In a significant shift in international trade policy, President Donald Trump has announced a new series of tariffs that have sent shockwaves across global economies.
As of today, the United States will implement a 35 percent tariff on imports from Canada, alongside varying rates for other trading partners, including 10 percent for the United Kingdom and a staggering 50 percent for Brazil.
These new tariffs, which will take full effect next week following necessary customs preparations, follow a series of framework deals struck with several major economies aimed at averting even steeper tariffs.
However, despite these deals, the overall impact on the global trading system is monumental, marking a major upheaval in an arrangement that has taken over seventy years to establish.
Josh Lipsky, chair of international economics at the Atlantic Council’s GeoEconomics Center, underscores the scale of this transformation: “In the span of seven months, Donald Trump has remade a global trading system that took over seventy years to construct.”
Before the tariffs, the effective US tariff rate averaged 2.5 percent. Lipsky estimates that with current rates combined with sectoral levies, the new effective rate will surge to approximately 20 percent—the highest rate recorded since the nineteenth century.
The timing of Trump’s tariff announcement—set to go into effect on August 7—is seen by some as an attempt to allow countries additional time to negotiate.
However, experts, including Lipsky, believe this delay is not intended for negotiations but rather to ensure proper implementation.
“Why? Because the announcement also includes rates for ‘transshipment,’ which addresses goods that pass through third countries before reaching the United States,” he explains.
This aspect of the tariffs indicates the administration’s concern that countries may try to circumvent the tariffs through indirect routes.
Prior to the tariffs being officially announced, President Trump managed to secure agreements with the European Union, the United Kingdom, Vietnam, the Philippines, Japan, and South Korea.
Barbara C. Matthews, a nonresident senior fellow at the Atlantic Council, highlights that these agreements are far more than mere trade deals.
They encompass commitments related to security, energy, and investment that aim to realign geoeconomic interests and strengthen ties between the United States and these countries.
For instance, transshipment hubs in Southeast Asia, which have historically favored China, are now providing concessions to the United States, thereby obtaining more favorable tariff treatments.
In contrast, nations that have found themselves without agreements, such as Australia, Canada, and India, could be facing steep tariffs without the benefit of negotiation.
Australia, known for supplying iron to China for steel manufacturing, and Canada, accused of being insufficiently tough on Chinese fentanyl, are both now subject to punitive tariffs.
India, specifically, is facing a 25 percent tariff, with the possibility of escalated rates due to Trump’s threats of “secondary tariffs” aimed at Russia’s trading partners amid the ongoing conflict in Ukraine.
Mark Linscott, a nonresident senior fellow with the Atlantic Council, believes India has missed a vital opportunity in these negotiations.
“As trade talks escalated, New Delhi opted for silence during the critical final stages before the deadline,” he notes.
Linscott observes that India may have hoped to rely on past offers made in negotiations instead of engaging directly with Trump.
Nonetheless, he anticipates that discussions will resume, particularly considering agreements previously directed between Prime Minister Narendra Modi and Trump regarding a Bilateral Trade Agreement.
“However, it wouldn’t be surprising to see an immediate reciprocal tariff deal occur in the near future,” Linscott adds, emphasizing that Modi might engage directly with Trump to finalize a deal.
On the other hand, Brazil finds itself grappling with a 50 percent tariff rate tied to allegations of unfair trade practices and internal political issues.
Valentina Sader, deputy director at the Atlantic Council’s Adrienne Arsht Latin America Center, explains that the tariffs have not been well-received by Brazilians, who view them as improper interference in domestic matters, particularly relating to the prosecution of former President Jair Bolsonaro.
Despite the harsh tariffs, Sader points out that there are around seven hundred exemptions concerning products like aircraft, oranges, and cellulose, though commodities such as coffee, beef, and sugar will suffer under these new rates.
Leading up to the tariff announcement, Brazilian officials engaged in discussions in Washington to strategize the next steps in their relationship with the US.
Sader affirms, “For Brazil, the tariffs are not good, but they expected worse.”
Moving forward, countries still seeking agreements with the United States may need to adopt unconventional strategies to appeal to Trump.
As Matthews indicates, this will likely involve concentrating on critical minerals and technology products that the US requires, emphasizing the changing dynamics of global trade.
The negotiations moving forward will likely reflect heightened concerns about supply chains influenced by both Russia and China.
As the situation evolves, the likelihood remains that President Trump could potentially reverse or postpone the tariffs, as he had done previously in the spring.
However, Lipsky warns that such delays may not be enough to mitigate the overall impact of these tariffs and their consequences.
“We are only beginning to see the costs of tariffs, which will play out in the months to come,” he cautions.
Ultimately, these developments are indicative of a larger trend towards dismantling an “increasingly brittle system” of global trade.
According to Lipsky, “There’s no going back to the old way of doing business,” signaling a paradigm shift that could have lasting ramifications for international commerce.
image source from：atlanticcouncil
