What to know about Trump's newest and most sweeping tariffs

The Hill

5 days ago

BANGKOK (AP) — President Donald Trump on Thursday imposed once unthinkably high U.S. taxes on imports from dozens of countries, part of his campaign to turn one of the world's most open economies into a fortress bristling with barriers to trade.
The taxes — tariffs — that took effect at midnight apply to products from 66 countries, the European Union, Taiwan and the Falkland Islands.
Trump believes the tariffs will protect U.S. industry from foreign competition, encourage companies to build factories and hire workers in the United States and raise revenue to pay for the massive tax cuts he signed into law July 4.
'Growth is going to be unprecedented,' Trump said Wednesday.
But mainstream economists and policy analysts warn that tariffs are paid by importers in the United States who will try to pass along the cost through higher prices to their customers, businesses and consumers alike; make the economy less efficient and innovative by shielding domestic companies from foreign competition; and threaten U.S. relationships with longstanding allies and trading partners.
Indeed, the economic damage is already starting show.
Here's what to know:
Hefty tariffs have taken effect — but many could have been higher
The levies that took effect Thursday are a revised version of what Trump called ' reciprocal tariffs ' announced on April 2. Those earlier threats included import taxes of up to 50% on goods from countries that have a trade surplus with the United States, along with 10% 'baseline'' taxes on almost everyone else. The move triggered sell-offs in financial markets, and Trump backtracked to give countries a chance to negotiate.
Some of them did, caving in to Trump's demands to accept high tariffs to ward off even higher ones. The United Kingdom agreed to 10% tariffs and the European Union, South Korea and Japan accepted U.S. tariffs of 15%. Those are well above the low single-digit rates they paid last year, but down from the 30% Trump had ordered for the EU and the 25% he ordered for Japan in April.
Thailand, Pakistan, South Korea, Vietnam, Indonesia and the Philippines cut deals with Trump, settling for rates of around 20%.
Indonesia views its 19% tariff deal as a leg up against exporters in other countries that will have to pay slightly more, said Fithra Faisal Hastiadi, a spokesperson in the Indonesian president's office. 'We were competing against Vietnam, India, Bangladesh, Sri Lanka and China … and they are all subject to higher reciprocal tariffs,' Hastiadi said. 'We believe we will stay competitive.'
Trump dictated terms to countries that didn't reach a deal
For countries that didn't or couldn't reach a deal, Trump dictated terms himself, plastering tariffs ranging from 10% on the Falkland Islands to 41% on Syria. Countries in Africa and Asia are mostly facing lower rates than the ones Trump decreed in April. Tiny Lesotho in southern Africa, for instance, ended up with a 15% tariff instead of the 50% Trump originally announced.
India also has no broad trade agreement with Trump. On Wednesday, Trump he signed an executive order placing an extra 25% tariff for its purchases of Russian oil, bringing combined U.S. tariffs to 50%. India has stood firm, saying it began importing oil from Russia because traditional supplies were diverted to Europe after the outbreak of the Ukraine conflict.
Impoverished Laos and war-torn Myanmar face 40% rates. Trump whacked Brazil with a 50% import tax largely because he's unhappy with its treatment of former Brazilian President Jair Bolsonaro. South Africa said the steep 30% rate Trump has ordered on the exporter of precious gems and metals has put 30,000 jobs at risk and left the country scrambling to find new markets outside the United States.
Even wealthy Switzerland is under the gun. Swiss officials were visiting Washington this week to try to stave off a whopping 39% tariff on U.S. imports of its chocolate, watches and other products.
Overall, the average U.S. tariff rate has risen from around 2.5% before Trump returned to the White House to 18.6% — the highest since 1933 — the Budget Lab at Yale University reported Thursday.
Canada and Mexico have their own arrangements as China talks continue
Goods that comply with the 2020 United States-Mexico-Canada Agreement that Trump negotiated during his first term are excluded from the tariffs.
So, even though U.S. neighbor and ally Canada was hit by a 35% tariff after it defied Trump — a staunch supporter of Israeli Prime Minister Benjamin Netanyahu — by saying it would recognize a Palestinian state, most of its exports to the U.S. remain duty free.
Canada's central bank says 100% of energy exports and 95% of other exports are compliant with the agreement since regional rules mean Canadian and Mexico companies can claim preferential treatment.
The slice of Mexican exports not covered by the USMCA is subject to a 25% tariff, down from an earlier rate of 30%, during a 90-day negotiating period that began last week.
Meanwhile, Trump has yet to announce whether he will extend an Aug. 12 deadline for reaching a trade agreement with China that would forestall earlier threats of tariffs of up to 245%.
Treasury Secretary Scott Bessent said the president is deciding about another 90-day delay to allow time to work out details of an agreement setting tariffs on most products at 50%, including extra import duties related to illicit trade in fentanyl.
Higher import taxes on small parcels from China have hurt smaller factories and layoffs have accelerated, leaving some 200 million workers reliant on 'flexible work' — the gig economy — for their livelihoods, the government estimates.
Still, China has shown that it has leverage to resist Trump's threats: It can withhold exports of rare earth minerals that companies need for everything from wind turbines to electric vehicle batteries.
Considerable uncertainty remains
Details of the deals reached in a frenzy of negotiations leading up to Trump's August deadline have not been published — and are already subject to disagreement.
Japanese Prime Minister Shigeru Ishiba, for instance, told reporters that Japan is asking the U.S. government to immediately correct tariffs that are not consistent with their agreement.
'The uncertainty about whether Trump was bluffing with his tariff threats and simply using those threats as a negotiating tool has been resolved,' said Eswar Prasad, professor of trade policy and economics at Cornell University. 'But the uncertainty about the tariffs themselves, including the rates and what countries and products will be covered, is still unresolved in any durable way and remains subject to Trump's whims.
'Even the deals that have ostensibly been negotiated lack clarity about their details and are far from settled.'
Trump also is threatening new tariffs — including levies of 200% or more on pharmaceuticals and 100% on computer chips.
Trump's trade agenda also is under attack in court, adding to the uncertainty.
A specialized trade court in New York ruled in May that Trump overstepped his authority in imposing April 2 tariffs and earlier ones on Canada, China and Mexico. An appeals court, which allowed the government to continue collecting tariffs while the case moves through the judicial system, now has the case, which is expected to eventually go to the Supreme Court.
In a hearing last week, the judges sounded skeptical about the Trump administration's authority to declare a national emergency to justify the tariffs.