President Trump’s New Tariffs Take Effect Across 90+ Countries

On August 7th, President Donald Trump’s new tariffs on more than 90 countries came into effect. Goods from countries around the world are being taxed with tariff rates of at least 10% and up to 50%. This latest round of tariffs significantly escalates trade tensions and may represent the biggest shift in the global economy in nearly a decade.

Goods from the European Union, Japan, and South Korea are being taxed at 15%, while goods from Bangladesh, Taiwan, and Vietnam are being taxed at 25%. Laos and Myanmar are subject to a 40% tariff. India and Brazil face the highest tariffs at 50%. A 25% import tax was applied to India, but then an additional 25% import tax was placed on top of it for buying Russian oil. President Trump also expects the European Union, Japan, and South Korea to invest billions of dollars in the U.S. economy.

Since Canada and the U.S. did not reach an agreement by August 1st, a 35% import tax has been placed on Canadian goods not covered by the Canada-U.S.-Mexico Agreement (CUSMA). Previously, Canada had a 25% import tax, which was increased due to the U.S. citing Canada’s “failure to cooperate” in restricting the flow of fentanyl and other drugs across the border. However, most exports will be exempt from tariffs due to the CUSMA agreement.

President Trump is applying tariffs to reduce the U.S. trade deficit and reshape the global trading system, arguing that other countries “have taken advantage of the United States.” He believes that tariffs will encourage US consumers to move away from foreign goods and buy more American-made goods, which will increase government revenues and incentivize companies to relocate manufacturing back to the U.S. to avoid paying tariffs. In some cases, like the increased tariffs on Canada, tariffs are also being used as leverage to pressure countries like Canada, Mexico, and China to take stronger action against illegal drug trafficking and migrant flows across the U.S. border.

These tariffs will raise the costs of importing foreign goods to the U.S. for importers, which importers may pass on to consumers through higher prices. For example, Diageo, the global drinks company, owner of brands like Johnnie Walker, Guinness, and Smirnoff, has stated that these tariffs would cost the company $200 million. However, they’re working to offset about half of these costs before needing to raise prices.

Tariffs can also drive up the costs of certain foreign products for U.S. consumers, such as spices. Many of the spices used by home chefs, restaurants, and large manufacturers are imported from India, which is facing 50% tariffs. In fact, last year, more than $410 million was imported in spices from India to the U.S. These tariffs have raised the effective rate of the U.S. above 17%, making this the highest tax Americans will have to pay on foreign goods since the Great Depression. According to Reuters tracking company responses to the tariffs, 22 U.S companies are raising prices, including big retail companies, footwear brands, and big household products companies such as Walmart and Best Buy, Nike, Crocs, Birkenstock, Colgate-Palmolive, Procter & Gamble, and Clorox.

The Peterson Institute for International Economics (PIIE) notes that while tariffs are now in effect, the increased costs may not immediately impact prices on store shelves. They add that most importers will not pass the increase in costs until existing inventory purchased at a pre-tariff price has run out, which can delay the rise in consumer prices for months or longer if importers choose to cover the tariffs for a while.

https://globalnews.ca/news/11322240/commentary-donald-trump-tariffs-what-now/