In an executive order signed Thursday evening, President Trump formalized a tariff framework that marks the most protectionist U.S. trade posture in decades. The new tariffs target dozens of key U.S. trading partners and cemented the fresh deals made with others.
Labeling America’s $1 trillion goods trade deficit an “extraordinary threat” to national security and economic prosperity, the executive order increases duties on a range of imports — from semiconductor components to consumer goods — while offering strategic tariff relief to nations that struck last-minute deals with Washington.
“This is a new system of trade,” a senior administration official declared. “We’re moving from a model obsessed with efficiency at all costs to one focused on balanced reciprocity, safeguarding domestic interests while opening foreign markets.”
The new tariff regime largely divides U.S. trading partners into three main categories:
Deal-Makers: Parties like the EU and Japan negotiated last-minute agreements to reduce their tariff burden. For instance, the EU saw its rate cut from 20% to 15%, and Japan from 24% to 15%.
Defaulters: Nations that failed to meet Trump’s August 1 deadline — notably Canada, India, and Switzerland — now face steep levies. Switzerland’s rate increased from 31% to 39%, Canada’s rate climbed to 35%, and India will be hit with a 25% tariff.
Baseline Countries: Others like Brazil, UK, and Australia retained a baseline 10% rate, either due to pre-existing deals or minor surpluses with the U.S.
Tariff implementation begins August 8, except for Canada, where duties jump to 35% immediately — a move Washington justifies as retaliation for alleged Canadian inaction on cross-border drug flows and recent foreign policy misalignments.
Canada’s abrupt tariff hike is particularly dramatic. Prime Minister Mark Carney’s failure to secure a deal — amid political friction over his recognition of Palestinian statehood — has triggered a storm. Ontario Premier Doug Ford called for a retaliatory 50% duty on U.S. steel and aluminum, asserting that “now is not the time to roll over.”
Taiwan’s rate dropped from 32% to 20%, but that is still punishing for the world’s top chip exporter. Taiwan’s President Lai Ching-te responded diplomatically, calling the 20% U.S. tariff “temporary” and blaming the lapse in negotiations on procedural delays. Taiwan’s growing surplus with the U.S., largely driven by booming semiconductor exports, made it a prime target despite its strategic importance.
Thailand and Cambodia welcomed the revised 19% tariff rate — a significant reduction from April’s proposed 36% and 49%, respectively. The change follows a brokered ceasefire between the two nations after deadly border clashes.
Thai Finance Minister Pichai Chunhavajira hailed the lower rate as a “confidence booster” for investors and a growth enabler. Cambodian Prime Minister Hun Manet called it “good news for Khmer people and Cambodia’s economy.”
While Australia celebrated its 10% tariff rate as a success of “calm diplomacy,” Trade Minister Don Farrell signaled Canberra’s intent to push for further reductions, especially for beef, wheat, and wine exporters. Farrell has invited U.S. Commerce Secretary Howard Lutnick for continued negotiations.
New Zealand was less pleased. Bumped to a 15% tariff from the expected 10%, Trade Minister Todd McClay warned the new rate could hurt exporters and called for immediate talks.
Mexico, in contrast, won a 90-day reprieve — a testament to what officials described as its “constructive” approach in contrast to Canada’s.
Asian equity markets fell modestly Friday morning, signaling cautious concern rather than panic. Taiwan’s Taiex dropped 1.4%, and South Korea’s Kospi slumped 3.3% — the latter also impacted by a new domestic tax bill. Japan’s Nikkei declined 0.6%.
Wall Street, however, remained largely unfazed. S&P 500 and Nasdaq futures were down just 0.2% and 0.3%, respectively, suggesting investors had already priced in the policy shift after Trump’s warning letters circulated earlier in July.
Similarly, oil prices were trading flat in early Asian trade, with WTI at $69.20 and Brent trading at $71.61.
By Charles Kennedy for Oilprice.com
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