Overview:
President Trump announced a new wave of tariff increases, closely resembling the “Liberation Day” tariffs from April 2nd. The key change was a one-month delay in implementation, pushing the effective date to August 1st. The announcement served as a reminder that the risk outlook remains biased toward higher tariffs, not lower.
Breakdown of Tariff Developments:
Europe
- European officials indicated the EU may receive an exemption from the August 1st deadline.
- Despite months of difficult negotiations, this outcome suggests a more favorable shift in the U.S. policy toward Europe.
Japan and South Korea
- A baseline 25% tariff is being imposed on both nations, in line with the “Liberation Day” rates.
- Sector-specific tariffs will exceed the baseline, and transshipment violations will face additional penalties.
Japan
- The U.S. is open to talks, especially with a new Japanese Prime Minister expected after the July 20th upper house elections.
- Issues, particularly in the automotive sector, appear more negotiable.
South Korea
- Locked into a 25% tariff with no sign of flexibility.
- Challenges in tech (DST), defense, and agriculture make the situation harder to resolve.
Other Countries
- Additional tariff plans were rolled out against imports from South Africa, Indonesia, Thailand, Cambodia, and others.
- Trump stated he would impose an extra 10% off tariff on any nation aligning with “Anti-American BRICS policies.”
Tariff Positions by Country
China
- A 55% tariff is being reinstated on Chinese imports, reverting to pre-2021 levels.
- China has warned of retaliation, potentially targeting supply chains, despite the fragile truce agreed in June.
Mexico & Canada
- A 25% tariff applies broadly, with exemptions for goods under the USMCA.
- Crude oil and gas imports will face a 10% tariff.
European Union
- A 10% baseline tariff is in effect, with a potential hike to 50% if no deal is reached by August 1st.
United Kingdom
- A tentative deal keeps UK tariffs at 10% for now.
- The UK is temporarily shielded from 50% tariffs on steel and aluminum.
