activities associated with these controlled strategic minerals.
South Korea: plan on circular use of batteries
On May 14, the Ministry of the Environment (MoE) announced plans for circular use of batteries, supporting the domestic supply chain. The goals include introducing a certification system for valuable metals from waste batteries. Measures include:
- support for domestic companies to obtain required certification
- promotion of renewable raw materials and reusable batteries in products such as electric agricultural machinery and energy storage systems
- expansion of the Producer Responsibility Recycling system from 2026, increasing battery recovery rates
- support for eco-friendly recycling technologies and development of high-purity recovery technologies
- support for recycling by-products from battery manufacturing. It also seeks to establish a battery life cycle history management system by 2027
Impact: The MoE intends to prepare a legal basis for the certification system. It will promote the enactment of relevant laws and establish a Battery Resource Circulation Cluster by late 2025.
Businesses will have to comply with new requirements and meet targets for using renewable raw materials. They will also have to provide information for the battery life cycle history management system. Enhanced safety standards for transportation and storage are planned.
China: new export controls on rare earth materials
On April 4, the PRC Government announced new export control measures on specific medium and heavy rare earth materials, citing national security concerns and non-proliferation goals. The measures prohibit the export of seven types of rare earth materials (samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium) and their respective intermediaries (oxides, alloys, compounds and mixtures) out of the PRC without a valid licence.
Impact: All export of these controlled materials without a valid licence are now prohibited. The new restrictions causes disruption to global industrial supply chains. The automotive sector is particularly affected as the materials are essential in the manufacture of both combustion engine and electric vehicles.
EU: European Defence Industry Programme
On June 23, the Council of the EU adopted a mandate for negotiations with the European Parliament on the European Defence Industry Programme (EDIP). The EDIP aims to enhance the EU's defence industry by boosting cooperation in defence procurement, improving and accelerating supply chain adaptability, facilitating cross-border cooperation, and increasing manufacturing capacities.
Impact: The EDIP will establish the first security-of-supply regime for defence, ensuring timely and reliable access to defence products and components during crises. The program will provide €1.5 billion in grants by 2027, with €1.2 billion for the EDIP and €300 million for Ukraine Support Instrument.
EU: Net-zero tech manufacturing rules
On May 23, the European Commission adopted four new pieces of secondary legislation and a communication under the Net-Zero Industry Act. These are aimed at accelerating decarbonisation technologies manufacturing in the EU.
These rules clarify which projects can benefit from the Act, including permitting, strategic project status, and non-price criteria. They aim to scale up net-zero technologies, enhance supply chain resilience, and promote sustainable manufacturing. The legislation includes criteria for renewable energy auctions, strategic project selection, and diversification of technology sources.
Impact: Businesses must consider new non-price criteria in public procurement and renewable energy auctions, including net-zero technology products and components that trigger the ’resilience’ criterion. Additionally, the administrative burden for manufacturing projects applying for "strategic project" status will be reduced.
The act defining sub-categories and components of net-zero technologies is currently under a 2-month review by the European Parliament and the Council.
EU: Cybersecurity database launched
On May 13, the ENISA (the EU Agency for Cybersecurity) launched an EU Vulnerability Database (EUVD). This is required by the NIS2 Directive and is intended to supply chain management for crucial sectors like energy, transport and health. It also aims to support the Cyber Resilience Act by protecting products with digital elements from cyber threats.
Impact: The EUVD will bring together publicly available cybersecurity vulnerability data relating to ICT products and services from multiple sources. There are three dashboard views; critical vulnerabilities, exploited vulnerabilities and EU coordinated vulnerabilities. These can be interrogated by both public and private sector organisations and by the public at large. Access to the vulnerabilities data will help businesses to identify and take appropriate mitigating measures.
EU: Microplastics reporting requirements
On April 16, the European Chemicals Agency (ECHA) published REACH restriction reporting requirements on microplastics, and the timeline for implementation. The REACH Regulation's microplastics restriction mandates annual reporting of synthetic polymer microparticles (SPM) emissions by manufacturers, industrial users, and suppliers. Reporting aims to monitor the effectiveness of use and disposal instructions and improve risk management. SPM are defined as solid polymers in particles or coatings, with specific size criteria. Exemptions include industrial uses, medicinal products, food additives, and diagnostic devices.
Impact: Businesses that produce or use synthetic polymer microparticles must comply with new reporting requirements, unless included in the listed exemptions. SPM suppliers will also be required to report. The first reporting deadline is 31 May 2026. It applies to manufacturers and industrial downstream users of SPM in the form of pellets, flakes, and powders. Businesses involved in other uses will be required to report from 2027.
Affected businesses should review the new requirements, assess their current operations, and have effective data collection and reporting processes in place. Failing to meet the reporting requirements could incur enforcement actions by Member States, such as fines and other penalties
UK: Government seeks views on measures to support steel supply chain
On June 25, the Department for Business and Trade launched a six-week call for evidence on further steel trade protections. It seeks views on trade measures to continue protection for the steel industry after the steel safeguard expires.
The current safeguard is designed to protect the domestic steel industry from sudden increases in imports and allow time for adaptation to new trading patterns. It covers 14 steel product categories with tariff rate quotas and imposes a 25% tariff on imports exceeding the quota volumes. The safeguard is due to expire in line with World Trade Organization rules in June 2026.
Impact: Industry stakeholders are being invited to input on:
- their current steel production, imports, and exports of steel products
- the effect of the current steel safeguard on domestic production and steel imports
- how the government should continue to support the steel industry from overcapacity
The call for evidence closes on 7 August 2025.
UK: forever chemicals inquiry
On April 10, the UK Parliament’s Environmental Audit Committee (EAC) launched an inquiry into the risks from PFAS, also known as forever chemicals. The inquiry will cover the uses, risks and benefits of PFAS. It will also review the current status of measures to address pollution from PFAS, comparing the UK approach with other regulatory regimes.
Impact: Businesses could face higher compliance costs if the inquiry leads to the development of tighter regulations. Potential restrictions or bans on certain PFAS may require businesses to adjust their manufacturing processes or find alternative materials.
PFAS are the subject of increasing regulation and litigation in other jurisdictions, including the US and EU. This development indicates that the UK government may follow a similar approach to regulating these chemicals.
US: funding of critical mineral projects streamlined
On June 30, the US Administration issued a memorandum to multiple government agencies involved in energy and critical mineral or material projects. The agencies are directed to streamline their funding application processes.
Agencies must update their policies within 60 days, and a common cross-agency application process must be developed within 180 days.
Impact: The stated aim is to support critical supply chains, and domestic energy infrastructure, through simplified processes. The development of a unified application would allow applicants to apply to related funding programs simultaneously.
US: rules affecting manufacturers and importers of PFAS updated
On May 13, the Environmental Protection Agency (EPA) amended the PFAS reporting required under the Toxic Substances Control Act (TSCA). The EPA is changing the data submissions periods to ensure adequate time for developing and testing the reporting application. The aim is to facilitate compliance and minimize technical issues.
The rule concerns businesses involved in the manufacture or import of PFAS. It may particularly affect construction, manufacturing, wholesale trade, retail trade, and waste management and remediation services.
Impact: Businesses that have manufactured or imported PFAS from 2011 to 2022 must report data to the EPA. This includes data on exposure and environmental and health effects. The data submission period begins on April 13, 2026, and ends on October 13, 2026. For small manufacturers reporting only as article importers, the end date is April 13, 2027.
Affected businesses should take steps to familiarize themselves with the reporting requirements and develop a data collection plan. This should include information on chemical identity, production, use, by-products, exposure, disposal, and health and environmental effects.
US: steel and aluminium tariffs inclusions process launched
On April 30, the Department of Commerce issued a rule updating the tariff inclusion process for derivative aluminium and steel products. These products, containing significant amounts of aluminium or steel, are subject to additional tariffs based on their metallic content. Examples include certain machinery, tools, and other manufactured goods.
The new rule details the submission, review, and decision phases for inclusion requests. This process includes specific submission windows, valid request requirements, and a public comment period.
The rule also removes the previous exclusion process for these metals.
The stated aim of this regulation is to ensure that import levels do not harm the domestic steel and aluminium industries.
Impact: Businesses can now submit inclusion requests during three two-week submission periods during each year, in May, September and January.
Import costs may increase on additional derivative products added to the scope of current steel and aluminium tariffs. For domestic manufacturers, the new rule may encourage investment in production capabilities and offer potential to increase their market share.
US: proposal to ban petroleum-based food dyes
On April 22, the Department of Health and Human Services and Food and Drug Administration (FDA) announced plans to phase all petroleum-based synthetic dyes from the food supply chain. This includes dyes like Citrus Red No. 2 and Orange B. The FDA plans to revoke authorization for these dyes within months. These dyes are linked to cancer in animals and hyperactivity in children.
The FDA plans to fast-track the approval of natural alternatives.
Impact: The Biden administration had already scheduled a January 2027 date to ban Red No. 3.
Several states have already earmarked 2027 as the date for a ban on some food dyes. A single federal directive is likely to be preferable to food and beverage manufacturers and consumers. A patchwork of differing state regulations could lead to confusion and increased costs.
The FDA want to bring in a federal ban on some dyes, including FD&C Red No. 40 and FD&C Yellow No. 5, by the end of 2026.
Manufacturers should use the transition period to identify and use natural colour additives.
Some other countries still allow certain uses of dyes like Red No. 3. Any manufacturer exporting to the US should also reformulate products.
US: plans to revive US shipbuilding
On April 9, the US Administration issued an executive order aimed at addressing a decline in shipbuilding in the United States. Included in the list of key actions outlined are:
- the creation of a comprehensive Maritime Action Plan (MAP)
- encouragement of private capital to invest in: commercial and defense shipbuilding, component supply chains, ship repair, marine transportation capabilities, and port infrastructure
- proposed tariffs on ship-to-shore cranes and other cargo handling equipment from the People’s Republic of China
- the establishment of a Maritime Security Trust fund to support MAP programs
Impact: Use of Defense Production Act authorities and encouragement of private capital investment could create new opportunities in the sector. However, proposed tariffs may lead to increased costs. Businesses may consider adjusting their supply chains or investing in domestic alternatives. Proposed new regulations and fees, such as a new harbour maintenance fee, could affect operational costs.
For more on Executive Orders, see our US Administration Legal Impact Hub
Further reading
EU: Toy Safety Regulation redefines product safety standards | Eversheds Sutherland
Global Sustainability & ESG Insights - May 2025 | Eversheds Sutherland
Changes to the UK Strategic Export Control List Take Effect
A Closer Look at the UK – US Economic Prosperity Deal | Eversheds Sutherland
UK’s New Trade Sanctions Against Russia | Eversheds Sutherland
Global – Financial services, US tariffs and retaliatory tariffs | Eversheds Sutherland
Dealing with the impact of tariffs on your supply chain | Eversheds Sutherland
Co-authored by Claire Webb, Uendi Barreti, Clare Johnston and Paola Paccani (Knowledge)
