US President Donald Trump has signed a new presidential decree postponing the entry into force of his punitive tariffs - the implementation of the new trade rules will begin on August 7, and not today - August 1, as planned.
Trump explained that the reason is related to the time needed for customs authorities to adapt and implement the new system. For some countries, trade relations with the US are certainly changing, and seriously.
The case of India and the relationship with Russia
Back on July 30, Donald Trump announced that imports from India would be taxed with a 25% tariff. The US president explained that the punitive tariffs for India are also related to the country's trade with Russia. "They have always bought most of their military equipment from Russia and, along with China, are the largest consumer of Russian energy at a time when everyone wants Russia to stop the killing in Ukraine. None of this is good!", Trump wrote on social networks. He also threatened some other "punishment" India, but it is not yet clear what exactly he means.
The fact is that after the start of Russia's full-scale invasion of Ukraine, India took advantage of the newly created situation - European countries decided to punish Putin's regime and limited or completely stopped purchases of Russian energy. As a result, its price fell, and India benefited. India and Russia have a long trade history and energy trade easily fits into these relations, recalls "The New York Times". Russia has a lot of raw materials, and India needs them.
Although India hoped that under Donald Trump, the US would not take steps that would create problems for the import of Russian energy, now the American president is doing just that. Additionally, Trump announced that he wants to compensate for the trade deficit between the two countries, which is tens of billions of dollars. One solution is for India to start importing oil and liquefied gas from the US, but this would look like capitulation, writes "The New York Times". Analysts warn that US tariffs could reduce India's economic growth. And yet the Indian economy will remain the fastest growing in the world. It already rivals those of Japan and Germany.
Punishments for Canada and Brazil?
From today, Canadian products will be taxed with a 35% tariff compared to the current 25 percent. Trump has cited an alleged lack of cooperation in the fight against drug trafficking. According to Trump, the fact that Canada has said it will recognize Palestine also makes it difficult to conclude a trade agreement. Canadian Prime Minister Mark Carney expressed disappointment with the measures.
Most Canadian exports to the United States will be subject to a 35% tariff, but not some of the most important products. Carney's main goal in the negotiations was to eliminate the 25% tariff on cars made in Canada, which took effect in April. Under the current plan, it remains in place and could seriously cripple the Canadian auto industry, writes the "New York Times". Steel and aluminum, of which Canada is the largest foreign importer to the United States, have been subject to 50% tariffs.
Brazil, however, will be hit hardest with a tariff rate of 50%. Trump is "punishing" Brazil mainly for political reasons, writes "The New York Times". The criminal prosecution of former President Jair Bolsonaro, his ally, who is accused of plotting a coup, motivates Trump. He describes the case as a "witch hunt" and because of it the US imposed sanctions on a judge from the Supreme Court of Brazil. Like Trump in 2020, Bolsonaro also lost the 2022 elections and refused to accept the result. Both Trump supporters on January 6, 2021, and Bolsonaro supporters on January 8 of the following year stormed the capital to try to prevent their rivals from taking office.
Although Trump has clearly identified with Bolsonaro and wants to punish current President Lula da Silva, the tariffs have still been mitigated by hundreds of exceptions, including for some of the most important Brazilian products exported to the US market. Therefore, the blow to the Brazilian economy may not be so severe.
Signed deals and deferrals
Mexico is getting a 90-day deferral before the tariffs go into effect. Japan and South Korea, as agreed in previous trade agreements, are subject to a 15 percent rate, which is the same as the rate agreed for the EU.
Trump justifies the tariffs by arguing that there is an imbalance in trade with other countries that needs to be corrected. He accuses the United States' trading partners of imposing excessive tariffs themselves or of not opening their markets sufficiently to American imports.