President Donald Trump has taken a decisive step in his trade policy by sending out tariff letters to seven smaller U.S. trading partners, with plans to announce further import taxes later in the day.
The initial countries targeted — the Philippines, Brunei, Moldova, Algeria, Libya, Iraq, and Sri Lanka — are not major industrial competitors to the United States.
This action reflects Trump’s longstanding affinity for tariffs as a mechanism to generate prosperity for America.
Economic analyses generally suggest that such tariffs may exacerbate inflationary pressures and hinder economic growth.
Nevertheless, Trump views these tariffs as vital tools for asserting U.S. diplomatic and financial power over both allies and rivals alike.
His administration claims that these import taxes will help reduce trade imbalances, offset recent tax cuts, and encourage the return of factory jobs to U.S. shores.
During a recent meeting at the White House with African leaders, Trump emphasized trade as a means of diplomacy, characterizing it as a foundational element for resolving disputes, such as those between India and Pakistan, and Kosovo and Serbia.
‘You guys are going to fight, we’re not going to trade,’ he remarked, suggesting the strategy has been effective.
On Monday, Trump had already positioned a 35% tariff on Serbia, highlighting the contradiction of using trade as a peacekeeping tool while imposing tariffs.
In his tariff letters, Trump justified the rates as being grounded in ‘common sense’ and reflective of existing trade imbalances.
He also noted he would be sending a letter to Brazil in the coming days, indicating ongoing adjustments in his trade strategy.
Interestingly, Trump pointed out that he did not consider applying penalties to certain leaders he met with in the Oval Office, referring to them as ‘friends.’
European Union officials, a significant trade partner and a frequent target of Trump’s complaints about trade, did not expect to receive any tariff letters this time.
The Republican president had previously initiated a tariff process by imposing a 25% import tax on two major trading partners, Japan, and South Korea.
The tariff rates in the letters denote a significant increase, with taxes set at 30% for imports from Libya, Iraq, Algeria, and Sri Lanka; 25% for Moldova and Brunei; and 20% for the Philippines.
These tariffs are slated to take effect starting August 1.
According to the Census Bureau, the U.S. registered a trade deficit with Algeria amounting to $1.4 billion, $5.9 billion with Iraq, $900 million with Libya, $4.9 billion with the Philippines, $2.6 billion with Sri Lanka, and smaller amounts with Brunei and Moldova.
In sum, the trade imbalances with the seven targeted countries are minor relative to the overall U.S. economy, which boasts a gross domestic product of $30 trillion.
The letters were released on Truth Social after a 90-day negotiating period, during which the baseline levy was set at 10%.
Trump stated there would be no extensions for negotiations, although he is allowing more time for countries to engage before the August 1 deadline.
Maros Sefcovic, the EU’s chief trade negotiator, addressed EU lawmakers, confirming that the increased tariffs mentioned in Trump’s letters did not apply to the EU, providing additional time for negotiations to reach a satisfying resolution.
In recent months, Trump proposed a 20% tariff on EU goods, which he threatened to raise to 50% when negotiations fell short of his expectations, only to subsequently revert to a 10% baseline.
The EU, which consists of 27 member states including France, Germany, Italy, and Spain, continues to navigate these changing tariffs while seeking an amicable resolution with the U.S.
The language used in Trump’s tariff letters is characteristically aggressive, framing the tariffs as an invitation to engage with ‘the extraordinary Economy of the United States.’
Trump described the existing trade imbalances as a ‘major threat’ to both America’s economy and national security.
He also warned of potential additional tariffs on any nation that might retaliate against these measures.
Justifying his decision to issue the letters personally, Trump claimed that it was too complicated for U.S. officials to negotiate directly with counterparts in the affected countries.
He highlighted the lengthy process that often accompanies establishing trade agreements, which can span several years.
Japanese Prime Minister Shigeru Ishiba interpreted the August 1 deadline as a time for negotiations, but he also warned that tariffs could negatively impact Japan’s domestic industries and employment levels.
Meanwhile, Malaysia’s trade minister Zafrul Aziz announced that his country would not be able to accommodate all of the U.S. requests following a Trump letter that imposed a 25% tariff on its goods.
Aziz indicated that the U.S. demands include changes in government procurement practices, halal certification, medical standards, and digital taxes, labeling these stipulations as ‘red lines.’
As the situation continues to evolve, Secretary of State Marco Rubio is scheduled to arrive Thursday in Malaysia’s capital, Kuala Lumpur, in what could be an attempt to manage these complex trade relations.
image source from：pbs
