Tariffs Begin August 1; Trading Partners Rush to Avoid Heavy Duties
US President Donald Trump said on Thursday that his government will likely begin sending out letters on Friday to tell other countries about new tariffs on their exports to the United States. These tariffs are set to start on August 1, and some could be as high as 70%.
Trump explained that around 10 to 12 countries will receive notices first, with more letters going out in the next few days. Countries have until July 9 to make trade deals with the US and avoid these higher tariffs.
“They’ll be fully covered by the ninth,” Trump told reporters, adding that the new tariffs would range from 10% to as high as 70%.
Trade Talks Get Intense
The US is in tough talks with countries like Indonesia, South Korea, the European Union, and Switzerland. Trump’s team is trying to settle the most difficult issues before the deadline. In line with his past style, Trump is using tariff threats to push negotiations forward.
If applied, the 70% tariffs would be higher than the 50% maximum he suggested during his “Liberation Day” announcement in April. At that time, he began a 90-day pause to allow countries time to reach new deals. A 10% rate was temporarily put in place during those 90 days.
Which Countries Are Affected?
President Trump didn’t say exactly which countries or goods would face the highest tariffs. However, he stated, “They will start paying on August 1. The money will start coming into the US on August 1.”
Usually, importers or businesses bringing goods into the US are the ones who pay the tariffs. But these costs can often be passed on to customers or lead to lower profits for companies.
Market Reactions and Economic Concerns
After Trump’s statement, stock markets in Asia and Europe fell, and the US dollar weakened. US markets were closed for the Fourth of July holiday.
Some officials from the Federal Reserve are worried that tariffs could cause higher inflation. This is one reason why the Fed hasn’t cut interest rates this year, despite pressure from Trump.
Tariff Pressure Continues
President Trump has warned since April that if countries don’t agree to trade deals, he would move ahead with new tariffs.
According to Bloomberg Economics, if all the “reciprocal tariffs” go into effect on July 9, the average US import duty could rise to around 20%, up from just 3% when Trump first took office in January 2017. That could cause problems for US growth and prices.
Recent Trade Developments
So far, the Trump administration has:
- Made trade deals with the UK and Vietnam
- Reached temporary truces with China to reduce tariffs and ease export restrictions
On Wednesday, Trump said the US reached a deal with Vietnam. The agreement includes:
- 20% tariff on general Vietnamese exports
- 40% tariff on goods thought to be transshipped (where parts are moved through Vietnam from countries like China)
These rates are lower than the original 46%, but higher than the basic 10% level. Details of the Vietnam deal are still being finalized.
Vietnam, in response, said the talks are still ongoing.
Other Countries Respond
- Indonesia says it’s close to a “bold” trade deal covering minerals, energy, defense, and market access.
- Cambodia announced an agreement with the US and will release it soon. Cambodia had faced a possible 49% tariff, one of the highest.
- Japan, South Korea, and the EU are still working hard to finish their deals before July 9.
Some European carmakers are pushing for a deal that would lower tariffs if they increase investments in the US.
Last-Minute Efforts and Remarks
South Korea’s top trade official will be in the US this weekend to present new offers before the deadline.
Trump sounded hopeful about a deal with India, but was less positive about Japan, saying Japan might have to pay 30% or 35%, or “whatever the number is that we determine.”
When asked if he would extend the deadline, Trump said no.
US Treasury Secretary Scott Bessent confirmed on Thursday that the final decision would be made by President Trump himself.
“We’re going to do what the president wants,” Bessent said on CNBC, “and he’ll be the one to determine whether they’re negotiating in good faith.”