Donald Trump’s new flat-rate tariff is a boost for China and Brazil

Donald Trump’s new 15 per cent global tariff will most greatly benefit countries he has singled out for heavy criticism, including China and Brazil, data analysis shows.

An examination of the new regime by independent trade monitoring body Global Trade Alert found that Brazil will enjoy the biggest reduction in average tariff rates — falling by 13.6 percentage points — followed by China, with a 7.1 percentage point reduction.

Long-standing US allies including the UK, the EU and Japan will suffer the largest hit from the new levy, which the US president introduced after the Supreme Court ruled much of his previous trade policy unlawful on Friday. 

Trump had originally used the International Emergency Economic Powers Act (IEEPA) to impose tariffs on US trade partners, but a majority ruling of the court struck these down. 

After the judgment was announced, Trump said he would replace the IEEPA tariffs with a blanket 10 per cent tariff — which he then raised to 15 per cent on Saturday. It is due to come into force on Tuesday, but is only valid for 150 days before requiring further authorisation by Congress. 

On Sunday, US trade representative Jamieson Greer defended the new regime and vowed to press ahead with trade practice investigations that could yield more levies.

“We don’t have the same flexibility that IEEPA gave us” but “we’re going to conduct investigations that can allow us to impose tariffs if it’s justified by the investigation”, Greer told CBS. “So we expect to have continuity in the present tariff programme.”

He said Trump increased the new global rate from 10 to 15 per cent because “the urgency of the situation demands that he uses full authority”.

Greer said he had been speaking to his counterparts in other countries about deals that had already been struck, including the EU, and that no trading partner had said “the deal is off”.

“I’ve been telling them for a year [that] whether we won or lost [in court], we were going to have tariffs . . . That’s why they signed these deals, even while the litigation was pending,” he said.

He added: “I haven’t heard anyone yet come to me and say the deal is off. They want to see how this plays out.”

Johannes Fritz, economist and GTA chief executive who conducted the analysis, said: “Countries including China, Brazil, Mexico and Canada that were most bitterly criticised by the White House and targeted with IEEPA tariffs under special executive orders have seen their tariffs fall the most.”

Asian manufacturers such as Vietnam, Thailand and Malaysia, which have frequently been singled out by Trump for running huge trade surpluses with the US, will benefit from the new regime.

Their manufacturing base including clothing, furniture, toys and plastics will do particularly well. 

But Greer said that his office expects to initiate unfair trade practice investigations related to excess industrial capacity that “will cover a lot of these countries in Asia that have overcapacity”.

“We’re looking at unfair trading practices and things like rice overseas where people have lots of subsidies, and they kill our rice farmers here,” he said.

Greer added that the new global tariffs would not affect Trump’s upcoming meeting with Chinese President Xi Jinping.

The purpose of the bilateral meeting is “to maintain stability, make sure that the Chinese are holding up their end of our deal and buying American agricultural products” and Boeing jets, and “sending us the rare earths that we need”.

Fritz said that the future for all tariffs was now clouded in uncertainty, with the administration signalling that it intended to levy additional country-specific measures via section 301 of the 1974 Act. 

“This regime is potentially only 150 days. The administration has signalled that it will now focus on statutes that do allow them to impose tariffs, so in practice the game now begins anew,” he said.  

The US has already initiated section 301 investigations into Brazil and China.

The new regime will hit key US allies particularly hard because their exports are more dominated by steel, aluminium and autos — sectors that are covered by other tariffs which remain in force after Friday’s ruling.

US Treasury secretary Scott Bessent told CNN on Sunday that all US trading partners wanted to keep the deals they negotiated with Trump in place. 

“We’ve been in touch with our foreign trading partners, and all of them want to keep the trade deals that have been set,” Bessent said. 

But Brussels demanded “full clarity” from Washington. The European Commission said on Sunday that “the current situation is not conducive to delivering ‘fair, balanced, and mutually beneficial’ transatlantic trade and investment”, as specified in its trade agreement with the US.

“A deal is a deal. As the US’s largest trading partner, the EU expects the US to honour its commitments,” the Commission said.

European Central Bank president Christine Lagarde told CBS: “While some exporters have borne some of the brunt [of existing tariffs], most of it was borne by the US importers and eventually, the US consumers.”

She added to the Commission’s call for clarity. “You want to know the rules of the road before you get in the car . . . It’s the same with trade. It’s the same with investment,” she said.

The biggest loser from the new global flat rate is the UK, which had secured a 10 per cent tariff on many goods but will now see a 2.1 percentage point increase in its average tariff rate. 

The EU, which secured a 15 per cent tariff rate in its trade deal with Washington, will see an overall 0.8 percentage point increase, with Italy and France most exposed when some 1,100 exempted product categories are factored into the calculations.

The British Chambers of Commerce said that 40,000 UK companies exporting goods to the US will be “dismayed” by the new regime, and urged the British government to enter into dialogue with Washington. 

Former UK trade department official Allie Renison, now at consultancy SEC Newgate, said the situation left the British facing a quandary about whether to push for a better deal or play a waiting game, to see if they are overtaken by alternative measures.

“It’s possible that President Trump would be willing to find a way to reapply 10 per cent rate to the UK, but likely at the cost of further concessions rather than as a good faith measure,” she added.

Additional reporting by Alice Hancock in Brussels

Data visualisation by Bob Haslett

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