US partners scramble for relief as Trump tariffs upend global trade
Sign up now: Get ST's newsletters delivered to your inbox
People walking past a Tissot store on Fifth Avenue in New York as US President Trump’s new tariffs come into force, on Aug 7.
PHOTO: REUTERS
Follow topic:
- Trump's tariffs, effective 7 Aug, raise import duties to 41% on some nations, impacting trade despite existing deals and aiming to revive US manufacturing.
- Switzerland criticised the "reciprocal" duties, Wall Street slumped, and exemptions remain for sectors like steel, autos, pharmaceuticals and semiconductors.
- The Federation of Indian Export Organisations called the move a “severe setback,” while Commerce Secretary Howard Lutnick expects $50 billion monthly revenue, but companies fear harm.
AI generated
WASHINGTON - US President Donald Trump’s steeper global tariffs came into effect on Aug 7, 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’s tariffs to 50 per cent and hit many semiconductor imports with a 100 per cent duty.
Mr 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 per cent to levels between 15 per cent and 41 per cent for a list of trading partners.
Many products from the European Union, Japan and South Korea now face a 15 per cent tariff, even with deals struck with Washington to avert steeper threatened levies.
Others like India face a 25 per cent duty – to be doubled in three weeks – while Syria, Myanmar and Laos face staggering levels of 40 per cent.
Switzerland’s government, which failed to convince Mr Trump not to impose a stinging 39 per cent tariff, said after an extraordinary meeting on Aug 7 that it remains committed to talks
Mr 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 mostly dipped on Aug 7, while other global markets largely shrugged off the higher tariffs for now.
‘No charge’
The steeper duties maintain exemptions on sectors that Mr Trump separately targeted, like steel and cars.
Categories that could be hit later, like pharmaceuticals and semiconductors, are also spared for now.
Mr Trump said on Aug 6 that he plans an “approximately 100 per cent tariff” on semiconductor imports, but with no charge for companies investing in the US or committed to doing so.
Companies and industry groups warn that Mr 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 US before Aug 7 – and arriving before Oct 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.
Mr Trump is using tariffs to pursue a variety of goals, such as doubling planned duties on India
The order threatened penalties on countries that “directly or indirectly” import Russian oil too.
The Federation of Indian Export Organisations called the move a “severe setback” impacting nearly 55 per cent of shipments to the US.
Discrepancies
Lingering questions remain for partners who have negotiated deals with Mr Trump.
Tokyo and Washington appear at odds over the terms of their pact, such as when tariffs on Japanese cars will be lowered to 15 per cent.
Generally, US car imports face a 25 per cent duty under a sector-specific order, weighing on Japanese carmakers.
The two countries also seem to differ on whether the new 15 per cent 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 stand-off expiring on Aug 12.
Commerce Secretary Howard Lutnick told Fox Business it is likely that Mr Trump will extend the pause on tariff hikes by another 90 days.
Mr 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 per cent on Aug 6, but with broad exemptions.
Mr Lutnick expects Mr Trump’s duties could bring in US$50 billion (S$64 billion) in monthly revenue. AFP
