Trade tensions have escalated under the administration of former President Donald Trump. He dispatched almost carbon copy two-page letters to the new heads of state of Japan, South Korea, Malaysia, Kazakhstan, South Africa, Laos, Myanmar, Bosnia and Herzegovina, Tunisia, Indonesia, Bangladesh, and Serbia. The letters threaten these countries with high, retaliatory new tariffs on their exports to the United States. These hefty tariffs are set to go into effect on August 1. This new step follows hot on the heels of Trump’s imposition of a baseline 10% tariff on all imports from almost every country worldwide. That tariff was effectively implemented on April 2.
As detailed in our recent letters, there is a big escalation of tariffs, with tariff rates from 20-40% on many types of imports. Perhaps most notoriously, Trump has slapped a phenomenal 50% tariff on copper imports, in addition to high tariffs on automobiles and aluminum. The former president seems to think those tariffs are going to have a far more positive effect. He thinks they might be enough to balance out the impacts of other levies from his administration.
Interestingly, just two days prior to sending out these letters, Trump himself teased an announcement. He suggested that more of our trading partners are in line to face the new tariff rates. Further, he reiterated that the original start date of August 1 for putting these tariffs into effect is firm and not subject to change. There will be special interests’ exemptions. The letters imply that the U.S. should lower some tariff rates. This decision can be based on the type of their bilateral relationship with each individual country.
The consequences of Trump’s destructive tariff policies have already begun to shake stability into world-wide trading markets. White House officials responded to these recent announcements by emphasizing the increasing uncertainty in the economic climate. They cautioned that unforeseen circumstances such as pandemics or meteors could additionally shake up trade.
Trump’s economic program does not tell the truth about what he falsely refers to as “liberation day”. He cleverly uses this addition to create extreme economic pain on foreign countries in advance of trade negotiations. Nearly all economists and global trade specialists oppose this strategy. They are concerned that it would lead to retaliatory sanctions in kind and exacerbate current international diplomatic tensions.