3 days ago
Trump's higher tariffs on major trading partners officially kick in
Higher tariffs on goods imported from dozens of countries into the United States have officially come into force, leaving some major trading partners scrambling to secure a deal with the world's biggest economy.
The US Customs and Border Protection agency began collecting the higher tariffs of 10 per cent to 50 per cent from at 12:01am US east coast time on Thursday, after weeks of suspense over Donald Trump's final tariff rates and frantic negotiations with countries seeking to lower them.
The increases bring the US's average import duty to its highest rate in a century, and are part of Mr Trump's strategy to shrink America's trade deficit with trading partners.
Among leaders vowing to hold out on making a deal with Mr Trump are Indian Prime Minister Narendra Modi and Brazilian President Luiz Inácio Lula da Silva.
The US president has frequently modified his plans since unveiling his "liberation day" tariffs in April.
Recently, he slapped higher rates on imports from some countries, including 50 per cent for goods from Brazil, 39 per cent from Switzerland, 35 per cent from Canada and 25 per cent from India.
He announced on Wednesday a further 25 per cent tariff on Indian goods, to be implemented in 21 days over India's purchases of Russian oil, on top of the 25 per cent already imposed.
Tariffs are ultimately paid by companies importing the goods, and passed on in full or in part to consumers of end products.
Mr Trump's top trade negotiator, Jamieson Greer, said the US was working to reverse decades of policies that had weakened its manufacturing capacity and workforce.
"The rules of international trade cannot be a suicide pact," he wrote in a column published by the New York Times.
"By imposing tariffs to rebalance the trade deficit and negotiating significant reforms that form the basis of a new international system, the United States has shown bold leadership."
Eight major trading partners accounting for about 40 per cent of US trade flows have reached framework deals for trade and investment concessions to Mr Trump, including the European Union, Japan and South Korea, reducing their base tariff rates to 15 per cent.
Australia is currently on the base rate tariff of 15 per cent.
Britain negotiated a 10 per cent rate, while Vietnam, Indonesia, Pakistan and the Philippines secured rate reductions to 19 per cent or 20 per cent.
Center for Strategic and International Studies trade expert and senior fellow William Reinsch said the tariffs would likely stoke inflation.
"There'll be some supply chain rearrangement. There'll be a new equilibrium," he told Reuters.
Countries with punishingly high duties, such as India and Canada, "will continue to scramble around trying to fix this," he added.
US import taxes are one part of a multi-layered tariff strategy that includes national security-based sectoral tariffs on semiconductors, pharmaceuticals, autos, steel, aluminium, copper, lumber and other goods.
Mr Trump said on Wednesday the microchip duties could reach 100 per cent.
China is on a separate tariff track and will face a potential tariff increase on August 12 unless Mr Trump approves an extension of a prior truce.
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.
The US president has also a vast increase in federal revenues from his import tax collections, with his Commerce Secretary Howard Lutnick saying on Fox Business Network on Thursday that he expected revenue from tariffs to reach $US50 billion a month.
Mr Lutnick said more increases were expected from separate duties on semiconductors and pharmaceuticals that should be announced soon.
The increase in duties will drive average US tariff rates to around 20 per cent, the highest in a century and up from 2.5 per cent when Mr Trump took office in January, the Atlantic Council estimates.
US Commerce Department data released last week included more evidence that tariffs were driving up prices for American consumers, including for recreational goods and motor vehicles.
Costs were also mounting for companies, including bellwethers Caterpillar, Marriott, Molson Coors and Yum Brands.
Reuters
