The Trump administration has also recently released a new list of import taxes affecting dozens of trading partners. This unexpected move has drawn fiery responses from governments and market watchers across the world. These new tariffs went into effect on August 12th. They affected every country in the world (more than 90) and dramatically changed the landscape of worldwide trade.
The administration announced a six-month extension for many countries to reach compliance agreements with the United States. Now, these discussions are due to be finished by 7 August. This action provides additional time for negotiations. Negotiations continue with countries such as Mexico, which has suspended increased tariffs for another 90 days in efforts to seek a more complete trade agreement.
In welcome news, Taiwan officials announced that they had secured an important exemption. One positive outcome—they got TSMC out of the new tariff frying pan. Similarly, South Korean officials stated that major corporations SK Hynix and Samsung would be exempt from the increased levies. While surprising at first glance, this decision demonstrates a smart, savvy move by the Trump administration to avoid painful disruptions to strategically important technology supply chains.
The long-running trade negotiations have been punctuated by U.S.-China counter-efforts. Both countries are reportedly in talks to renew a prior 90-day respite on tariffs. This pause is scheduled to end on August 12.
The European Union has taken a significant step toward this by reaching a preliminary framework agreement with Washington. As punishment, they’ve threatened to levy a 15% tariff on all goods brought in from the trading bloc. This new agreement is a welcome step toward stabilizing increasingly fraught transatlantic trade relations at a time of escalating tensions.
President Trump announced his intention to impose a staggering 100% tariff on foreign-made semiconductors, underscoring his administration’s aggressive stance on protecting American manufacturing. In a dramatic declaration, he stated,
“IT’S MIDNIGHT!!! BILLIONS OF DOLLARS IN TARIFFS ARE NOW FLOWING INTO THE UNITED STATES OF AMERICA!” – US President Donald Trump
The hardest hit by these new, blended tariffs will be countries in Southeast Asia, particularly those with economies highly dependent on exports. They will account for the full brunt of impact. Brazil’s exports to the U.S. will now be hit with a crushing 50% tariff, while India finds itself in the same boat. India faces the threat of a 50% tariff increase on its exports if it does not renege on promises to buy Russian oil. After much negotiation, this big change will be implemented on August 27.
Taiwan as a result is subject to a new tariff rate of 20%. In comparison, Lao and Myanmar face some of the highest taxes in the world at a whopping 40%. This distribution of tariffs is a clear example of how the impacts are not equally felt across the country and across industries.
As a result, market analysts have started to predict effects of these tariffs on global trade. Farhan Badami, a market analyst at the financial services firm eToro called this transition the “pixel perfect suddenly” in a recent blog post. He explained that it would bring a great deal of instability to global markets.