WSJ Opinion: Is the West Finally Getting Serious About Imposing Pain on Vladimir Putin?
The European Union places tougher economic sanctions on Russia amid its war on Ukraine. Will Donald Trump do the same at last? Plus, a populist wave hits Japan as the Liberal Democratic Party loses its majority in the upper house as voters revolt against inflation. Photo: Monica Espitia
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Yahoo
20 minutes ago
- Yahoo
Trump's broad tariffs go into effect, just as economic pain is surfacing
WASHINGTON (AP) — President Donald Trump was set to officially begin levying higher import taxes on dozens of countries Thursday, just as the economic fallout of his monthslong tariff threats has begun to create visible damage for the U.S. economy. The White House said that starting just after midnight that goods from more than 60 countries and the European Union would face tariff rates of 10% or higher. Products from the European Union, Japan and South Korea will be taxed at 15%, while imports from Taiwan, Vietnam and Bangladesh will be taxed at 20%. For places such as the EU, Japan and South Korea, Trump also expects them to invest hundreds of billions of dollars in the U.S. 'I think the growth is going to be unprecedented,' Trump said Wednesday afternoon. He added that the U.S. was 'taking in hundreds of billions of dollars in tariffs,' but he couldn't provide a specific figure for revenues because 'we don't even know what the final number is' regarding tariff rates. Despite the uncertainty, the Trump White House is confident that the onset of his broad tariffs will provide clarity about the path of the world's largest economy. Now that companies understand the direction the U.S. is headed, the administration believes they can ramp up new investments and jump-start hiring in ways that can rebalance the U.S. economy as a manufacturing power. But so far, there are signs of self-inflicted wounds to America as companies and consumers alike brace for the impact of new taxes. What the data has shown is a U.S. economy that changed in April with Trump's initial rollout of tariffs, an event that led to market drama, a negotiating period and Trump's ultimate decision to start his universal tariffs on Thursday. After April, economic reports show that hiring began to stall, inflationary pressures crept upward and home values in key markets started to decline, said John Silvia, CEO of Dynamic Economic Strategy. 'A less productive economy requires fewer workers,' Silvia said in an analysis note. 'But there is more, the higher tariff prices lower workers' real wages. The economy has become less productive, and firms cannot pay the same real wages as before. Actions have consequences.' Even then, the ultimate transformations of the tariffs are unknown and could play out over months, if not years. Many economists say the risk is that the American economy is steadily eroded rather than collapsing instantly. 'We all want it to be made for television where it's this explosion — it's not like that,' said Brad Jensen, a professor at Georgetown University. 'It's going to be fine sand in the gears and slow things down.' Trump has promoted the tariffs as a way to reduce the persistent trade deficit. But importers sought to avoid the taxes by importing more goods before the taxes went into effect. As a result, the $582.7 billion trade imbalance for the first half of the year was 38% higher than in 2024. Total construction spending has dropped 2.9% over the past year, and the factory jobs promised by Trump have so far resulted in job losses. The lead-up to Thursday fit the slapdash nature of Trump's tariffs, which have been variously rolled out, walked back, delayed, increased, imposed by letter and frantically renegotiated. The process has been so muddled that officials for key trade partners were unclear at the start of the week whether the tariffs would begin Thursday or Friday. The language of the July 31 order to delay the start of tariffs from Aug. 1 said the higher tax rates would start in seven days. On Wednesday morning, Kevin Hassett, director of the White House National Economic Council, was asked if the new tariffs began at midnight Thursday, and he said reporters should check with the U.S. Trade Representative's Office. Trump on Wednesday announced additional 25% tariffs to be imposed on India for its buying of Russian oil, bringing their total import taxes to 50%. He has said that import taxes are still coming on pharmaceutical drugs and announced 100% tariffs on computer chips, meaning the U.S. economy could remain in a place of suspended animation as it awaits the impact. The president's use of a 1977 law to declare an economic emergency to impose the tariffs is also under challenge. The impending ruling from last week's hearing before a U.S. appeals court could cause Trump to find other legal justifications if judges say he exceeded his authority. Even people who worked with Trump during his first term are skeptical that things will go smoothly for the economy, such as Paul Ryan, the former Republican House speaker, who has emerged as a Trump critic. 'There's no sort of rationale for this other than the president wanting to raise tariffs based upon his whims, his opinions,' Ryan told CNBC on Wednesday. 'I think choppy waters are ahead because I think they're going to have some legal challenges.' Still, the stock market has been solid during the recent tariff drama, with the S&P 500 index climbing more than 25% from its April low. The market's rebound and the income tax cuts in Trump's tax and spending measures signed into law on July 4 have given the White House confidence that economic growth is bound to accelerate in the coming months. As of now, Trump still foresees an economic boom while the rest of the world and American voters wait nervously. 'There's one person who can afford to be cavalier about the uncertainty that he's creating, and that's Donald Trump,' said Rachel West, a senior fellow at The Century Foundation who worked in the Biden White House on labor policy. 'The rest of Americans are already paying the price for that uncertainty.'
Yahoo
20 minutes ago
- Yahoo
Trump's higher tariff rates hit goods from major US trading partners
By David Lawder and Andrea Shalal (Reuters) -President Donald Trump's higher tariff rates of 10% to 50% on dozens of trading partners kicked in on Thursday, testing his strategy for shrinking U.S. trade deficits without massive disruptions to global supply chains, higher inflation and stiff retaliation from trading partners. U.S. Customs and Border Protection agency began collecting the higher tariffs at 12:01 a.m. EDT (0401 GMT) after weeks of suspense over Trump's final tariff rates and frantic negotiations with major trading partners that sought to lower them. Goods loaded onto U.S.-bound vessels and in transit before the midnight deadline can enter at lower prior tariff rates before October 5, according to a CBP notice to shippers issued this week. Imports from many countries had previously been subject to a baseline 10% import duty after Trump paused higher rates announced in early April. But since then, Trump has frequently modified his tariff plan, slapping some countries with much higher rates, including 50% for goods from Brazil, 39% from Switzerland, 35% from Canada and 25% from India. He announced on Wednesday a separate, 25% tariff on Indian goods to be imposed in 21 days over the South Asian country's purchases of Russian oil. "RECIPROCAL TARIFFS TAKE EFFECT AT MIDNIGHT TONIGHT!," Trump said on Truth Social just ahead of the deadline. "BILLIONS OF DOLLARS, LARGELY FROM COUNTRIES THAT HAVE TAKEN ADVANTAGE OF THE UNITED STATES FOR MANY YEARS, LAUGHING ALL THE WAY, WILL START FLOWING INTO THE USA. THE ONLY THING THAT CAN STOP AMERICA'S GREATNESS WOULD BE A RADICAL LEFT COURT THAT WANTS TO SEE OUR COUNTRY FAIL!" Eight major trading partners accounting for about 40% of U.S. trade flows have reached framework deals for trade and investment concessions to Trump, including the European Union, Japan and South Korea, reducing their base tariff rates to 15%. Britain won a 10% rate, while Vietnam, Indonesia, Pakistan and the Philippines secured rate reductions to 19% or 20%. "For those countries, it's less-bad news," said William Reinsch, a senior fellow and trade expert at the Center for Strategic and International Studies in Washington. "There'll be some supply chain rearrangement. There'll be a new equilibrium. Prices here will go up, but it'll take a while for that to show up in a major way," Reinsch said. Countries with punishingly high duties, such as India and Canada, "will continue to scramble around trying to fix this," he added. Trump's order has specified that any goods determined to have been transshipped from a third country to evade higher U.S. tariffs will be subject to an additional 40% import duty, but his administration has released few details on how these goods would be identified or the provision enforced. Trump's July 31 tariff order imposed duties above 10% on 67 trading partners, while the rate was kept at 10% for those not listed. These import taxes are one part of a multilayered tariff strategy that includes national security-based sectoral tariffs on semiconductors, pharmaceuticals, autos, steel, aluminum, copper, lumber and other goods. Trump said on Wednesday the microchip duties could reach 100%. China is on a separate tariff track and will face a potential tariff increase on August 12 unless Trump approves an extension of a prior truce after talks last week in Sweden. He has said he may impose additional tariffs over China's purchases of Russian oil as he seeks to pressure Moscow into ending its war in Ukraine. REVENUES, PRICE HIKES Trump has touted the vast increase in federal revenues from his import tax collections, which are ultimately paid by companies importing the goods and consumers of end products. The higher rates will add to the total, which reached a record $27 billion in June. U.S. Treasury Secretary Scott Bessent has said that U.S. tariff revenues could top $300 billion a year. The move will drive average U.S. tariff rates to around 20%, the highest in a century and up from 2.5% when Trump took office in January, the Atlantic Institute estimates. Commerce Department data released last week showed more evidence that tariffs began driving up U.S. prices in June, including for home furnishings and durable household equipment, recreational goods and motor vehicles. Costs from Trump's tariff war are mounting for a wide swath of companies, including bellwethers Caterpillar, Marriott, Molson Coors and Yum Brands. All told, global companies that have reported earnings so far this quarter are looking at a hit of around $15 billion to profits in 2025, Reuters' global tariff tracker shows.
Yahoo
20 minutes ago
- Yahoo
Trump's sweeping tariffs take effect in another dramatic reshaping of the US trade landscape
New sweeping "reciprocal" tariffs are now in force as the White House implemented a recent executive action that will see importers paying between 10% and 50% in the coming months as they bring in a variety of goods to the US from around the globe. Dozens of countries — including top trading partners like the European Union, South Korea, and Japan — now face a key new rate of 15%. Others are facing "bespoke" rates. Those at the higher end of the spectrum have found themselves at odds with President Trump. The latest complete tally, according to recent calculations from the Yale Budget Lab, is that the US overall average effective tariff rate will jump to 18.3% as these "reciprocal" tariffs take effect. Read more: What Trump's tariffs mean for the economy and your wallet It's yet another uptick from Trump in his trade wars, with plenty more promised in the weeks ahead. Trump even suggested late Wednesday afternoon he is looking to impose a tariff of approximately 100% on "all chips and semiconductors coming into the United States" but with an escape hatch for companies who offer even "a commitment to build inside the United States." Trump's focus on tariffs hasn't slowed even after months of fears that these new duties will spur at least temporary inflation. The many moves have pushed the Federal Reserve to hold interest rates steady — much to Trump's unhappiness — with Chair Jerome Powell recently noting "higher tariffs have begun to show through more clearly to prices of some goods." But rates continue to rise, with countries now facing higher tariffs, including Brazil, which saw 50% duties go into effect Wednesday, and India, which now faces 25% duties but could see rates double in about three weeks' time over its consumption of Russian oil. Goods from almost two dozen nations, from Bangladesh to South Africa, now face higher rates, with shippers there now set to pay 20% or higher. Meanwhile, a major surprise in recent days has been Switzerland, which now faces 39% duties. That's after a last-minute trip from the Swiss president, which appears not to have borne immediate fruit in getting an exemption for her country. Canada, Mexico, and China are not seeing their rates change this week as all three nations already face headline tariffs of 25% or higher — and all are on different negotiating schedules. Over 100 other nations— nearly all smaller ones — are also not seeing their rates change on Thursday; instead, they will stay at a previously set 10% level. Read more: 5 ways to tariff-proof your finances That number is also sure to change further in the weeks ahead as nations continue to search for carveouts on hundreds of fronts and Trump continues to promise new sector-specific tariffs on both semiconductors and pharmaceuticals in the weeks ahead. The new duties also include a focus on the issue of transhipping, promising an additional tariff of 40% for any goods deemed "to have been transshipped to evade applicable duties" without providing a further definition. Thursday's changes are the latest culmination of Trump's intense second-term focus on tariffs. He declared "I am a tariff man" back in 2018, but has gone much further on the issue in his second term. The duties — as Trump notes nearly every day while also dismissing worried economists — are already setting tariff revenue records and could grow further in the coming months with the new higher rates. As Trump said Wednesday, "We've really just started; this is just in its infancy." Ben Werschkul is a Washington correspondent for Yahoo Finance. Click here for political news related to business and money policies that will shape tomorrow's stock prices
