Last-Minute Trade Deals with the U.S. Amid New Tariffs

Countries globally scrambled on Thursday to finalize trade agreements with the United States, just ahead of new tariffs set to take effect on Friday. President Trump had already secured a significant deal that encompasses roughly a third of America’s trade.

The U.S. established a framework agreement that involves various tariff rates: a 15% levy on imports from the European Union, 10% on goods from the UK, 20% on Vietnam, and 19% on imports from the Philippines and Indonesia. Japan and South Korea will also face a 15% tax.

Trump has additionally greenlit expansions in both China and Mexico, two of the U.S.’s primary trading partners, accounting for about 27% of the U.S. economy. The goal seems to be clarifying details and increasing access for more American products.

Countries that represent 40% of U.S. trade should expect letters by midnight Eastern Time, informing them of a new 50% fee. The tariffs will include significant charges, such as 50% on foreign copper, aluminum, and steel, along with 20% on foreign pharmaceuticals.

Canada, the U.S.’s second-largest trading partner and often a target of Trump’s ire, appears to be facing a new 35% obligation.

Despite this, negotiations were still ongoing for over 100 countries, as shared by White House press secretary Karoline Leavitt during a daily briefing.

Leavitt noted that “more than 200 countries are reaching out to their trade and customs teams,” emphasizing that the White House is keen on prioritizing critical trading partners in this final stretch.

While she did not specify the exact fees for different countries, she indicated that Trump’s team has been working non-stop to engage with as many nations as possible.

A deal with Canada seems somewhat improbable. Last year, the U.S. imported $350 billion in goods from Canada while exporting $412 billion in return, which could be adversely affected by the impending tariffs.

Trump commented to reporters, stating, “They have to pay a fair fee. They have charged very high tariffs on our farmers.”

In his trade strategy, Trump is also using America’s economic strength to address other geopolitical tensions.

For example, India has been warned of a potential 25% tariff on imports of Russian arms and energy. While the U.S. maintains a trade surplus with Brazil, this South American giant may face a staggering 50% tariff due to its past ties with Trump’s ally, former President Jair Bolsonaro.

Trump first unveiled the intent to increase tariffs as part of his “liberation deal” back in April, threatening to impose higher rates to address trade discrepancies accused by partners.

He temporarily suspended the high tariffs a week later, settling on most at around 10%, in hopes of a resolution within “90 days.”

Since then, Trump has conducted several important transactions with key trading partners, with the administration anticipating that the August 1 deadline will spur further agreements in the following months.

Earlier, he had signed a deal with the UK in May that initiated 10% tariffs and included a commitment for the UK to open its market to U.S. products like beef.

Following that, Trump struck agreements with Vietnam for a 20% tariff, a 19% rate for the Philippines and Indonesia, and the 15% tariff for Japan and South Korea. The deal with the EU was particularly notable, as it marked a significant increase from prior levels, with commitments for the EU to purchase $700 billion in American energy and invest heavily in the U.S.

While ongoing negotiations continue with China and Mexico, the deadline for final agreements is set for August 12.

On Thursday, Mexico received a 90-day extension for discussions, keeping its 25% tariff on fentanyl, alongside 25% fees on vehicles and 50% on aluminum, copper, and steel.

Other leaders have suggested possible extensions too, but ultimately, the decision rests with Trump, who has indicated that the deadline is firm.

Richard Stern, acting director at the Thomas A. Law Institute for Economic Policy, expressed that Trump was effectively enhancing export opportunities for the U.S. and its producers.

He highlighted that the framework could ensure the protection of American intellectual property and facilitate a quicker disengagement from China, which is crucial for national security.

Scott Lincicome, vice president at the Cato Institute, warned that U.S. tariffs would soon reach historic highs, with substantial new taxes impacting American businesses and consumers.

There’s also a looming uncertainty regarding a forthcoming federal court ruling that could clarify Trump’s authority to impose import taxes without Congressional approval.

Lincicome noted the complexities of the evolving situation, saying, “There are so many things we don’t know yet.”

Mark Diplacido, a policy adviser at the American Compass think tank, asserted that the administration’s trade strategy is bearing fruit, helping reduce the U.S. trade deficit while fostering domestic industries and creating quality jobs.

He remarked that despite earlier predictions of drastic consequences, the administration demonstrated that tariffs could be effectively employed to increase market access and investment without causing significant economic instability.