By Eric Vandenbroeck and co-workers

Trump's Global Tariffs Come At a High Price

Hours before a deadline to strike trade deals, the White House released new levies for dozens of countries, which came into effect on 7 August.

 

Trump raises Canada tariff to 35% as US announces new levies on dozens of countries

In April, Donald Trump stunned the world by announcing sweeping new tariffs on imports.

Four months later, the US president is touting what he claims is a series of victories, having unveiled a handful of deals with trading partners and unilaterally imposed tariffs on others, all without the kind of massive disruptions to the financial markets that his spring attempt triggered.

At least, so far.

Having worked to reorder America's place in the global economy, Trump is now promising that the US will reap the benefits of new revenue, rekindle domestic manufacturing, and generate hundreds of billions of dollars in foreign investment and purchases.

Whether that turns out to be the case – and whether these actions will have negative consequences – is still very much in doubt.

What is clear so far, however, is that a tide that was (gently) turning on free trade, even ahead of Trump's second term, has become a wave crashing across the globe. And while it is reshaping the economic landscape, it hasn't left the kind of wreckage in its wake that some might have predicted - though of course there is often a lag before impact is fully seen.

What's more, for many countries, this has all served as a wake-up call - a need to remain alive to fresh alliances.

And so, while the short-term result might be - as Trump sees it - a victory, the impact on his overarching goals is far less certain. As are the long-term repercussions, which could well pan out rather differently for Trump, or America he leaves behind after his current term.

The UK was first off the blocks, perhaps inevitably. Trump's biggest bugbear is, after all, America's trade deficit, and trade is in broad balance when it comes to the UK.

While the baseline 10% applied to most British goods may initially have raised eyebrows, it provided a hint of what was to follow – and in the end came as a relief compared to the 15% rate applied to other trading partners such as the EU and Japan, with whom the US has larger deficits; $240bn and $70bn respectively last year alone.

And even those agreements came with strings attached. Those countries that weren't able to commit to, say, buying more American goods, often faced higher tariffs.

South Korea, Cambodia, Pakistan - as the list grew, and tariff letters were fired off elsewhere, the bulk of American imports are now covered by either an agreement or a presidential decree concluded with a curt "thank you for your attention to this matter".

US Treasury Secretary Scott Bessent, left, and US Trade Representative Jamieson Greer address a press conference in Rosenbad after the trade talks between the US and China concluded, in Stockholm, Sweden.

The agreement of tariff terms, however unpalatable, reduced much of the uncertainty (itself wielded by Trump as a powerful economic weapon) for better and for worse.

For the better, in the sense that businesses are able to make plans, investments, and hiring decisions that had been paused may now be resumed.

Most exporters know what size tariffs their goods face, and can figure out how to accommodate or pass on the cost to consumers.

That growing sense of certainty underpins a more relaxed mood in financial markets, with shares in the US notably gaining.

A container ship arrives at the port in Lianyungang, in China's eastern Jiangsu province.

As nations around the world grapple with higher tariffs, the fate of China’s economic future with the US remains uncertain, leaving one of the world’s most important trade relationships in limbo.

Despite a two-day meeting with Chinese and American negotiators this week in Stockholm, the two economic giants have yet to agree on a deal to prevent tariffs from soaring to significantly elevated levels.

While diplomats from both nations have portrayed the discussions in a positive light, US Treasury Secretary Scott Bessent stressed that any decision to extend a pause on tariffs will come from President Donald Trump.

Why their trade conversations are tricky: Unlike Canada, the European Union, Japan, and South Korea — all longtime American allies — the Sino-US relationship is adversarial.

The issues clogging the conversations extend far beyond financial arrangements. Both nations hold resources and technology viewed as crucial to their respective security and stability.

This includes China’s vast reservoirs of rare earth minerals, substances American firms need to build everything from electronic device, lighting and electric vehicles.

China’s manufacturing strength is also leaving a palpable impact on American consumers through higher costs and reduced merchandise, thanks to US tariffs already in place.

American companies, including tech giant Nvidia, hold chip technology that’s crucial in powering AI-related platforms.

Beyond economics, there’s also ego: Chinese leader Xi Jinping is balancing a fragile domestic economy, yet can’t risk any appearance of caving in to Trump and American demands.

And Trump is notoriously mercurial – just look at how he threatened Canada yesterday as soon as Ottawa announced plans to recognize a Palestinian state.

Still, both leaders seem keen on a face-to-face meeting.

How they tackle their deep divides on trade will reshape the global economic system.

 

Brazil faces the biggest tariffs, and it’s entirely political

Brazil initially thought it had got off lightly with a relatively mild 10% US tariff. Now, Trump has raised tariffs on Latin America’s largest economy to 50%.

Unlike with other countries, this move isn’t about trade. It’s political. Earlier in July, Trump falsely claimed the US had a trade deficit with Brazil when it actually had a multimillion-dollar surplus.

Trump has framed the tariffs as retaliation for the trial of his ally, former Brazilian president Jair Bolsonaro, who faces charges over an alleged coup attempt after losing the last election. His supporters stormed government buildings, and the case includes allegations of a plot to "kill" current President Lula da Silva.

Bolsonaro denies the charges, which Trump has called a "witch hunt".

The White House also cited concerns over Brazil’s "actions harming US companies" and "free speech rights of US persons".

 

Little clarity about Taiwan's semiconductors

Taiwan's President Lai Ching-te has said the US is open to further negotiations, as the self-governing island has been hit with a 20% tariff rate - higher than the 15% imposed on its key competitors, Japan and South Korea.

 

Pakistan has the lowest tariff rate of any South Asian country

Pakistan's tariff rate of 19% is the lowest of any South Asian country - and significantly lower than that of its neighboring archrival India, which faces a 25% tariff rate.

Pakistan Prime Minister Shehbaz Sharif had previously expressed his "profound thanks to President Trump" for slashing his country's rate from a previous 29%.

On Thursday night, the Pakistani Finance Ministry said in a statement that “this deal marks the beginning of a new era of economic collaboration, especially in energy, mines and minerals, IT, cryptocurrency and other sectors".

The relatively low tariff rate is expected to give a particular boost to Pakistan's textile industry, which is responsible for close to 60% of the country's total exports, mostly to the US. Its main competitors in this sector - India, Bangladesh, and Vietnam - have all been hit with higher tariffs.

Pakistan-US ties have warmed under the Trump administration. In June, Pakistan nominated Trump for the Nobel Peace Prize.

 

More To Come, She Says:

 

Haven’t We Been Here Before?

The tariff changes evoke Trump’s “Liberation Day” in April, when he similarly hiked import taxes across the board. The move threw financial markets into chaos and stoked fears of a global recession.

Trump ultimately delayed the “reciprocal” April tariffs hours after they took effect, later setting August 1 as the new deadline for trade agreements on pain of higher tariff rates. The president told some countries what rates they would face on that day absent new agreements, but appeared to leave other nations in the dark.

 

Why do Laos and Myanmar have some of the highest tariffs?

Two South East Asian countries - Laos and Myanmar - have stood out for having among the highest tariff rates at 40% each.

An exporter of wood, coffee, and garments, Laos has a notably wide trade deficit with the US - sending $803.3m (£608.3m) worth of goods to the US in 2024 but buying just $40.4m from America.

Myanmar, an exporter of leather goods and electronics, clocked a trade deficit of $579m with Washington in 2023, according to US trade data.

The Trump administration has put major disincentives in place to block countries, like China, from shipping through other countries - a process known as transshipment.

Washington appears to be targeting Asian countries that have been suspected of transhipping with China, says trade policy expert Deborah Elms from the Hinrich Foundation.

"Though unclear, there does seem to be suspicion by some in the White House towards the relationship between some countries in the region for being too cosy with China and subject to transshipment," says Dr Elms.

 

Country-specific tariffs are not the only charges businesses face. And more US tariffs are coming

On top of the tariffs on US imports unveiled Thursday, there are also levies targeting various industries that would pose far-reaching consequences for countries that rely on those sectors.

Tariffs on specific industries that have been announced include steel, aluminium, copper, automobiles, and car parts.

Tariffs on pharmaceuticals and semiconductors are pending under the 232 investigations that President Donald Trump initiated in April. The probe was launched under section 232 of the Trade Expansion Act of 1962, as part of a bid to impose tariffs on both sectors on national security grounds.

Trump has previously threatened levies as high as 200% on pharmaceuticals and rates of 25% or higher on semiconductors.

US Commerce Secretary Howard Lutnick said Sunday that the result of the investigation on semiconductors would be released in two weeks.

Some countries and economies have negotiated deals that include specific sectors.

The European Union, Japan, and South Korea each reached trade deals with the US that brought tariffs on their goods to 15% – a rate that applies to their automobile exports.

For the EU, the new levy also covers pharmaceuticals and semiconductors.

 

Poor old penguins

Some relief for our feathered friends on the Heard and McDonald islands - the tariffs on the uninhabited Australian territory will stay at 10%.

No humans have set foot on the tiny, remote Antarctic outposts in almost a decade, but somehow they found themselves on Trump’s trade hit list on Liberation Day in April.

It is hard to get a clear picture of the trade relationship between the Heard and McDonald Islands and the US, but Australia has previously said the decision to impose import taxes on them was “clearly a mistake”.

"Poor old penguins, I don't know what they did to Trump,” Trade Minister Don Farrell said in April.

"It just shows and exemplifies the fact that nowhere on Earth is safe from this," Australian Prime Minister Anthony Albanese added.

 

 

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