On Thursday, President Donald Trump signed a decree imposing higher tariffs on dozens of countries to restructure global trade in favor of the United States.
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The new customs tariffs will not come into effect this Friday as initially planned, but in seven days. The delay is aimed at giving customs officials time to prepare, reported a senior U.S. official to journalists.
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The White House wrote in uppercase and bold letters: “Restructuring of world trade for the benefit of American workers” in one of the documents announcing the new tariffs.
It is about “addressing the growing annual trade deficit in goods of the United States” and “protecting the United States from foreign threats to national security and the economy,” the documents adds.
The new customs tariffs reach 41% in the case of Syria, followed closely by Switzerland with 39%. Algeria is subject to 30%, Bangladesh to 20%, Laos to 40%, and India to 25%.
Canada also takes a hit, going from 25% to 35%, except for products protected by the United States-Mexico-Canada Agreement (USMCA), of which it is a part along with the United States and Mexico.
“The White House lamented that Canada has not cooperated to stop the constant flow of fentanyl and other illicit drugs, and has retaliated against the United States.”
“The Mexican cartels are increasingly operating fentanyl and nitazene synthesis labs in Canada,” he adds, referring to two synthetic opioids that concern the United States.
The European Union (EU), Japan, and South Korea, some of the few partners who managed to renegotiate tariffs during the truce announced in April and postponed since then, will be subject to the 15%, like most countries. The United Kingdom, Vietnam, Indonesia, and the Philippines also reached agreements, still preliminary.
Washington increased the surcharges for Costa Rica, Bolivia, and Ecuador from 10 to 15%, and kept the ones set in April for Venezuela (15%) and Nicaragua (18%) unchanged.
Brazil is at 10%, but it will only be until August 6th. On Wednesday, the Trump administration announced that they will add 40 percentage points (pp) to that universal minimum tariff, which amounts to 50%, mainly due to the trial against the far-right former president Jair Bolsonaro, accused of a coup attempt.
This Thursday, after speaking on the phone with his Mexican counterpart Claudia Sheinbaum, Trump was lenient with his southern neighbor and granted a 90-day extension in order to “sign” an agreement “within that period, or even more.” In the meantime, Mexico remains subject to the 25% tariff, except for goods included in the USMCA.
“It was reached ‘the best possible agreement’ when compared to other nations,” stated Sheinbaum in a press conference.
China is excluded
Mexico, which was facing additional customs tariffs of 30%, “agreed to immediately eliminate its numerous non-tariff trade barriers, which were many,” added Trump.
“There is no doubt: the decree and agreements” concluded in recent months “shatter the rulebook that has governed international trade since World War II,” says Wendy Cutler, Senior Vice President of the Asia Society Policy Institute.
“If our partners can preserve it without the United States is an open question,” he added.
China has been excluded from the drama because its truce did not expire this Friday, but on August 12, when tariffs could return to higher levels.
So far, most countries have been dealing with the universal minimum tariff of 10% imposed in April and those applied to certain products such as 50% on aluminum and steel or 25% on automobiles. Starting Friday, surcharges of 50% will also come into effect for products made with copper.
Economists are concerned about the impact of tariffs. They see them as a drag on inflation, which rose to 2.6% in June, according to the PCE index published on Thursday, and on the growth of the United States.
The use of tariffs as a means of pressure to achieve trade agreements favorable to the United States ended up in court.
This Thursday, a hearing was held in a Washington appeals court to determine whether Trump has overstepped his constitutional powers by imposing these surcharges.
The White House has warned that it will appeal to the Supreme Court if the ruling is unfavorable.