The economic development landscape is quickly evolving. President Donald Trump is changing the international trade playing field altogether with unprecedented, sweeping tariffs on several countries. Going forward from what he has declared “Liberation Day,” Trump has implemented a shocking 34% tariff on imports from dozens of countries. While several countries are facing higher overall tariff rates for their first time, this aggressive approach represents a severe escalation in U.S. trade policy.
China is one of the countries hit hardest. It is currently under a shocking 145% tariff barrage on its exports to the United States. In doing so, this move addresses longstanding trade imbalances. Most importantly, it serves as an anchor to Trump’s overall strategy of increasing American manufacturing and protecting American industries. On the flip side, U.S. exports to China have equally struggled—experiencing a 125% increase in tariffs.
Vietnam, once hailed as the shining star of global supply chains, has not been spared from the damage. Then, in August of 2019, President Trump announced a surprise 20% tariff on all goods imported from Vietnam, blindsiding countless American businesses. The new levy was a shock to Vietnamese exporters and U.S. importers alike. Overnight, they needed to reconsider their operations and outreach strategies to adjust to the sudden increase in expenses.
Trump also slapped a heavy 40% “transshipping” tariff. This move would primarily affect products that are manufactured in other countries but shipped to the U.S. via Vietnam. This important measure would help to reduce abusive practices, many of which critics say take advantage of tariff loopholes.
As Trump’s trade policies shift their gaze, India has recently been targeted as well. The President announced a 25% tariff on Indian imports, pointing to the fact that the country has long kept tariff rates high. He stated, “While India is our friend, we have, over the years, done relatively little business with them because their Tariffs are far too high, among the highest in the World.”
Our neighbors to the south are in the same boat, now forced to endure a newly instituted 30% tariff. The Trump administration has additionally threatened to raise this rate if Mexico takes retaliatory measures against U.S. products. This lately released strategy is a signal of the administration’s openness to use tariffs as a negotiating tool in negotiations.
Canada, as well, was caught by surprise at being put on the receiving end of new duties. Before Trump rolled out his so-called “reciprocal” tariffs, Canada had already been dealt with hefty blows. These tariffs were intended to address the influx of drugs coming over the border. Beyond that, the rationale that Trump used for these specifically targeted tariffs was the drug trafficking issue.
Unlike these punitive retaliation measures, other countries have negotiated reduced tariffs in the U.S. Japan was able to lower its tariff rate from 25% to 15% as part of an agreement with Trump. Indonesia’s rate was reduced from 32% to 19%. This change is an example of how constructive conversation can produce beneficial outcomes in the current trade climate.
The United Kingdom is moving quickly to solidify its trade relationship with the U.S. It has already taken the lead on setting the terms of the deal and reached an agreement as early as May. This contract set a very baseline tariff of 10% on British goods coming into the American market.
Trump has indicated that countries without any agreements will face a global baseline tariff ranging from 15% to 20%. This policy is meant to incentivize countries to talk to the U.S. and develop more fair and reciprocal trade practices.
With these new tariffs coming into force, businesses on both sides will have to make some quick proclamations. The future of our domestic industries, from agriculture to manufacturing to tech, increasingly rests on their ability to compete within this rapidly changing arena of international trade.
“perhaps the largest Deal ever made” – Donald Trump