Last week, the Trump administration sent letters to some of the country’s largest trading partners threatening to impose new tariff rates unless agreements were reached before Aug. 1. While the rates for each country vary, the basic content of each letter was the same – make satisfactory trade concessions to the U.S. or see an increase in import taxes.
These latest communications are, in essence, a delay of President Donald Trump’s prior threat to fully impose the “reciprocal tariffs” set to take effect July 9. In an executive order issued July 7, Trump said this extension was based on “additional information and recommendations from various senior officials, including information on the status of discussions with trading partners.” It is also important to note that the president’s authority to issue the reciprocal tariffs is currently subject to multiple unresolved legal challenges.
Last week’s announcements included, but were not limited to, the following trading partners:
E.U.: 30%
Mexico: 30%
Canada: 35%
Japan: 25%
South Korea: 25%
Thailand: 26%
Malaysia: 25%
Brazil: 50%
Indonesia: 32%
South Africa: 30%
Philippines: 20%
The letters to each trading partner note they are “separate” from “sectoral” tariffs – presumably referring to the preexisting levies on the auto industry, steel, aluminum, etc. However, substantial questions remain as to the interaction between these tariff regimes. Hopefully, further guidance will be issued before the August 1 deadline, including clarification as to whether the exemption for goods subject to the U.S.-Mexico-Canada Agreement will continue.
Trump also announced last week, via a July 9 social media post, that his administration would impose a 50% tariff on copper imports to the U.S. Although there is an assumption that the mechanics of these new tariffs on copper will operate similar to the existing steel and aluminum levies, to date no official guidance has been issued – including the extent to which copper derivative products will be subject to the 50% import tax.
