President Donald Trump is set to make a bold move in American trade policy by significantly increasing tariffs on several foreign nations. With the end of a three-month suspension on joint duties approaching, these new tariffs could soar as high as 70% starting August 1. In a recent address from Joint Base Andrews, Trump disclosed that he had been reaching out to approximately twelve countries daily to communicate their revised tariff obligations. He emphasized that the exact rates would vary, ranging from 10% to 70%, depending on the nature of each nation’s trade relationship with the United States. This development marks one of the most consequential shifts in trade policy seen in recent years.

Where it all began

The initial steps were taken on April 2, known as "Liberation Day," when Trump announced a baseline tariff of 10%, along with additional tariffs of up to 50% based on specific countries. These increased rates were put on hold for 90 days to facilitate negotiations. Although the original deadline ended on July 9, an executive order pushed the deadline to August 1 to allow some partners additional time. Trump stated that there would be no additional extensions and that tariffs would automatically take effect on August 1. “They’ll begin to be applied on August 1, in almost all situations,” he remarked.

How far now?

Up to now, correspondence has been dispatched to 14 nations, including key trading partners like Japan and South Korea, which will experience a standard tariff of 25% starting August 1. Lesser economies, such as Malaysia, South Africa, Laos, and Myanmar, may encounter tariffs ranging from 25% to 40%. Concurrently, Trump declared a 50% tariff on copper imports, and there are similar stringent tariffs on semiconductors and pharmaceuticals under consideration.

Global Markets Absorb Tariff News with Minimal Shock

Despite warnings of potential 70% tariffs, U.S. stock-index futures closed July 9 with slight gains, reflecting a sense of investor stability amid ongoing uncertainty. Analysts indicate that the markets may be anticipating negotiated delays and limited rollbacks, which could reduce immediate volatility.

On the other hand, copper futures spiked due to the tariff announcements, while certain U.S. bonds and currencies experienced moderate fluctuations. Economists warn that a prolonged escalation of tariffs could lead to inflation, disruptions in the supply chain, and possible retaliatory actions.

Implications for Key Partners

Japan and South Korea are encountering significant tariffs unless they agree to further concessions, leading both countries to initiate discussions focused on finding smaller-scale solutions to mitigate the impact of U.S. duties. Meanwhile, the European Union is negotiating to establish a baseline tariff of 10% on aircraft, vehicles, components, and alcoholic beverages. Additionally, countries like India, Thailand, and Indonesia are facing new tariffs ranging from 25% to 36% but are actively pursuing deeper trade agreements to circumvent these high duties.

What’s next?

Trump has implemented changes to trade policy that focus on economic nationalism, using tariffs to influence trade relations. This change may impact prices for American consumers and could affect global supply chains. Observers are monitoring the situation to assess whether these tariffs lead to diplomatic negotiations or negative responses from other countries.