Former President Donald Trump promised big changes to such “reciprocal” tariffs and his administration instituted them across a number of countries. The changes come after a temporary suspension on these tariffs, which began in April. New tariff rates will go into effect on August 7. This latest step represents a new high (or low) in the escalating trade conflagration. It especially aims at countries that have already been declared outlaws in multiple economic pacts and embargoes.
In an unexpected chat, President Trump called newly-elected Mexican President Claudia Sheinbaum. They agreed to extend the current pause on new tariffs imposed on Mexico. This ruling means that Mexico can continue to keep its level at 25%, rather than facing a rise to 30%, which would have hurt its economic development. In the meantime, our own baseline tariff for Australian exports continues to stay the same at 10%. Trump teased that this rate might double to 15% to 20% in the future.
Impact on Key Trading Partners
The amended tariff order puts particularly onerous burdens on a number of countries. Syria is hit with a 41% tariff, one of the highest tariffs in the world. Myanmar and Laos are each projected to see a 40% increase. Switzerland will be facing tariffs at 39%, and Brazil has already been slapped with a crushing 50% tariff. These changes reflect Trump’s aggressive stance towards nations that he believes are not cooperating adequately on issues such as drug trafficking.
“The president has determined that it is necessary and appropriate to modify the reciprocal tariff rates for certain countries.” – White House statement.
Compared with these exorbitant rates, the United States has managed to secure provisions far less favorable in negotiations with the United Kingdom, the European Union, and six Asian countries. These deals will slap new tariffs of 10 to 20 percent on these nations. Unfortunately, New Zealand increased its tariffs from 10% to 15%. This decision underscores the important role that tariff and non-tariff changes play in shifting the landscape of international trade.
Use of Economic Emergency Powers
It appears that Trump’s administration is using the International Emergency Economic Powers Act (IEEPA) to impose these tariffs. This statute has been used in the past to punish hostile states or to block their financial holdings. Critics point out that utilizing these special powers to modify tariffs raises serious legal issues. These groups rightly question how far the president’s authority extends in international trade.
“IEEPA doesn’t even mention the word ‘tariffs’ anywhere.” – Circuit Judge Jimmie Reyna.
Trade experts and economists have warned that employing emergency powers for these purposes could have sweeping ramifications. Todd McClay, a senior trade advisor, indicated that urgent advice is being sought to navigate the complexities arising from these tariffs.
Reactions from Affected Nations
Countries affected by Trump’s tariff changes have protested. Brazilian President Luiz Inacio Lula da Silva responded vehemently, stating that the measures infringe upon “the sovereignty of the Brazilian people.” The Australian government strongly opposed the tariffs on its exports as unwarranted and harmful to the bilateral trade relationship.
Undeterred by these failures, Trump digs in further on his call for tariffs, arguing that they are needed to bring about an end to unfair trade practices. He sounded the alarm that countries that do not collaborate on interdiction of drugs and other threats will incur economic penalties.
“Make it very hard for us to make a trade deal with them.” – Mr. Trump.
He further stated, “We’re going to be setting a tariff for, essentially, the rest of the world,” underscoring his intent to reshape global trade dynamics. Trump’s consistent message was that these tariffs put countries on notice about their behavior. In his view, they guarantee equitable payment for the role they play in supporting international trade.
