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Mint
29-05-2025
- Business
- Mint
Tariff ruling is a setback for Trump but doesn't end trade war
SINGAPORE : Shortly after the news broke that a U.S. court invalidated almost all of President Trump's tariffs, one Vietnam-based furniture exporter responded with an astonished text: 'WHAT???" Wednesday's shock decision by a hitherto little-known U.S. federal court sows fresh uncertainty over the U.S. assault on global trade, the latest in a series of escalations and reversals over trade policy that have whipsawed financial markets and scrambled corporate decision-making. The bottom line, say trade experts, is that the global trade war is far from over. While a setback for the Trump administration, the ruling is unlikely to deter the president from seeking to rewrite the rules of global commerce in America's favor or lead him to abandon tariffs as the principal tool to do so. The administration has already said it will appeal the ruling, and trade experts and lawyers say it has a variety of other legal avenues to prosecute the trade war that are unaffected by Wednesday's decision. 'This is just one more bump in the tariff road that we are going to be on for as long as Trump remains in office," said Deborah Elms, head of trade policy at the Singapore-based Hinrich Foundation, which advocates for free and open trade. 'He loves tariffs and he loves the idea of being able to impose them at will, and I don't think he's going to give that up easily." The New York-based Court of International Trade's ruled that the president overstepped his authority in invoking powers granted to the executive in an economic emergency to impose sweeping tariffs on all U.S. trade partners April 2. The judgment undermines the legal basis for those 'reciprocal" tariffs—which the administration paused for 90 days to allow time for negotiations—that are the centerpiece of Trump's effort to rein in the U.S.'s yawning trade deficit. The court also shot down special levies of 20% imposed on Canada, Mexico and China for their alleged role in the U.S. fentanyl crisis. The administration's plan to appeal could ultimately land the case in the Supreme Court. It is unclear if the tariffs affected by the judgment will remain in place while appeals are heard. Stocks in Asia rose Thursday following the ruling, with investors warming to the prospect of faster economic growth as trade tensions ease. Hong Kong's Hang Seng Index closed up 1.35%, while Tokyo's Nikkei benchmark was up 1.88%. For now, business executives say they're unsure how to respond, given the legal fog. Jeffy Ma, a hat manufacturer in Guangzhou, China, said the ruling was good news, but he hadn't yet heard from his U.S. customers. 'After all, tariffs haven't been completely canceled," he said. New cars sit near the Port of Long Beach in California, where new tariffs have constricted the flow of imports. 'Some large retailers are asking us to see if we can ship more now," said William Su, who splits his time between Taiwan and New York as chief executive officer of Teamson, which sells China-made products, such as toys, through U.S. retailers. But he said muddiness about the future of tariffs on China could deter retailers from approving new production. Some executives expressed caution over the decision, saying that Trump will likely search for other ways to reimpose steep tariffs on China and potentially other Asian economies that run large and persistent trade surpluses with the U.S., including Vietnam, South Korea and Japan. 'I don't think it will change much as U.S. customers will keep on moving products out of China as the focus of Trump is clearly China. Just adding to more instability with everyone wondering what Trump's next step will be," said Michel Bertsch, who runs a furniture-manufacturing company in Vietnam that exports to the U.S. Trump's trade broadside and his frequent reversals have sent manufacturers, retailers and shippers around the world racing to respond, upending longstanding supply chains in Asia, Europe and Latin America. Importers from China canceled billions of dollars' worth of orders after Trump slapped 145% tariffs on the country earlier this year, only to rush to revive some of them when Washington and Beijing later reached a truce to lower duties. Companies have put investment on hold amid the uncertainty over U.S. trade policy. The court's decision doesn't affect a host of other tariffs imposed on U.S. imports, including 25% levies placed on steel, aluminum and cars. Those levies were imposed using alternative legal avenues to that questioned by the New York court. Those more conventional avenues, known as Section 232 and Section 301, still give the president substantial authority to impose new tariffs, though they tend to be used to target imports in specific sectors and don't confer the broad power to tariff all goods in the way the president had sought. The Trump administration says sweeping tariffs are necessary to counter what it says are unfair practices of U.S. trading partners that have contributed to the U.S.'s large and persistent deficit in trade in goods. The 90-day tariff pause announced not long after April 2 sparked a stampede by countries eager to strike trade agreements with Trump to avoid the new tariffs. The U.S. reached agreement with the U.K. over tariff reductions and a framework for further talks, and agreed with Beijing a marked de-escalation in a bilateral trade fight that saw Washington and Beijing push tariffs on each others' products above 100%. The truce brought new tariffs on most Chinese goods down to around 30%, though some products face additional levies. But progress with other trading partners including the European Union, South Korea and Japan has been slow. Trade experts say the court ruling complicates those negotiations, since it means countries might be less willing to make concessions on trade if the courts ultimately decide the basis for Trump's move was faulty. 'Do you still negotiate knowing the whole thing might get settled with the bang of a gavel?" said Paul Nadeau, an associate professor in international affairs at Temple University's Japan campus. Write to Jason Douglas at Jon Emont at and Hannah Miao at
Japan Times
10-05-2025
- Business
- Japan Times
Trump's first trade pact offers faint glimpse of art of the deal
For global leaders puzzling over how to negotiate with Donald Trump, the U.S. president's inaugural pact with the U.K. offers a few clues on how much ground he's prepared to give. Thursday's announcement of their trade framework in the Oval Office shows Trump is willing to keen progress even without a final accord and that can buy political credit with the White House. There's also evidence that American levies can be talked down, but that may not be much more of a template, according to analysts. "If you thought you were going to have to have a real deal done in 90 days, you've now at least seen from the U.K. that that need not be true,' said Deborah Elms, head of trade policy at the Hinrich Foundation in Singapore. "You can have a sketch of an idea of a plan.' The framework Trump greeted as a "breakthrough' will, he says, fast-track U.S. items through U.K. customs and reduce barriers on "billions of dollars' of other exports. The British government meanwhile says tariffs on U.K. cars will drop to 10% and those on metals to zero. Final details need to be negotiated over coming weeks. Stay updated on the trade wars. Quality journalism is more crucial than ever. Help us get the story right. For a limited time, we're offering a discounted subscription plan. Unlimited access US$30 US$18 /mo FOREVER subscribe NOW That extended cliffhanger requires caution on making conclusions. Trump's insistence on preserving some proposed levies, his assent to specific carveouts, and the lack of any requirements regarding China are among highlights analysts point to. But the U.S. surplus with the U.K., as well as their longstanding ties may mean this skirmish in the president's trade war isn't much of a guide for exporters such as Japan or the European Union engaging in negotiations of their own. "You can't be optimistic just because of the U.S.-U.K. announcement,' said Hiroshi Namioka, chief strategist at T&D Asset Management in Tokyo. "The U.S. doesn't have a trade deficit with U.K., so reaching a deal was easier.' Asian countries such as Japan, Vietnam and South Korea that have large trade surpluses with the U.S. have moved quickly to initiate talks, with few signs of progress. Speaking shortly after the deal announcement, Commerce Secretary Howard Lutnick said negotiations with South Korea and Japan are taking "an enormous amount of time.' He added that India could be among the next countries to reach an agreement, while cautioning that work still needs to be done. The EU is also making limited headway in its own engagement with the administration. That's partly because of its sheer size, according to Sam Lowe, partner and head of international trade practice at Flint Global in London. "Whereas the option of retaliation was not really available to the U.K. due to its much smaller economy, the EU can inflict some damage on the U.S. via tariffs and other measures,' he said. "This potentially gives it more leverage, but also means any deal will probably take longer.' One component of the U.K. accord that will be analyzed closely in auto-making hubs was the cut in tariffs on British cars to 10% from 27.5% for 100,000 vehicles per year. Ryosei Akazawa, Japan's chief trade negotiator, speaks to members of the media at the Japanese Embassy in Washington on May 1. | BLOOMBERG Auto exports from Japan and South Korea to the U.S. are each more than 10 times larger than those from the U.K., and account for around one-third of their sales to America. While the deal offers some encouragement that 25% levies on Japanese and South Korean cars could be lowered, Tokyo insists on a complete removal. "We'll continue to seek a rethink of the string of tariff measures from the U.S.,' Japan's chief trade negotiator, Ryosei Akazawa, said Friday. Similarly, the U.K. agreement is unlikely to serve as a viable template in South Korea's talks because of the importance of cars there too, said Hyosung Kwon of Bloomberg Economics. "To secure lower U.S. tariffs on autos, South Korea may need to make concessions such as increasing imports of U.S. liquefied natural gas and easing nontariff barriers on U.S. agricultural products,' he said. One way of looking at the U.S.-U.K. agreement is that the 10% baseline levy applied to all countries by the U.S. is largely fixed, some trade analysts said. The U.K. said it will keep trying to negotiate over that so-called reciprocal tariff. For other countries including Australia and Singapore, it may be the case that there's no real point in discussing going below the 10% level right now, said Elms at the Hinrich Foundation. In one exception, the U.K. was able to get U.S. tariffs on steel and aluminum lowered to zero from 25% as part of what the U.S. called "a new trading union.' It was not immediately clear how this agreement might affect U.S. tariffs on the metals imposed on other countries. The framework didn't offer much insight into nontariff barriers to trade, including regulations and subsidies that U.S. officials have highlighted. The U.K. said it wouldn't loosen safety checks on food imports despite removing levies on beef and other agricultural products. Some analysts also noted the lack of any reference to China in the U.S.-U.K. framework despite indications given by U.S. officials that they want help in efforts to pressure Beijing. U.S. and Chinese officials are set to meet in Switzerland this weekend for their first round of negotiations.
New York Times
14-02-2025
- Business
- New York Times
‘The W.T.O. Is Toast.' What Happens to Global Trade Now.
When President Trump announced he would impose new tariffs on imports from countries around the world, he launched a frontal attack on the global free trade system created in the aftermath of World War II. Mr. Trump's move, announced Thursday and set to begin as soon as April, represents a bet that the United States will gain leverage by replacing global tariffs with its own tariffs, which are taxes on imports. The United States, the world's largest importer, has for decades bought far more from the rest of the world than it sells. Mr. Trump wants to change that and is calculating that other countries, with more exports at stake, might be cautious about retaliating by raising their own tariffs. But instead, many trade experts warn, Mr. Trump's action could presage a global shift toward higher tariffs. That would pose a big challenge to the World Trade Organization, which was established in 1993 to coordinate global tariffs and trade rules. Decisions by other countries to follow Mr. Trump's example and set tariffs unilaterally could impede trade, raising prices for everyone. The free trade promise of consumers buying from the lowest-cost producers could be imperiled. 'I would say the W.T.O. is toast, but what matters now is how other members respond,' said Deborah Elms, the head of trade policy at the Hinrich Foundation, a research group in Singapore that favors free trade. 'Do they stand up for the system? Or do they also ignore key principles, provisions and practices?' How We Got Here: GATT and the W.T.O. The main agreement governing international trade, even today, is the General Agreement on Tariffs and Trade, or GATT. Only 23 countries, including colonial powers like Britain and France, signed that agreement in 1947. The pact's signatories agreed to charge the same tariffs to all other member countries — a crucial provision that Mr. Trump is challenging. Member nations negotiated for years to reduce these tariffs. The most important of these multiyear negotiations was the Uruguay Round, which led to an agreement in 1993 to reduce tariffs further. The negotiators, from 117 nations, also created the World Trade Organization to administer GATT rules and negotiations and to provide binding arbitration of disputes. An American Backlash Against the W.T.O. At the start of President Trump's first term, he and his trade advisers voiced frustration with how the W.T.O.'s arbitration panels had worked out. They contended that the panels were reluctant to condemn export subsidies and other measures by countries like China that sought to strengthen their manufacturing sectors, in violation of the rules of free trade. And they complained that the panels often decided against the United States. Mr. Trump blocked the naming of judges to the W.T.O.'s top body for resolving disputes. That body became unable to meet as judges' terms expired, and could no longer issue binding verdicts. Trade officials in Mr. Trump's first term discussed whether to rewrite tariff rates, but decided that would be a step too far. The prospect of setting new tariffs for more than 4,000 import categories for U.S. trade with more than 150 countries was too daunting. But Mr. Trump is preparing to do just that, overturning GATT's most basic rules by setting tariffs unilaterally. The U.S. would match other countries' tariffs and then add further tariffs to offset subsidies and non-tariff trade barriers in those countries. Mr. Trump particularly complained about value-added taxes in Europe and very steep tariffs in developing countries. Steep Tariffs in Developing Countries When GATT was established in 1947, only a handful of countries had industrialized their economies, and many of them were in ruins because of World War II. As colonial empires broke up into numerous developing countries, leaders of the world's poor countries worried that they might never have a chance to develop manufacturing industries. Developing countries insisted on keeping high tariffs to limit imports of factory goods. They also insisted on being allowed to subsidize their agricultural sectors to try to become self-sufficient in food. Some of these developing countries, like China and India, are now among the world's largest economies. But they have maintained their status as developing countries under GATT rules, allowing them to keep tariffs much higher than in developed economies and heavily subsidize agriculture. Only in response to Trump's trade war in 2018 and 2019 did China begin to reduce its tariffs voluntarily, while retaining the world's largest agricultural subsidies. Mr. Trump signaled that developing countries with high tariffs may be hit with equally high American tariffs. But developing countries, including China and India, contend that while their industrial sectors have grown enormously, their populations are not yet affluent. They still have low average incomes per person and want to remain mostly self-sufficient in food. The dilemma now for Europe and most developing countries is that they desperately need to run trade surpluses with the United States to afford their large trade deficits with China. If they retaliate against President Trump's tariffs, they may trigger a global trade war and doom the W.T.O., which has helped them grow faster for so long.
