Countries React to New US Tariff Rates
Multiple countries said they're still assessing the impact of the new U.S. tariffs that took effect Aug. 1 (see 2507310081), although some that agreed to deals, including the EU and South Korea, said they now have more stability for their industries.
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Canada's Prime Minister Mark Carney issued a statement about the rate hike from 25% to 35% on goods from his country, saying Canada's government is disappointed, though the carve-out for goods that qualify for the free-trade pact, which Canada calls CUSMA, means it's not as stark as it might seem.
"The U.S. application of CUSMA means that the U.S. average tariff rate on Canadian goods remains one of its lowest for all of its trading partners. Other sectors of our economy -- including lumber, steel, aluminum, and automobiles -- are, however, heavily impacted by U.S. duties and tariffs," he wrote. Lumber is subject to trade remedies; the other sectors are being tariffed under Section 232 at 50% for the metals and 25% for cars.
"The United States has justified its most recent trade action on the basis of the cross-border flow of fentanyl, despite the fact that Canada accounts for only 1% of U.S. fentanyl imports and has been working intensively to further reduce these volumes," he wrote. He said the country has hired thousands of new law enforcement and border officers.
Swiss President Karin Keller-Sutter said on social media that trade talks between Switzerland and the U.S. failed: "For the President, the trade deficit is the main focus. No agreement could be reached on the letter of intent negotiated between Switzerland and the USA."
The Indian government has not yet officially replied to the news it would face 25% tariffs on Aug. 7, but India Today reported that Commerce Minister Piyush Goyal said that India is examining the impact of the tariff announcement, while emphasizing the need to protect Indian farmers.
Prime Minister Narendra Modi in a social media post said his government is “committed to the welfare and food security of the farmers across the country.” Indian farming subsidies have been a sticking point during trade negotiations with the U.S. and a source of Trump’s ire toward the country (see 2507300018).
The Indian opposition party used social media to criticize the government’s failure to secure a deal, and said that India “is suffering the consequences of Narendra Modi's 'friendship'” with Donald Trump.
Indian trade officials reportedly were “shocked and disappointed” by Trump’s tariff announcement, according to reporting by Bloomberg, which also suggested that India's unwillingness to purchase F-35 fighter jets may have scuttled trade talks.
Japan’s Chief Cabinet Secretary Yoshimasa Hayashi, said during a press conference that his country has “to assess the details” of the trade deal it had reached with the U.S. in light of deals announced with other countries. He said that Japan will be asking Trump for a reduction in duties paid on Japanese cars to reflect the lower tariffs on cars from the EU. Japanese cars will face a 17.5% rate, since the reduced 15% auto tariff will be applied to the MFN rate, whereas cars assembled in the EU will face a 15% rate, all in.
EU Trade Commissioner Maros Sefcovic posted on social media that the “new U.S. tariffs reflect the first results of the EU-US deal, esp. the 15% all-inclusive tariff cap.” He said that the deal “reinforces stability” for European businesses and that EU exporters are now in a “more competitive position.” He concluded by saying, “The work continues.”
South Korean President Lee Jae-myung said that his government has “eliminated uncertainty” for Korean exporters and “established conditions for competing with major countries on equal or superior terms” by securing rates below that of international competitors, according to an unofficial translation.
Bloomberg reported that Taiwan's Cabinet said: "Taiwan and the US will continue negotiations, with upcoming discussions to also include supply chain cooperation and issues related to Section 232 investigation [on semiconductors]. If an agreement is reached, there is a possibility of further reducing reciprocal tariff rates and securing preferential treatment on tariffs related to the Section 232 investigation." Taiwan was given a 20% rate, but electronics are not subject to reciprocal tariffs, so, according to the Bloomberg story, more than 65% of Taiwanese exports aren't facing the additional 20% tariff.