Washington (AFP) – President Donald Trump’s steeper global tariffs came into effect Thursday, leaving dozens of US trade partners scrambling to secure relief from soaring levies that are rewriting global trade practice. Shortly before the new rates kicked in, Washington also announced it would double India tariffs to 50 percent and hit many semiconductor imports with a 100-percent duty. Trump’s tariff policy is a demonstration of economic power that he hopes will revive domestic manufacturing by keeping out imports, but many economists fear it will trigger inflation and lower growth.
In his latest move, the president raised import duties from 10 percent to levels between 15 percent and 41 percent for a list of trading partners. Many products from the European Union, Japan, and South Korea now face a 15-percent tariff, even with deals struck with Washington to avert steeper threatened levies. Others like India face a 25-percent duty—which is to be doubled in three weeks—while Syria, Myanmar, and Laos face staggering levels of 40 percent. Switzerland’s government, which failed to convince Trump not to impose a stinging 39-percent tariff, said after an extraordinary meeting Thursday that it remains committed to talks aiming at lowering tariffs.
Trump’s latest wave of “reciprocal” duties—a response to trade practices Washington deems unfair—broadens measures imposed since he returned to the presidency. Wall Street’s major indexes slumped Thursday, while other global markets largely shrugged off the higher tariffs.
The steeper duties maintain exemptions on sectors that Trump separately targeted, like steel and autos. Categories that could be hit later, like pharmaceuticals and semiconductors, are also spared for now. Trump said Wednesday that he plans an “approximately 100 percent tariff” on semiconductor imports, but with no charge for companies investing in the United States or committed to doing so. Companies and industry groups warn that Trump’s new levies will severely hurt smaller American businesses.
But providing some reprieve from the “reciprocal” tariff hike is a clause saying that goods already en route to the United States before Thursday—and arriving before October 5—will not face the new rates. With the dust settling, at least for now, Georgetown University professor Marc Busch expects US businesses to pass along more of the bill to consumers. Inventories are depleting, and it is unlikely firms will absorb costs indefinitely, he told AFP.
Trump is using tariffs to pursue a variety of goals—such as doubling planned duties on India due to its purchase of Russian oil, a key revenue source in Moscow’s war in Ukraine. The order threatened penalties on countries that “directly or indirectly” import Russian oil too. The Federation of Indian Export Organizations called the move a “severe setback” impacting nearly 55 percent of shipments to the United States.
Lingering questions remain for partners who have negotiated deals with Trump. Tokyo and Washington appear at odds over the terms of their pact, such as when levies on Japanese cars will be lowered to 15 percent. Generally, US auto imports face a 25-percent duty under a sector-specific order, weighing on Japanese automakers. The two countries also seem to differ on whether the new 15-percent toll on Japanese goods would be added to existing levies or—like the EU—be capped at that level for many products.
Washington and Beijing, meanwhile, have a temporary truce in their tariff standoff, which is set to expire on August 12. Commerce Secretary Howard Lutnick told Fox Business it is likely that Trump will extend the pause on tariff hikes by another 90 days. Trump has separately targeted Brazil over the trial of his right-wing ally, former president Jair Bolsonaro, who is accused of planning a coup. US tariffs on various Brazilian goods surged to 50 percent Wednesday, but with broad exemptions. Lutnick expects Trump’s duties could bring in $50 billion in monthly revenue.
© 2024 AFP
