A flurry of tariff threats by President Trump leaves U.S. consumers and businesses in limbo ahead of an Aug. 1 deadline to deploy the import duties against more than 50 countries around the world, according to economists and trade experts.
“Nobody knows whether these are threats or whether they will become policy, so it seems like everyone has become desensitized to them,” EY Parthenon chief economist Gregory Daco told CBS MoneyWatch, adding that uncertainty over U.S. tariffs leaves companies in “a very dense fog.”
Mr. Trump on Saturday announced he is imposing 30% tariffs against Mexico and the 27-member European Union. That followed moves to threaten tariffs ranging from 20% to 50% on roughly two dozen countries, including key U.S. trading partners such as Brazil, Canada, Japan and South Korea.
The White House last week also said it plans to impose a 50% levy on copper imports by Aug. 1, raising concerns about higher costs for electronics, cars and numerous other products that use the metal.
Heat on Russia and Brazil
In a separate development that illustrates the White House’s willingness to use tariffs to accomplish its aims beyond trade, Mr. Trump is threatening sharply higher tariffs as he tries to tamp down conflict in Ukraine. The president said on Monday that the U.S. will impose 100% tariffs on countries that engage in trade with Russia if there is no peace deal to end the war in Ukraine within 50 days.
In another case of hitching trade policy to other foreign policy priorities, Mr. Trump said last week that the U.S. would slap a 50% tariff on goods from Brazil next month, citing the criminal prosecution of former Brazilian President Jair Bolsonaro, which Mr. Trump called an “international disgrace.”
The Trump administration has defended its aggressive use of tariffs as a way to ensure fair trade for U.S. businesses; boost key domestic sectors; generate federal revenue; and advance other policy priorities, such as curbing fentanyl trafficking and authorized immigration from Canada and Mexico.
According to Reuters, customs duties in June surpassed $100 billion for the first time in a single fiscal year, a sign the stepped-up tariff regime is contributing more revenue.
“High uncertainty”
So far, the White House has notched only a handful of trade deals, experts note, while agreements with major trading partners like the EU have been harder to come buy. Earlier this month, Mr. Trump announced a pact between the U.S. and Vietnam, while in June a more limited deal was reached with the United Kingdom that the White House said provides gives “American companies unprecedented access to British markets while bolstering U.S. national security.”
Also last month, the U.S. and China announced that they had agreed on a framework for a trade deal that makes it easier for U.S. businesses to acquire Chinese magnets and rare earth minerals.
But with little time to thrash out trade agreements ahead of the White House’s self-imposed Aug. 1 deadline, some trade experts say the U.S. has made little progress since suspending country-based tariffs in April.
“We don’t have any comprehensive deals with our largest trading partners,” said Alex Jacquez, chief of policy and advocacy at Groundwork Collaborative, a left-leaning public policy think tank. “Where this leaves us is where we’ve been — in a period of high uncertainty for businesses and consumers.”
Ryan Young, a senior economist at the Competitive Enterprise Institute, a nonpartisan think tank, said mixed messages from the Trump administration on trade is making it difficult to nail down agreements.
“How do you negotiate with someone when you don’t know what they want?” he said. “One day, [President Trump] says they are about trade deficits, the next day it’s about raising revenue, the next it’s about stimulating American industry — then it’s a bargaining tool. His multiple goals conflict with one another.”
Demanding equal footing
White House spokesperson Kush Desai said Mr. Trump’s tariff agenda is driven in part by his desire for U.S. trade partners to lower both “tariff and non-monetary trade barriers that are undermining American industries.”
Such moves by other nations would allow American industries to “be on a more equal footing to compete and grow,” Desai told CBS MoneyWatch.
Despite Mr. Trump’s trade policies, tariffs have yet to significantly affect consumer prices in the U.S.
Oxford’s Daco said that the average U.S. tariff rate in June was around 15%, while the effective tariff rate — or actual cost of tariffs on imports — was 10%. That’s part of the reason, combined with a front-loading of imports by companies, why prices have been slow to rise.
“In terms of the full bite of tariffs, it’s not yet visible in the duties collected,” he said.
Following are the tariff rates the U.S. said last week it would impose on roughly two dozen countries as well as members of the EU:
- Brazil: 50%
- Laos: 40%
- Myanmar: 40%
- Cambodia: 36%
- Thailand: 36%
- Bangladesh: 35%
- Canada: 35%
- Serbia: 35%
- Indonesia: 32%
- Algeria: 30%
- European Union 30%
- Iraq: 30%
- Libya: 30%
- Mexico 30%
- South Africa: 30%
- Sri Lanka: 30%
- Japan: 25%
- Kazakhstan: 25%
- Malaysia: 25%
- South Korea: 25%
- Tunisia: 25%
- Philippines: 20%
More details on the impact of tariffs in the U.S. will come Tuesday when the Department of Labor release its June Consumer Price Index, a closely watched inflation gauge.
