New US tariffs cloud outlook for exporters in Asia and beyond

Boston Globe

2 hours ago

There's still no agreement on what tariffs might apply to products shipped from China. India has no deal yet and faces a potential 50% tariff as Trump pressures it to stop buying oil from Russia.
Recent data shows uncertainty is clouding the outlook for exporters around the world as a rush to beat the tariffs during a pause for negotiation tapers off. Companies are reporting billions of dollars in higher costs or losses due to the higher import duties.
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Global financial markets took Thursday's tariff adjustments in stride, with Asian shares and U.S. futures mostly higher.
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Here's where things stand in what has proven to be a fast-changing policy landscape.
The tariffs taking effect this week
The tariffs announced on Aug. 1 apply to 66 countries, Taiwan and the Falkland Islands. They are a revised version of what Trump called 'reciprocal tariffs,' announced on April 2: 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. That move triggered sell-offs in financial markets and Trump backtracked to allow time for trade talks.
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The president has bypassed Congress, which has authority over taxes, by invoking a 1977 lawto declare the trade deficit a national emergency. That's being challenged in court, but the revised tariffs still took effect.
To keep their access to the huge American market, major trading partners have struck deals with Trump. The United Kingdom agreed to 10% tariffs and the European Union, South Korea and Japan accepted U.S. tariffs of 15%. Those are much higher than 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.
Countries in Africa and Asia are mostly facing lower rates than the ones Trump decreed 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.'
The latest situation for China and India
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.
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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.
A top body of Indian exporters said Thursday the tariffs will impact nearly 55% of the country's outbound shipments to America and force exporters to lose their long-standing clients.
'Absorbing this sudden cost escalation is simply not viable. Margins are already thin,' S.C. Ralhan, president of the Federation of Indian Export Organisations, said in a statement.
Others among the hardest-hit countries
Struggling, impoverished Laos and war-torn Myanmar and Syria face 40-41% 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.
Canada and Mexico have their own arrangements
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, nearly all of its exports to the U.S. remain duty free.
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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.
The outlook for businesses
Surveys of factory managers offer monthly insights into export orders, hiring and other indicators of how businesses are faring. The latest figures in the United States and globally mostly showed conditions deteriorating.
In Japan, factory output contracted in July, purchasing activity fell and hiring slowed, according to the S&P Global Manufacturing PMI. But the data were collected before Trump announced a trade deal that cut tariffs on Japanese exports to 15% from 25%.
Similar surveys show a deterioration in manufacturing conditions worldwide, as a boost from 'front loading' export orders to beat higher tariffs faded, S&P Global said. Similar measures for service industries have remained stronger, reflecting more domestic business activity. In Asia, that includes a rebound in tourism across the region.
Corporate bottom lines are also taking a hit. Honda Motor said Wednesday that it estimates the cost from higher tariffs at about $3 billion. Toyota said its quarterly profit plunged 37% and the hit from tariffs was $3 billion.
On top that, the U.S. economy — Trump's trump card as the world's biggest market — is starting to show pain from months of tariff threats.
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Associated Press writer Niniek Karmini in Jakarta and Aniruddha Ghosal in Hanoi contributed.