On the international trade front, former President Donald Trump just announced new tariffs against China that go into effect on August 1. He weaves in “very, very substantial facts” and historical precedents to make the case for these levies. The announcement comes in the midst of heated trade negotiations. Unfortunately for Trump, he’s delayed his initiation of Liberation Day tariffs, due to the fact deals with multiple countries are close to being finalized.
Despite his ambitious goal of securing 90 trade deals within 90 days, Trump has only managed to finalize agreements with two nations: Vietnam and the United Kingdom. The administration’s recent actions—specifically on China—show the administration doubling down on a more aggressive trade policy. Brazil is now facing a daunting 50 percent tariff wall. The action has sparked fears as to what this means for U.S.-Brazil relations and how it could affect bilateral trade.
Details of the New Tariffs
In a letter addressed to Brazilian President Luiz Inacio Lula da Silva, Trump emphasized that the impending 50 percent tariff would be separate from all sectoral tariffs. This modified estimate represents a more than fourfold increase from the previous count. Trump called for the lower 10 percent rate first at his “Liberation Day” rollout in April. Brazil is the United States seventh largest trading partner with us importing over $42.3 billion worth of goods in 2024 alone.
Now, the Trump administration has sent letters to eight other countries. They defended these tariffs as a proportional measure to retaliate against trade agreements which their own officials say are unjust and “unfortunately, very distant from reciprocal.” On August 1, these countries will face new levies on their imports. Those levies can be circumvented if the right agreements are proactively negotiated with the administration.
Specific Tariff Rates for Other Nations
In addition to Brazil’s new tariff rate, others countries will be seeing their tariff levies on imports change as well. Sri Lanka will have its tariff cut from 44 percent to 30 percent. The rise will be a bit higher for the Philippines, which will see a 20 percent increase from its current 17 percent rate. Algeria’s MFN tariff remains high and flat at 30 percent. Brunei will be raising its personal income tax rate from 24 percent to 25 percent. Iraq’s tariff will be reduced too, although to a lesser extent, from 39 percent down to 30 percent.
These changes are meant to show the administration’s continued attempts to bring a balanced trade agreement with more nations. The diverse tariff rates reflect calculated economic strategies. They react to provisions in current trade agreements that U.S. officials themselves deem problematic.
Implications for Trade Relations
The imposition of these tariffs is yet another sign of Trump’s ongoing influence in transforming U.S. trade policy. The administration threatens massive tariffs on important trading partners, including Brazil. Their intent appears to be to engage in negotiations and get the best terms for American enterprises. While such aggressive tactics are certainly in the toolbox, they run the risk of escalating tensions and inciting retaliatory measures from affected nations.
Countries are quickly moving to protect themselves against these changes. They are bargaining for better terms to minimize any adverse effects from the new tariffs. The next few weeks will be key to determining how these relationships develop. Indeed, Trump will need to labor intensely just to line up additional trade deals and avoid unilateralism to accomplish his goals.
