Japan, South Korea Among Those Striking Deals as US Tariffs Arrive

Several countries have struck deals with the United States ahead of the arrival of Donald Trump's reciprocal tariffs, which have been adjusted again after his latest executive order.

The largest of these deals was struck with the European Union, which had been facing a steep tax of 30% on all goods. However, after pledging to invest at least $600 billion into the US economy and promising to buy over $750 billion worth of American energy, Trump reduced the tariffs to 15%, which seems to have become the new baseline for his reciprocal tariffs. Read more into the deal here.

Additionally, he also made deals with several other countries. With South Korea, he will lower their rates to 15% (he previously threatened to raise rates to 25%) as long as they invest $350 billion into the US and buy $100 billion of liquefied natural gas (LNG). Trump will lower Japan's tariffs to 15% if they invest $550 billion into the American economy and increase agricultural, energy, military, and automobile imports. Earlier this week, Trump confirmed that the Philippines would face a revised 19% tariff after they agreed to avoid placing reciprocal tariffs on the US, and he agreed on a similar deal with Indonesia the week before. In the case of Pakistan, the tariffs were significantly lowered, and Trump made an agreement with the Pakistani government to help them develop their oil reserves and increase trade between the two nations.

Then, in an executive order yesterday, Trump drastically changed the tariffs that many countries will face and extended the deadline for when they go into effect by another week. Most tariffs were lowered, with notable drops including Cambodia (49% to 19%), the Falkland Islands (41% to 10%), Lesotho (50% to 15%), Madagascar (47% to 15%), and Mauritius (40% to 15%).

Nevertheless, several major US trading partners were negatively impacted by the new changes. Switzerland, one of America's largest trading partners, saw its already-severe 31% tariff rise to 39%, which is certain to impact various companies-- in 2024 alone, the US imported $63.4 billion worth of Swiss goods.

Meanwhile, Canada, the United States' second-largest trading partner, will face a staggering 35% tariff on all goods. The increase comes just days after Trump warned Canada that they were making the wrong move by announcing their impending recognition of Palestine at the UN General Assembly in September. Thankfully, the tariff is unlikely to immediately drive up prices in many sectors due to Canada's existing trade agreement with the US and Mexico, known as the USMCA, but the deal is due to expire next year.

Mexico, on the other hand, has been given an additional 90 days to negotiate a trade deal with the US, making it the only country that still has that ability-- today, August 1, was the deadline for all countries to finalize a trade agreement with the Trump administration.

Furthermore, various markets in southeast Asia will also be heavily impacted, as Laos and Myanmar still face a 40% tariff. Deals were made with various nations, including Vietnam, Cambodia, Indonesia, and Thailand, but others remain without agreements. The prospect of the incoming tariffs has sent Asian stock markets plunging over the last few days,

In the end, despite all of the reciprocal tariffs, the largest consumer impact will likely come from Trump's sector-specific tariffs, which affect every country that exports those goods to the US. Steel and aluminum continue to face a massive 50% tariff, and all vehicle parts have faced a 25% tariff for months. Additionally, beginning today, the Trump administration is imposing a 50% tariff on copper imports, which is sure to impact the electrical and manufacturing industries. Nevertheless, businesses and consumers alike will need to adapt quickly to the rising costs of foreign items, with tariffs expected to drive up prices within the coming weeks.

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