U.S.-EU Trade Agreement Reached After Implementing Trump's Tariffs
The Trump administration has recently announced a series of tariff changes, causing market volatility as investors grapple with the potential impact on various industries.
One of the most significant announcements is a 50% tariff on copper imports, effective from 1 August. This follows existing 50% tariffs on steel and aluminium imports from most countries, though the tariff for the UK stands at 25%.
The US-EU trade deal, which includes the UK, Japan, Indonesia, the Philippines, and Vietnam, will see US imports of pharmaceuticals, cars, and semiconductors from the bloc exempted from product-specific tariffs. European Union nations have been grouped together since all member states' US exports will be subject to the same tariff regime. The EU has secured a trade deal with the US that will reduce tariff rates on imports from the EU to 15%.
Chinese exports to the US are currently subject to a blanket 30% tariff, with export controls and additional rates applying to certain products. If no agreement is reached before the 12 August deadline, then the tariff rates would revert to 145% for US imports from China, and 125% for Chinese imports from the US.
Goods exported from the US to China are subject to a 10% tariff, again with some controls and additional rates in place. Delegates from both the US and China are expected to meet in Sweden next week to discuss further progress on the US-China trade deal.
The tariffs, announced on 2 April, are intended to reduce the US's trade deficit and boost its domestic industry. However, Michael Pearce, deputy chief US economist at Oxford Economics, has stated that tariffs could increase inflation in the US.
Notable new or heightened tariffs include:
- China: Among the highest US tariffs, reaching over 104%, following an additional 50% tariff hike in 2025 as part of an ongoing trade war.
- Brazil: A steep reciprocal tariff rate of 50% was announced.
- Canada: The tariff rate was increased to 35%, though many Canadian exports enter duty-free under USMCA rules; key tariff categories include autos, steel, and aluminum.
- Japan: Official reciprocal tariffs were initially set at 25%, but a recent announcement suggests a pending reduction to 15%, with details still pending official documentation.
- Kazakhstan: Currently subject to 25% reciprocal tariffs, down from 27%.
- Israel: Subject to about 17% reciprocal tariffs on all products, delayed until August 1, 2025.
- Jordan: Facing 20% reciprocal tariffs delayed until August 1, 2025.
- Iraq: 30% tariffs delayed until August 1, 2025.
For Mexico and Canada, the largest US suppliers, many exports enter duty-free under the USMCA agreement, especially manufactured goods like autos, electronics, and machinery. Tariffs mostly apply on steel, aluminum, and some autos, with current additional tariffs at about 10% for some product categories.
Manufactured goods from Mexico and Canada benefit from USMCA duty-free provisions, reducing their effective tariff rates. Chinese imports face the highest tariff burden, with rates exceeding 100%, including more than 50% on many products amid the trade war. Vietnam-specific tariffs have been announced at 20%, with 40% duties on transshipments aimed at preventing tariff evasion of these rates.
The tariff rate on US imports from the top 10 largest economies as of 24 July are: China (30%), EU (15%), Japan (15%), India (25%), United Kingdom (10%), Brazil (50%), Canada (35%), Russia (N/A), Mexico (30%), and Australia (10%).
Tariffs affect the US economy via three primary channels: higher prices, tighter financial conditions, and uncertainty. Rella Suskin, equity analyst at Morningstar, expects Porsche, Mercedes, BMW, and Volkswagen to be the most significant beneficiaries of this trade deal.
In summary, the highest US tariffs are on China (100%+), Brazil (50%), Canada (35% on some products), and varied 15-30% reciprocal tariffs on other countries. High-tariff categories include steel, aluminum, autos, some manufactured goods, and specific targeted products from countries like Vietnam and Iraq. Meanwhile, preferential trade agreements like USMCA substantially reduce tariffs for key trade partners Mexico and Canada on many products.
- In response to the Trump administration's announcement of a 50% tariff on copper imports, subscribers of a personal finance newsletter may receive recommendations on how to adjust their investment portfolios to mitigate potential financial losses caused by market volatility.
- The upcoming meeting between delegates from the US and China in Sweden could potentially discuss reducing the high tariffs (over 100%) currently imposed on Chinese imports, thereby impacting the general-news coverage of the ongoing trade negotiations.
