It was nice while it lasted. Nations all over the globe had until August 1st to agree to a trade deal with the Trump administration. Some of them made deals, but most of them did not. Those that did not will now be hit by a “wall of tariffs”, with individual rates being determined at the discretion of the White House. So how will this “wall of tariffs” affect the U.S. economy? Ultimately, it is going to take some time for this drama to fully play out. The products that will be in our stores this month were brought into our country well before deadline day. The products that will be brought into our country after deadline day will start showing up in our stores during the months ahead, and that is when we could start experiencing price hikes on certain things.
According to White House Press Secretary Karoline Leavitt, nations that decided not to make a deal will be receiving letters from President Trump which will inform them of the consequences…
For countries that were not able to strike a deal, they should expect a letter from the Trump administration soon, White House Press Secretary Karoline Leavitt said during a briefing Thursday.
“The rest of those countries that either do not have a deal or have a letter, they will be hearing from this administration by the midnight deadline tonight,” Leavitt said.
It remains unclear what tariff will be placed on those countries’ imports to the United States, however. Those discussions are taking place today, Leavitt said, and Trump will sign executive orders this afternoon or this evening setting those new tariff rates.
Thankfully, deals with some of our most important trading partners have been reached.
For example, South Korea was able to make a deal with President Trump right at the deadline…
President Donald Trump announced a “full and complete trade deal” with South Korea on Thursday evening — an agreement committing $350 billion in investment into the United States and significantly eroding Korean automaker advantages in the U.S. market.
The Korean team did manage, however, to convince Washington to accept a deal that did not require South Korea to increase its imports of American beef or rice, a point of significant contention during prior negotiation sessions.
That is good news, because we do a tremendous amount of business with South Korea.
As for our closest neighbors, the news is mixed.
Mexico was given an extra 90 days to make a deal after a “very successful” call between President Trump and Mexican President Claudia Sheinbaum…
President Trump on Thursday said he’s giving Mexico an additional 90 days to strike a trade deal, with the announcement coming a day before his administration’s Aug. 1 deadline to impose 30% tariffs on imports from the nation.
Mr. Trump had said earlier this month that the 30% import duties would begin on Friday for Mexican imports, saying at the time that the country had not done enough to stop North America from turning into a “Narco-Trafficking Playground.”
In his Thursday social media post, the president said he agreed to a 90-day extension during a phone conversation with Mexico President Claudia Sheinbaum, which he described as “very successsful.”
Meanwhile, no deal has been made with Canada yet, and President Trump is warning that Canada’s support for a Palestinian state may make it “very hard” to do so…
While some Europeans are hailing Canada’s move, this has already provoked a swift and threatening reaction from President Trump.
“Wow! Canada has just announced that it is backing statehood for Palestine. That will make it very hard for us to make a Trade Deal with them. Oh’ Canada!!!” he wrote on Truth Social.
The threat to blow up trade talks due to Palestinian recognition comes as the US is dangling a 35% tariff hike over Canada if a mutual agreement cannot be reached by August 1 – literally tomorrow.
I think that some sort of an agreement with Canada will eventually be reached, but I cannot say the same thing about the BRICS nations.
In fact, because Brazil has been so uncooperative they have just been hit with a 50 percent tariff rate…
Trump signed executive actions on Wednesday imposing a 50% tariff on Brazil, a 50% tariff on certain copper products and suspending a tax perk for all countries that allowed cheap packages to fly into the US duty-free.
Our relations with Brazil are going downhill really quickly, and that is not a good thing.
As for Russia and India, Trump just said that they “can take their dead economies down together, for all I care”…
In response, Trump lashed out on Truth Social media early Thursday morning, labeling India a “dead economy” and claiming the U.S. does “very little business” with the country.
“I don’t care what India does with Russia. They can take their dead economies down together, for all I care,” Trump wrote on his social media platform.
He continued, “We have done very little business with India, their Tariffs are too high, among the highest in the World,” adding, “Likewise, Russia and the USA do almost no business together. Let’s keep it that way, and tell Medvedev, the failed former President of Russia, who thinks he’s still President, to watch his words. He’s entering very dangerous territory!”
Wow.
I am not sure what to say about that.
More than a billion people live in India, and so it is in our interest to have a positive relationship with them.
Of course more than a billion people live in China too, and a permanent deal with China has still not been reached.
Unlike the August 1st deadline for everyone else, the deadline for reaching a permanent deal with China is August 12th…
The Trump administration’s trade talks with China has taken a different tack than the rest of the world. The world’s second largest economy was firmly in Trump’s trade crosshairs from the moment he took office.
Rather than a deal, China has reached a series of suspensions over its “reciprocal” tariff rate. It was initially hit with a 34% tariff from “Liberation Day,” before a series of back-and-forth measures between the two sides saw the duties skyrocket to 145% duties for Chinese imports to the U.S. and 125% for U.S. imports to China.
However, both sides agreed to reduced tariffs in May, after their first trade meeting in Geneva, Switzerland. The truce was agreed to last till Aug. 12.
If August 12th arrives and tariffs on Chinese goods go up to 145 percent, that would create quite a bit of chaos.
Hopefully that will not happen.
But without a doubt we have entered a period of tremendous worldwide turmoil, and trade wars are definitely going to be a contributing factor.
If there are foreign-made goods that you are going to need in the months ahead, hopefully you have already purchased them by now.
Let us hope that we will see permanent trade deals get made with China, India, Brazil, Russia, Mexico and Canada, but we also need to be prepared for what will transpire if that does not happen.
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