U.S. President Donald Trump’s higher tariffs on imports from dozens of countries kicked in on Thursday, raising the average U.S. import duty to its highest in a century and leaving major trade partners such as Switzerland, Brazil and India hurriedly searching for a better deal.
The U.S. Customs and Border Protection agency began collecting the higher tariffs of 10 per cent to 50 per cent at today after weeks of suspense over Trump’s final tariff rates and frantic negotiations with countries seeking to lower them.
Read Also
China to reduce pig herd amid low consumer demand
China’s pig industry representatives will gather next week in Beijing to discuss ways to reduce breeding sow numbers by a million as part of a push to tackle over-capacity and stabilize prices.
The leaders of Brazil and India vowed not to be cowed by Trump’s hardline bargaining position, even while their negotiators sought a reprieve from the highest tariff levels.
The new rates will test Trump’s strategy for shrinking U.S. trade deficits without causing massive disruptions to global supply chains or provoking higher inflation and stiff retaliation from trading partners.
‘Billions’ in tariff revenue
After unveiling his “Liberation Day” tariffs in April, Trump has frequently modified his plans, slapping much higher rates on imports from some countries, including 50 per cent for goods from Brazil, 39 per cent from Switzerland, 35 per cent from Canada and 25 per cent from India. He announced on Wednesday a separate 25 per cent tariff on Indian goods, to be imposed in 21 days, over India’s purchases of Russian oil.
“BILLIONS OF DOLLARS, LARGELY FROM COUNTRIES THAT HAVE TAKEN ADVANTAGE OF THE UNITED STATES FOR MANY YEARS, LAUGHING ALL THE WAY, WILL START FLOWING INTO THE USA,” Trump said on Truth Social just ahead of the tariff deadline.
Tariffs are ultimately paid by companies importing the goods, and passed on in full or in part to consumers of end products.
Trump’s top trade negotiator, Jamieson Greer, said the U.S. was working to reverse decades of policies that had weakened U.S. manufacturing capacity and workforce, and that many other countries shared concerns about macroeconomic imbalances.
“The rules of international trade cannot be a suicide pact,” he wrote in a column published by the New York Times.
“By imposing tariffs to rebalance the trade deficit and negotiating significant reforms that form the basis of a new international system, the United States has shown bold leadership,” Greer said.
A new equilibrium
Eight major trading partners accounting for about 40 per cent of U.S. trade flows have reached framework deals for trade and investment concessions to Trump, including the European Union, Japan and South Korea, reducing their base tariff rates to 15 per cent.
Britain won a 10 per cent rate, while Vietnam, Indonesia, Pakistan and the Philippines secured rate reductions to 19 per cent or 20 per cent.
“There’ll be some supply chain rearrangement. There’ll be a new equilibrium. Prices here will go up, but it’ll take a while for that to show up in a major way,” said William Reinsch, a senior fellow and trade expert at the Center for Strategic and International Studies in Washington.
Countries with punishingly high duties, such as India and Canada, “will continue to scramble around trying to fix this,” he added.
Switzerland’s government was to hold an emergency meeting on Thursday after President Karin Keller-Sutter returned home empty-handed from an 11th-hour trip to Washington aimed at averting the crippling U.S. import tariff on Swiss goods.
Brazil, India defiant
A last-minute attempt by South Africa to improve its offer in exchange for a lower tariff rate also failed. The two countries’ trade negotiating teams will have more talks, South African President Cyril Ramaphosa’s office said.
Vietnam said on Thursday it will continue talks with the U.S. as it seeks to lower tariffs further still after negotiating a reduction to 20 per cent from the 46 per cent duty Trump slapped on the Southeast Asian country in April.
Meanwhile, Brazil’s President Luiz Inacio Lula da Silva told Reuters on Wednesday he wouldn’t humiliate himself by seeking a phone call with Trump even as he said his government would continue cabinet-level talks to lower a 50 per cent tariff rate.
Indian Prime Minister Narendra Modi was similarly defiant, saying he would not compromise the interests of the country’s farmers.
There were also signs that some countries were rallying together to confront Trump, with Brazil’s Lula saying he would call the leaders of India and China to discuss a joint BRICS response to tariffs.
India said on Wednesday that Modi will visit China for the first time in seven years.
Revenues, price hikes
U.S. import taxes are one part of a multilayered tariff strategy that includes national security-based sectoral tariffs on semiconductors, pharmaceuticals, autos, steel, aluminum, copper, lumber and other goods. Trump said on Wednesday the microchip duties could reach 100 per cent.
China is on a separate tariff track and will face a potential tariff increase on August 12 unless Trump approves an extension of a prior truce. He has said he may impose additional tariffs over China’s purchases of Russian oil as he seeks to pressure Moscow into ending its war in Ukraine.
Trump has touted a vast increase in federal revenues from his import tax collections, with U.S. Commerce Secretary Howard Lutnick saying on Fox Business Network on Thursday that he expected revenue from tariffs to reach $50 billion a month (C$68.7 billion).
The move will drive average U.S. tariff rates to around 20 per cent, the highest in a century and up from 2.5 per cent when Trump took office in January, the Atlantic Institute estimates.
Commerce Department data released last week showed more evidence that tariffs were driving up U.S. prices, including for recreational goods and motor vehicles, while costs are mounting for companies, including bellwethers Caterpillar, Marriott, Molson Coors and Yum Brands.
Toyota on Thursday said it expected a hit of nearly $10 billion (C$13.7 billion) from tariffs on cars imported into the U.S. as it cut its full-year profit forecast by 16 per cent.
But other Japanese companies such as Sony and Honda said they now expected a smaller impact on profits after Japan agreed a bilateral deal with Washington to lower tariffs.
