Global markets have reeled after US President Donald Trump’s latest wave of tariffs against nearly all his country’s trading partners as governments face a seven-day deadline before higher duties take effect.
Mr Trump announced late Thursday that dozens of economies, including the European Union, will face new tariff rates of between 10 and 41%.
However, implementation will be on 7 August rather than Friday as previously announced, the White House said.
This gives governments a window to strike deals with Washington setting more favourable conditions.
Neighbouring Canada, one of the biggest US trade partners, was hit with 35% levies, up from 25%, effective Friday.
But with wide-ranging, current exemptions remain in place.
The tariffs are a demonstration of the economic power that Mr Trump believes will put US exporters in a stronger position, while encouraging domestic manufacturing by keeping out foreign imports.
But the approach has raised fears of inflation and other economic fallout in the world’s biggest economy.
Stock markets in Hong Kong, London and New York slumped as they digested the turmoil, while weak US employment data added to worries.
Mr Trump ordered the Commissioner of the Labor Department’s Bureau of Labor Statistics Erika McEntarfer to be fired after the data showed weaker than expected employment growth in July.
Mr Trump’s actions come as debate rages over how best to steer the US economy, with the Federal Reserve this week deciding to keep interest rates unchanged, despite massive political pressure from the White House to cut.
Data yesterday showed US job growth will miss expectations for July, while unemployment ticked up to 4.2% from 4.1%.
On Wall Street, the S&P 500 dropped 1.6%, while the Nasdaq tumbled 2.2%.
Mr Trump raised duties on around 70 economies from a current 10% level imposed in April when he unleashed “reciprocal” tariffs citing unfair trade practices.
The new, steeper levels listed in an executive order vary by trading partner.
Any goods “transshipped” through other jurisdictions to avoid US duties would be hit with an additional 40% tariff, the order said.
But the president’s duties have a distinctly political slant, with the president using separate tariffs to pressure Brazil to drop the trial of his far-right ally, former president Jair Bolsonaro.
He also warned of trade consequences for Canada, which faces a different set of duties, after Prime Minister Mark Carney announced plans to recognise a Palestinian state at the UN General Assembly in September.
In targeting Canada, the White House cited its failure to “cooperate in curbing the ongoing flood of fentanyl and other illicit drugs” – although Canada is not a major source of illegal narcotics.
By contrast, Mr Trump gave more time to Mexico, delaying for 90 days a threat to increase its tariffs from 25% to 30%.
But exemptions remain for a wide range of Canadian and Mexican goods entering the United States under an existing North American trade pact.
Mr Carney said his government was “disappointed” with the latest rates hike but noted that with exclusions the US average tariff on Canadian goods remains one of the lowest among US trading partners.
With questions hanging over the effectiveness of bilateral trade deals struck, including with the EU and Japan, the outcome of Mr Trump’s overall plan remains uncertain.
“No doubt about it – the executive order and related agreements concluded over the past few months tears up the trade rule book that has governed international trade since World War II,” Wendy Cutler, a senior vice president of the Asia Society Policy Institute, said.
Mr Trump said yesterday that he would consider distributing a tariff “dividend” to Americans.
Notably excluded from the latest tariff announcement was China, which is in the midst of negotiations with the United States.
Washington and Beijing at one point brought tit-for-tat tariffs to triple-digit levels, but have agreed to temporarily lower these duties and are working to extend their truce.
Those who managed to strike deals with the US to avert steeper threatened levies included Vietnam, Japan, Indonesia, the Philippines, South Korea and the European Union.
Among other tariff levels adjusted in Mr Trump’s latest order, Switzerland now faces a higher 39% duty.
