On August 1, the US will begin to impose increased "mutual" tariffs on imported goods. Initially, global "mutual" tariffs were announced by Donald Trump on April 2 and then their introduction was postponed twice to develop negotiations with trading partners and form trade agreements to reduce imbalances. In July, new tariff threats intensified the negotiation process.
The level of new tariffs has been differentiated by country depending on the resulting imbalance in mutual trade with the United States. Olga Ponomareva, an expert at the Economic Policy Foundation, has estimated Trump’s current trade deals for different countries.
May 8 — Great Britain:
- Introduction of tariff quotas on imports of steel and aluminum to the United States agreed.
- Mutual zero tariffs established on certain types of goods in the aerospace industry to develop technological cooperation.
- A duty-free quota on imports of 100.000 British cars per year to the United States introduced.
July 2 — Vietnam:
- A 20% tariff introduced on almost all imports from Vietnam (instead of an additional 46%).
- An increased rate of 40% approved for goods redirected to the United States through Vietnam.
- However, Vietnam zeroed out import tariff rates on all goods from the United States.
July 16 — Indonesia:
- A 19% tariff introduced on Indonesian exports to the US (instead of the April mutual tariffs of 32%).
- Reverse duty is 0%.
- Additional import of energy resources from the US worth $15 bn, other goods worth $4.5 bn and 50 Boeing aircrafts agreed.
July 22 — Philippines:
- Tariff on imports from Philippines to the US reduced to 19% (from additional 20% announced in July).
- Reverse duty is 0%.
July 23 — Japan:
- Tariff on imports from to the US reduced to 15% (instead of additional 25%).
- Japan's investments in the US are expanding by $550 bn.
- Purchases of agricultural and food products from the US are increasing (rice by 75% and quota expansion), LNG, aircrafts (an agreement was signed to purchase 100 Boeing aircrafts), and military industry products.
- A reduction in trade barriers for US automobiles and industrial goods is expected (Japan agreed to recognize US auto industry standards).
July 27 — European Union:
- Tariff on imports to the USA was reduced to 15% instead of the planned increase by 30 p.p. (including cars; a quota will probably be introduced for metals).
- Duties in mutual trade on certain product groups were cancelled: goods for the aircraft industry, certain types of chemical products, equipment for semiconductors, agricultural goods, critical materials.
- Purchase of energy resources for $750 bn and additional investments for $600 bn agreed.
August 12 — China:
- Increased rates in mutual trade to be introduced after August 12 if parties have not agreed on anything by that date. This is +54 p.p. from the US side on Chinese imports and +34 p.p. from China on American imports.
- Parties are currently discussing the possibility of extending tariff truce.
- Parties are focused on concluding a comprehensive deal agreeing thereby on tariff conditions, mode of export control, expansion of US exports to China, technological cooperation, investment agreements, etc.
Benefits of those countries that have concluded agreements with the US look dubious; the advantages are partly evident when comparing conditions of certain countries (20% Vietnam, 19% Philippines and Indonesia versus 15% Japan and the EU and 10% Great Britain), however, tariffs are significantly higher than those in effect previously (less than 5%), noted Olga Ponomareva.
Considering possible changes in global trade, the expert noted that parties are currently seeking to reduce the potential negative effect of tariffs, to agree not only on the reduction of "mutual" country tariffs, but also sectoral duties on metals and automobiles. Depending on the volume of tariff quotas (compared with historical volumes of supplies to the USA), a certain market share may be preserved.
Rise in tariffs will affect exports to the US and will prompt a search for alternative trade routes, the expert predicted. Negotiation tracks are already actively developing (China — Japan — Korea; EU — India; EU — Indonesia; EU — Australia) and agreements are being concluded (Great Britain — India; China — ASEAN (updating the Free Trade Area)).