Trump shakes up global trade with new tariffs

President Donald Trump signed an executive order on Thursday 31 that imposes higher tariffs on dozens of countries , aiming to restructure global trade to the benefit of the United States.

Trump's new tariffs , known for his mercantilist view of trade relations, will not take effect tomorrow, as initially planned, but within seven days. The goal is to give customs agencies time to prepare, a senior source explained.

“Restructuring global trade for the benefit of American workers,” the White House wrote prominently in one of the documents announcing the new tariffs.

'Foreign threats'

The goal is to "further address the United States' growing annual goods trade deficit" and "protect the country from foreign threats to national security and the economy," he added.

The new tariffs reach 41% in the case of Syria, followed by Switzerland at 39%. Algeria will have 30%, Bangladesh 20%, Laos 40%, and India 25%.

Canada also took a hit, with tariffs rising from 25% to 35%, except for products protected by the T-MEC.

"Canada has failed to cooperate in stemming the continued flow of fentanyl and other illicit drugs, and has taken retaliatory action against the United States," the White House criticized. "Mexican cartels are increasingly operating fentanyl and nitazene synthesis labs in Canada," it added, referring to two synthetic opioids that are of concern to the United States.

The European Union (EU), Japan, and South Korea, among the few partners that managed to renegotiate tariffs , will be subject to 15%, as will most countries. The United Kingdom, Vietnam, Indonesia, and the Philippines have reached preliminary agreements.

Brazil and Mexico

Washington increased the charges for Costa Rica, Bolivia and Ecuador to 15%, and maintained those foreseen in April for Venezuela (15%) and Nicaragua (18%).

Brazil appears at 10% , but only until August 6. The US government announced yesterday that it will add 40 percentage points to this universal minimum rate, which is equivalent to 50%, mainly due to the trial of former president Jair Bolsonaro, accused of attempted coup d'état.

Trump expressed his tolerant attitude toward Mexico today after speaking by phone with his colleague Claudia Sheinbaum. "We agreed to extend the current agreement by exactly 90 days," he explained, "within the goal of signing a treaty within that timeframe or even longer."

Mexico will therefore continue to pay the 25% tariff imposed to encourage it to combat fentanyl trafficking, 25% on automobiles, 50% on steel and aluminum, and, starting Friday, 50% on copper. The products included in the T-MEC, which includes Mexico, the United States, and Canada, were previously protected from these tariffs—the vast majority of them.

"The best possible agreement" was reached compared to other nations, Claudia emphasized at a press conference. Her country, which was exposed to additional 30% tariffs, "agreed to immediately eliminate its numerous non-tariff trade barriers, which were numerous," Trump added.

'Destroy' the rules

"There is no doubt: the decree and the agreements" concluded in recent months "destroy the trade rulebook that has governed international trade since World War II," says Wendy Cutler, senior vice president of the Asia Society Policy Institute.

“Whether our partners can preserve it without the United States is still an open question,” he added.

China was left out of the drama because its truce did not expire this Friday, but on August 12, when tariffs could return to higher levels.

Until now, most countries faced the universal minimum tariff of 10% imposed in April and those applied to certain products, such as 50% on aluminum and steel and 25% on automobiles. Starting Friday, 50% surcharges will come into effect on products made with copper.

The impact of the tariffs worries economists. They are considered a drag on inflation , which rose 2.6% in June, according to the PCE index released this Thursday, and on growth in the United States.

The use of tariffs as a means of pressure to achieve trade agreements favorable to the United States has ended up in court. This Thursday, a hearing was held in a Washington appeals court to determine whether Trump exceeded his constitutional powers by imposing these tariffs. The White House has warned that it will appeal to the Supreme Court if the ruling is unfavorable.