New Landscape in Foreign Trade: Rising Trade Barriers in Europe and the US, Global Trade Frictions Intensify
“The EU has doubled steel tariffs to 50% and the US is tightening HTS enforcement from June 2, raising trade barriers. In contrast, China and Russia signed a joint statement backing WTO multilateralism, creating new openings for mechanical, agricultural, and logistics trade.”
I. EU Doubles Steel Import Tariffs to 50%, Quotas Cut by 47%
On May 19, the European Parliament passed a historic steel protection measure with 606 votes in favor, 16 against, and 39 abstentions. The bill is expected to be formally approved by the European Council shortly and take effect on July 1, 2026.
Key provisions of the new regulation are as follows:
•Duty-free import quotas: Cut by 47% from 2024 levels to an absolute ceiling of 18.3 million tons per year.
•Penalty tariff doubled: Steel imports exceeding the quota will face a tariff increase from the current 25% to 50%; steel products not covered by quotas will also be subject to 50% tariffs.
•"Melted and poured" traceability: The regulation introduces strict "melting and pouring" rules to determine the origin of steel and prevent tariff circumvention.
European media generally believe this measure aims to protect the region's steel industry from so-called "overcapacity" shocks, with China as the primary target. This tightening also reflects coordination between the EU and the US on trade protection policies.
★Foreign Trade Tip:
For steel and steel products, metal processing, and downstream automotive/infrastructure supporting enterprises, the cost of accessing the European market will rise significantly. Exporters are advised to immediately assess the tariff impact, consider transit routes, and actively explore alternative markets in Asia-Pacific or the Middle East, using RCEP preferential agreements to reduce overall export tax burdens.
II. US Customs Enforces New Clearance Rules from June 2: Strict Matching of HTS Codes and Importer Qualifications
On May 18, 2026, US Customs and Border Protection (CBP) announced via CSMS that a new error code "F865" will be added to the Automated Commercial Environment (ACE) system error dictionary effective June 2, 2026. System testing was deployed on May 19.
The core requirement of the new regulation is that the HTS tariff code declared by the importer must be consistent with the importer's own business qualifications, various regulatory filings, and licenses. Private use or misuse of product codes beyond the importer's authority is strictly prohibited. If the information does not match, the system will directly trigger an F865 error and reject the customs clearance request, and the goods will not be able to clear customs. This policy achieves automatic pre-clearance interception at the clearance stage, meaning compliance requirements have shifted from "accurate declaration" to "entity matching."
★ Foreign Trade Tip:
For exporters and freight forwarders shipping to the US, it is essential to strengthen communication with US importers before shipment and verify whether the scope of their import qualifications covers the HTS codes being declared. Exporters are advised to check the US importer's filing information in advance to avoid cargo delays or return due to mismatched qualifications.
III. China and Russia Sign Joint Statement: Jointly Defending the WTO Multilateral Trading System
On May 20, China's Ministry of Commerce and Russia's Ministry of Economic Development formally signed a "Joint Statement on Supporting Open Trade and Multilateralism."
The joint statement emphasizes that both sides reaffirm their support for a rules-based, non-discriminatory, fair, open, inclusive, equal, sustainable, and transparent multilateral trading system with the WTO at its core, and are committed to advancing bilateral economic and trade cooperation and promoting trade and investment growth. Both sides pledge to jointly resist unilateral coercive measures and trade protectionism, and oppose trade restrictions imposed under the guise of national security, environmental protection, or climate change. Both sides particularly stress the need to restore an effective WTO dispute settlement mechanism and jointly oppose unilateral sanctions, secondary sanctions, and discriminatory application of tariffs and other restrictive measures.
Both China and Russia also agree to strengthen coordination within the G20 and other multilateral frameworks, and jointly maintain the stability and smooth operation of global industrial and supply chains.
★ Foreign Trade Tip:
For enterprises in mechanical and electrical products, agricultural products, and cross-border logistics, China-Russia trade is entering a period of institutional benefits. Companies should focus on improved customs clearance efficiency at border ports, use cross-border RMB settlement systems to reduce exchange rate risks, and proactively engage in areas such as mechanical and electrical products, agricultural trade, and cross-border logistics, leveraging bilateral economic and trade cooperation to deepen industrial layout in the Far East.
IV. Global Market Snapshot
Federal Reserve Leadership Change: Kevin Warsh Sworn In
On May 22 local time, Kevin Warsh officially took the oath of office as Chairman of the US Federal Reserve, succeeding Jerome Powell. US President Trump presided over the inauguration ceremony. Warsh, nominated by Trump, advocates lowering interest rates and reducing the Fed's balance sheet. His subsequent monetary policy direction is attracting close attention from global markets.
Turkey's Triple Crisis: Dumping US Treasuries to Support Currency
Facing a plunging lira and capital market turmoil, Turkey's central bank urgently sold approximately 6 billionin foreign exchange to stabilize the exchange rate. By the end of March 2026,Turkey′sholdings of US Treasury bondshad plummeted from 6 billion in foreign exchange to stabilize the exchangerate.By the end of March 2026,Turkey′sholdings of US Treasury bonds had plummeted from 16 billion in February to just $1.8 billion, almost completely liquidated, in an effort to support its currency following the outbreak of the Iran war. The financial market turmoil triggered by the political crisis caused the Turkish stock market to trigger circuit breakers during the week, signaling severe challenges to the country's financial system.
Indonesia's Central Bank Unexpectedly Hikes Rates by 50 Basis Points
On May 20, Bank Indonesia raised its benchmark seven-day reverse repurchase rate by 50 basis points to 5.25%, exceeding market expectations. Most economists had predicted a hike of only 25 basis points. This is Bank Indonesia's first rate hike since April 2024, and the 50-basis-point hike is the first since November 2022. The direct driver of the hike is sustained pressure on the Indonesian rupiah — the day before the rate decision, the rupiah fell to a historic low around 17,700 against the US dollar, affected by heightened tensions in the Middle East, capital outflows, and increased concerns about fiscal conditions. Following the announcement, the rupiah stabilized somewhat, but markets remain focused on future policy direction.
UK Reaches Trade Agreement with GCC
The United Kingdom has reached a trade agreement with the Gulf Cooperation Council (GCC), which is expected to boost bilateral trade by about 20% in the long term. This agreement will further consolidate UK-Middle East economic and trade ties and bring new variables to the regional trade landscape.
Massive Capital Outflow from Indian Stock Market
Since the beginning of this year, global investors have withdrawn approximately $23 billion from the Indian stock market, intensifying depreciation pressure on the rupee. This trend reflects tightening global risk appetite toward emerging markets and poses challenges to India's external financing environment.
Germany Releases High-Tech Agenda Roadmap
Germany has released a high-tech agenda roadmap with the goal of having artificial intelligence contribute 10% of the country's economic output by 2030. This strategic layout will drive Germany's competitiveness in the digital economy.
V. Domestic News Briefs
State Council Studies Promotion of Unified National Market
Li Qiang chaired a State Council executive meeting to study work related to promoting the construction of a unified national market, further optimizing the domestic business environment and resource allocation efficiency.
Refined Oil Prices Raised
Effective from 24:00 on May 21, domestic gasoline and diesel prices increased by 75 yuan and 70 yuan per ton, respectively, influenced by international crude oil price fluctuations.
APEC Trade Ministers' Meeting Opens in Suzhou
The 2026 APEC Trade Ministers' Meeting opened today in Suzhou, focusing on digital cooperation and the green economy, providing a new dialogue platform for Asia-Pacific regional economic and trade cooperation.
BOE Clarifies Cooperation Rumors with NVIDIA
BOE Technology Group issued an announcement clarifying that the company has not yet engaged in business cooperation with NVIDIA, reminding investors to pay attention to factual basis and avoid blindly following trends.
GAC Issues 20 Support Measures for Guangdong-Hong Kong-Macao Greater Bay Area
The General Administration of Customs issued 20 measures to support the construction of the Guangdong-Hong Kong-Macao Greater Bay Area, further enhancing the level of trade facilitation within the region.
VI. Foreign Trade Tips
Based on the latest developments this week, foreign trade enterprises can focus on the following directions:
•Steel and related product exports to Europe: Closely follow the final approval timeline of the European Council, arrange shipping schedules in advance or find transit routes, and reassess pricing models for exports to Europe.
•Enterprises exporting to the US: Before the new rules take effect on June 2, confirm with US importers whether their business qualifications cover the HTS codes declared, to avoid customs clearance obstacles.
•Russia-related business: Leverage the institutional dividends of the China-Russia joint statement to actively deploy exports of mechanical and electrical products and agricultural products, and expand cross-border RMB settlement.
•Southeast Asian markets: Monitor exchange rate trends following Indonesia's rate hike, assess the impact on import/export costs and order stability, and arrange risk hedging in advance.
