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Business Times
11-07-2025
- Business
- Business Times
Trump unveils new tariff rates, including 50% levy on Brazil
[WASHINGTON] US President Donald Trump unveiled a new round of tariff demand letters on Wednesday (Jul 9), including a 50 per cent rate on Brazil, one of the highest so far announced for the levies which are set to hit in August. Trump cited the treatment of former president Jair Bolsonaro – a right-wing populist leader – in his letter to Brazil, calling on authorities to drop charges against him over an alleged coup attempt. 'This trial should not be taking place. It is a witch hunt that should end immediately!' Trump wrote in the letter. The president on Wednesday also said he would levy a 30 per cent rate on Algeria, Libya, Iraq and Sri Lanka, 25 per cent duties on products from Brunei and Moldova, and a 20 per cent rate on goods from the Philippines. The levies were largely in line with rates Trump had initially announced in April against those countries, though Iraq's duties are down from 39 per cent and Sri Lanka's, reduced from 44 per cent. Trump began notifying trading partners of new rates on Monday, ahead of a deadline this week for countries to wrap up negotiations with his administration – and posted to social media that he planned to release 'a minimum of seven' letters on Wednesday morning, with additional rates to be posted in the afternoon. Brazil is the first country to receive one of Trump's tariff notifications that was not on the initial list of trading partners when he announced higher so-called reciprocal tariffs in April. And the letter to Brazil also presents a warning shot to the Brics group of developing nations, which Trump has cast as a threat to the US dollar's status as the world's key currency. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up The US adding a tariff onto a foreign country to stop a judicial proceeding is unprecedented, according to Stephen Olson, visiting senior fellow at the Iseas – Yusof Ishak Institute and a former US trade negotiator. 'It signals to US trade partners that any and all issues that catch Trump's attention could become a problematic part of the trade agenda,' Olson said. 'It also raises questions as to whether the reciprocal tariff negotiations will ever really settle anything.' Brazil is unusual among Trump's most recent tariff targets because it runs a deficit in trade with the US, while almost all the others post large surpluses. In 2024, Brazil imported some US$44 billion of American products, while US imports from Brazil were around US$42 billion, according to the Census Bureau. In a social media post late on Wednesday, Brazil President Luiz Inacio Lula da Silva said the nation will not be 'tutored' by anyone, adding the case against those who planned a coup is a matter solely for the country's justice system and 'not subject to interference or threat'. 'Any unilateral rate hikes will be responded to using Brazil's economic reciprocity law,' Lula wrote. 'The sovereignty, respect and intransigent defence of the Brazilian people's interests are what guide our relations with the world.' Brazil ranks among the top 20 US trading partners. Out of the other seven countries cited in Trump's announcements on Wednesday, only the Philippines – which sent some US$14.1 billion of goods to the US last year – makes it into the top 50. Imports from the remaining six nations put together amounted to less than US$15 billion last year, with Iraq – an exporter of crude oil – accounting for about half of that sum. Asked what formula he was using to determine the appropriate duty rate for trading partners, Trump told reporters at a White House event on Wednesday that it was 'based on common sense, based on deficits, based on how we've been over the years and based on raw numbers'. 'They're based on very, very substantial facts, and also past history,' he said. So far, the latest warnings have done little to rattle markets, with traders focusing on Trump's overall extension of the deadline for the so-called reciprocal tariffs to Aug 1. That has effectively given trading partners an extension for talks, and initially fuelled scepticism on Wall Street that he would follow through on his import taxes. But the move on Brazil shook the real, which slumped as much as 2.9 per cent against the US dollar, while the US$5.4 billion iShares MSCI Brazil ETF – the largest US-listed exchange-traded fund tracking the nation's equities – was down 1.8 per cent in post-market trading. Trump added to uncertainty earlier this week by claiming he was 'not 100 per cent firm' on that new cut-off date for talks. He has since sought to signal to investors and trading partners that he is committed to carrying out his tariff threats, vowing on Tuesday that 'all money will be due and payable starting Aug 1, 2025 – no extensions will be granted' on country-specific levies. Deputy Treasury Secretary Michael Faulkender on Wednesday indicated that even if tariffs kicked into effect, negotiations could continue beyond the August deadline. 'There's enormous progress that has been made with many of these countries, and for some of them it is just finalising some of the terms of the framework,' he said in an interview with Bloomberg Television. 'Now obviously, the details of the trade agreement will be worked out well beyond Aug 1, but a general framework is the objective to have by Aug 1.' The president has also raised the stakes for two key trading partners, saying the European Union could receive a unilateral tariff rate soon despite progress in negotiations, and vowing to hit India with an additional 10 per cent levy for its participation in the Brics. And he has raised the spectre of more industry-specific tariffs, floating a 50 per cent rate on copper products that sent that metal climbing as high as 17 per cent in New York on Tuesday, a record one-day spike. He also pitched tariffs as high as 200 per cent on pharmaceutical imports if drug companies do not shift production to the US in the next year. The barrage of letters and fresh tariff threats marked the latest turn in a dizzying trade agenda that has spurred volatility in markets, and left consumers, businesses and trading partners anxious about the impact on trade flows and the global economy. Trump initially announced the so-called reciprocal tariffs on Apr 2, but after markets reacted with alarm, paused the higher duties to 10 per cent for a 90-day negotiating period that was set to end on Jul 9, before the latest three-week extension. The president's letters on Monday targeted countries including Japan, South Korea, South Africa, Indonesia, Thailand and Cambodia. Most of the tariff rates, however, were largely in line with what Trump had already announced the nations were likely to face. While Trump has touted his tariff notification letters as deals, even the actual agreements he has managed to strike during the negotiating period with the UK and Vietnam have been far short of comprehensive, leaving many details unclear. He also secured a truce with China to lower rates and ease the flow of critical earth minerals. BLOOMBERG
Business Times
18-05-2025
- Business
- Business Times
China-US trade truce prompts nations to consider tougher tactics
[HONG KONG] China's defiant stance in negotiating a tariff truce with the US has convinced some countries they need to take a tougher position in their own trade talks with the Trump administration. The pause reached a week ago gave structure to what promise to be prolonged and difficult rounds of talks between Washington and Beijing, which still faces average US import taxes near 50 per cent when past levies are factored into the 30 per cent rate agreed to in Geneva, Switzerland. Yet US President Donald Trump's willingness to retreat so much from the earlier 145 per cent duty on China surprised governments from Seoul to Brussels that have so far stuck with the US's request to negotiate rather than retaliate against its tariffs. After China's tough negotiating tactics earned it a favourable – albeit temporary – deal, nations taking a more diplomatic and expedited approach are questioning whether that's the right path. 'This shifts the negotiating dynamic,' said Stephen Olson, a former US trade negotiator who's now a visiting senior fellow with Iseas – Yusof Ishak Institute in Singapore. 'Many countries will look at the outcome of the Geneva negotiations and conclude that Trump has begun to realise that he has overplayed his hand.' Left for now at 10 per cent, the higher bespoke rates will kick in unless deals are signed or postponements are granted before a 90-day suspension ends in July. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up While officials are loathe to signal publicly any hardening of their approach, there are signs particularly from larger nations that they are realising they hold more cards than previously thought and can afford to slow the pace of negotiations. Trump himself indicated last week – near the halfway point of the 90-day reprieve – that there is not time to do deals with about 150 countries lining up for them. So the US may assign the higher tariff rates unilaterally in the next two to three weeks. While Trump also said that India was prepared to lower all tariffs on US goods, the nation's External Affairs Minister Subrahmanyam Jaishankar told reporters that trade talks are ongoing and 'any judgement on it would be premature'. India's Commerce Minister Piyush Goyal was scheduled to arrive in the US this weekend for further negotiations. 'There are many countries that may learn from China that the correct way to negotiate with President Trump is to stand firm, remain calm and force him to capitulate,' said Marko Papic, chief strategist of GeoMacro at BCA Research. Japan's rethink Japanese trade officials are scheduled to visit Washington this week. Japan's Trade Minister Yoji Muto skipped a regional meeting last week in nearby South Korea that US Trade Representative Jamieson Greer attended. Top negotiator Ryosei Akazawa, who leads Japan's tariff task force, said earlier this month that he is hoping to reach an accord with the US in June, but recent local media reports indicate an agreement is more likely be reached in July, ahead of an upper house election. Policymakers in Tokyo may be starting to think that it's preferable to take time rather than make major concessions to wrap things up quickly. 'Everyone in the queue is wondering, 'Well, why have I been lining up?'' said Alicia Garcia Herrero, chief economist for Asia-Pacific at Natixis. 'This deal let China jump the queue and also doesn't have clear benefits for the US so it's doubly painful for other countries watching.' Even US officials are signalling that negotiations will take longer. Commerce Secretary Howard Lutnick told Bloomberg TV that talks with Japan and South Korea will take time. Treasury Secretary Scott Bessent last week said the European Union suffered from a lack of unity that was impeding talks. 'I think the US and Europe may be a bit slower,' Bessent said on Tuesday (May 13) at a Saudi-US Investment Forum in Riyadh. On Sunday, the Treasury secretary sounded optimistic about talks more broadly, adding: 'We didn't get here overnight'. 'With a few exceptions, the countries are coming with very good proposals for us,' Bessent said in an interview on CNN's State of the Union. 'They want to lower their tariffs, they want to lower their non-tariff barriers, some of them have been manipulating their currency, they have been subsidising industry and labour.' EU scepticism Officials in Brussels viewed the US-China tariff announcement as leaving high tariffs in place and limited on several fronts, according to people familiar with EU discussions. The meagre negotiating gains for the US and the lack of a clear end game during the 90-day reprieve show how limited is Trump's appetite to keep ratcheting up the pressure on Beijing, the people said on condition of anonymity to discuss private deliberations. 'The trade landscape is becoming more fragmented' and 'the deals achieved so far are not completely addressing the situation,' the European Commission's top economic official Valdis Dombrovkis said in an interview in London on Thursday, referring to the China tariff truce and a UK-US outline of a deal announced days earlier. In Latin America, where developing economies want to preserve both Chinese investment and export access to the US market, leaders are trying to walk a careful line as the two heavyweights square off. Visiting Beijing Brazil President Luiz Inacio Lula da Silva, who previously said negotiation came before retaliation, on Wednesday brushed off concern that forging deeper ties with China would prompt a negative US response after a state visit to Beijing that saw him sign more than 30 agreements. Colombia's President Gustavo Petro, also in Beijing last week, signed on to China's Belt and Road initiative in a bid to boost trade and investment for his country, even as his top diplomat stressed the US remains the nation's main ally. The US-China arrangement may also show nations that the Trump administration is not immune to the pressures of domestic economic headwinds caused by tariffs. 'The economic pain is more immediate and broad-based in the US and this deal can be seen as the Trump administration acknowledging that,' said Robert Subbaraman, head of global markets research at Nomura Holdings Inc. But only nations with economic heft and limited reliance on trade with the US may be able to act on that, according to Bert Hofman, professor at the National University of Singapore and a former World Bank country director for China. 'It's pretty risky for most countries to be tough on the US,' Hofman said by phone. A prime example of that is Canada, which Oxford Economics said last week had effectively suspended almost all of its tariffs on US products. Over the weekend, Canada's Finance Minister Francois-Philippe Champagne disputed that, saying the government kept 25 per cent retaliatory tariffs on tens of billions of US dollars in US goods. He said 70 per cent of the counter-tariffs implemented by Canada in March are still in place, according to a social media post Saturday. The government 'temporarily and publicly paused tariffs' on some items for health and public safety reasons, he said. Still, because China's clout remains substantial as the world's factory floor, other countries may have 'to use more creative pieces of leverage,' according to Papic. Lacking leverage For Vietnam, one-third of its economy depends on trade with the US, and that lack of leverage means there is not scope to do much more than talk tough. Vietnam, which was among the first nations to offer purchasing additional US goods such as Boeing aircraft to close the trade surplus, slammed Trump's tariffs earlier this month as 'unreasonable'. If larger nations do want to get confrontational, one area where they may have room is on services trade, said Katrina Ell, Moody's Analytics head of Asia-Pacific economics. The EU, Singapore, South Korea and Japan are among the nations that have the biggest services trade deficits with the US, Moody's Analytics data show. 'China has too much leverage over the US for the US to continue with its hardline stance whereas that's not the case for many other economies,' Ell said. 'That's what we need to keep in mind is leverage and who has that leverage.' BLOOMBERG
Yahoo
14-04-2025
- Business
- Yahoo
China's Xi says there are ‘no winners' in tariff war as he visits Southeast Asia
China's leader, Xi Jinping, started a week of diplomacy in Southeast Asia with a visit to Vietnam. Monday's move signalled China's commitment to global trade just after US President Donald Trump upended the global economy with his latest tariff moves. Although Mr Trump has paused some tariffs, China was the outlier, as the US leader has kept in place 145% tariffs on the world's second-largest economy. Mr Xi's visit this week lets China show Southeast Asia it is a 'responsible superpower in the way that contrasts with the way the US under president Donald Trump presents to the whole world,' said Nguyen Khac Giang, a visiting fellow at Singapore's Institute of Southeast Asian Studies (Iseas)–Yusof Ishak Institute. China can also work to shore up its alliances and find solutions for the high trade barrier that the US has on Chinese exports. 'There are no winners in a trade war, or a tariff war,' Mr Xi wrote in an editorial jointly published in Vietnamese and Chinese official media. 'Our two countries should resolutely safeguard the multilateral trading system, stable global industrial and supply chains, and open and co-operative international environment.' While Mr Xi's trip likely was planned earlier, it has become significant because of the tariff fight between China and the US, the world's two largest economies. In Vietnam, Mr Xi will meet with Vietnam's Communist Party general secretary To Lam, as well as the prime minister Pham Minh Chinh. This is his third visit and comes just a year after he last visited in December 2023. The timing of the visit sends a 'strong political message that Southeast Asia is important to China,' said International Crisis Group Asia Deputy Director Huong Le-Thu. She said that given the severity of Mr Trump's tariffs and despite the 90-day pause, Southeast Asian nations were anxious that the tariffs, if implemented, could complicate their development. 'Xi's trip is to showcase how China is the opposite to the coercive and self-interested US. There will be a lot of expectations about what type of leadership and initiatives China is going to come up with at this time of crisis,' she said. Vietnam is experienced at balancing its relations with the US and China. It is run under a communist, one-party system like China, but has had a strong relationship with the US. In 2023, it was the only country that received both former president Joe Biden and China's leader. That year, it also upgraded the US to its highest diplomatic level, the same as China and Russia. Vietnam was one of the biggest beneficiaries of countries trying to decouple their supply chains from China, as businesses moved here. China is its biggest trading partner, and China-Vietnam trade surged 14.6% year-on-year in 2024, according to Chinese state media. But the intensification of the trade war has put Vietnam in a 'very precarious situation', given the impression in the US that Vietnam is serving as a backdoor for Chinese goods, said Mr Giang, analyst at Singapore's Iseas–Yusof Ishak Institute. Vietnam had been hit with 46% tariffs under Mr Trump's order before the 90-day pause. China and Vietnam have real, long-term differences. They have disputes over territory in the South China Sea, and Vietnam has faced off with China's coast guard but does not often publicise the confrontations.
