Economy
Tariffs could be launchpad for Europe’s single market needs
Materials group Umicore can spend at least a month on tackling a complex array of national shipment rules only to bring electronic scrap and other waste from across the European Union to its Belgian recycling plant.
The problem is not just Umicore’s, as businesses across Europe grapple with internal obstacles that can be as damaging as tariffs.
Analysts, however, say U.S. President Donald Trump’s tariffs have provided the necessary push to make the bloc the single market it aspires to be.
Umicore’s difficulties are particularly significant in that the company recycles 17 of the 34 minerals identified by the EU as critical for its green and digital transition.
Chief Executive Bart Sap says a shipment may need to go by rail in one country, then transfer to a boat in another, with a wealth of diverse documentation along the route.
“With that ununified waste market, the internal hurdles are so high that actually 73% of waste is being exported,” he told Reuters in an interview.
Diverging waste shipment regulations are one of the many internal barriers that add cost and complexity to doing business within the EU.
The International Monetary Fund (IMF) has estimated EU internal barriers are the equivalent of tariffs of 44% for goods and 110% for services, well above the U.S. tariffs of 25% on steel and cars and 10% on many other goods.
A similar study in 2021 concluded that barriers for goods flow within the U.S. amounted to a 13% tariff.
For goods, EU barriers include restrictions on retailers’ ability to source products or sell them in other EU countries and a jumble of rules on labelling.
AkzoNobel, Europe’s largest paint maker, complains it cannot just sell the same tub across the 27-nation bloc, placing the blame not on different languages but varying rules. These include separate recycling logos in France and Spain and some EU countries requiring air quality information.
The Dutch company says it cannot fit all the necessary information on smaller tubs, and that frequent rule changes force it to keep investing in packaging updates.
QR codes could be a solution, it says, something the EU will start requiring from 2027.
For services, the single market is even less developed.
Laws on setting up foreign subsidiaries diverge, declarations for posting workers abroad vary and 5,700 professions are regulated across the bloc, meaning doctors, nurses, engineers or accountants in one EU country cannot easily work in another.
Size deficit
The barriers do not just add cost and complexity. They stifle growth.
Former Italian Prime Minister Enrico Letta, who produced an influential report on the EU single market last year, said EU companies suffered a “stunning size deficit” relative to rivals and that market divisions prevented them from building scale.
A core problem is vested interest in sectors protecting regulated professions from competition and as national supervisors prove resistant to an EU-wide capital market that could rival U.S. investments in newer companies and infrastructure.
“These are low-hanging fruit economically, because basically they’re free. It’s essentially changing the regulation. But that doesn’t mean they’re necessarily politically easy,” said Niclas Poitiers, research fellow at think tank Bruegel.
The debate on a unified capital market has dragged on for over a decade as EU members have squabbled over issues such as supervision and insolvency rules.
However, a deeper single market has gone from a nice-to-have to a must-have as the impact of Trump’s tariffs on exports has highlighted the need to remove obstacles to compete with global rivals.
The Commission says it is prioritizing removing what it calls the “terrible ten” most harmful single market barriers, including recognition of professional qualifications and fragmented rules on labelling and waste.
Letta, dean of IE University in Spain and president of the Jacques Delors Institute think tank, said he was encouraged by Commission initiatives to tackle the most critical unfulfilled parts of the single market – services and capital.
They include the promotion of a savings and investment union and removing barriers to business in services.
Multiple legislative proposals are due in 2025 and 2026.
Aslak Berg, research fellow at the Centre for European Reform think tank, said the Commission seemed to be serious about reforms that made a difference, but needed to get EU members on board.
Letta said there were two grounds for optimism. Firstly, EU capitals were aware of the need for change.
“The other key point that makes me optimistic is the fact that we have a fantastic friend on the other side of the ocean, because the acceleration that is taking place is all because of Trump,” he said.
Letta said the EU needed to push through EU-wide laws called regulations, rather than directives that allow EU members to set their own course on common goals.
He also urged the EU to be energized, not paralyzed by Trump.
The EU took a pause after driving through the movement of goods and people and its new currency in the late 1980s and 1990s, but then got sidelined by a series of crises, from the sovereign debt crisis, Brexit, COVID-19 and the energy crisis.
“The EU usually is able to focus on one crisis at a time and today we are all focused on tariffs. That is a problem. Because in reality, my guess is the completion of the single market is more important than all the rest.”
The U.S. Federal Reserve (Fed) is set to convene its second policy meeting under Chair Kevin Warsh starting Tuesday, with markets expecting interest rates to remain unchanged as officials weigh persistent inflation risks, including potential pressures from President Donald Trump’s renewed conflict with Iran.
Warsh was chosen to lead the U.S. central bank by Trump, who has made his demand for lower interest rates clear as he has exerted unprecedented pressure on the independent monetary policymaking body.
After two days of closed-door sessions, the Fed’s open market committee (FOMC) will announce its decision on Wednesday at 2 p.m. (6 p.m. GMT), followed by a news conference by Warsh.
Most investors expect the Fed to hold rates steady at 3.50%-3.75% range for the fifth straight meeting, according to CME’s FedWatch monitoring tool.
U.S. consumer inflation eased to 3.5% on an annual basis last month, but remains far higher than the Fed’s long-term 2% target, which it has not achieved for more than five years.
Since last week, a ramping up of hostilities has seen intense U.S. strikes and Tehran’s retaliatory action targeting Washington’s allies across the region, while Yemen’s Houthis have also threatened to blockade the Red Sea oil trading route.
The fighting has sent energy prices soaring once more, with the benchmark oil futures contract breaching $100 per barrel for the first time since late May, when energy prices were on the downward path.
At the Fed, policymakers have been losing patience with persistent inflation, indicating that a rate hike may be near.
The Fed “has to be ready to tighten monetary policy to prevent a repeat of the 2021-to-2022 inflation episode,” Fed Governor Chris Waller said last week.
“Sternly staring at inflation until it melts before our withering gaze is not an option.”
‘Hawkish core’
Since taking office, Warsh has vowed to reduce or eliminate the amount of forward guidance the Fed provides on its decision-making process, a move that has received mixed reactions.
The new chair has said that providing forward guidance locks policymakers into positions that they may need to change. Some analysts, however, argue that opacity in decision-making creates more uncertainty for markets.
In public statements since taking control of the Fed, Warsh has said he has a “resolute commitment” to delivering price stability, but has not offered details on how and when he thinks it would be appropriate to act.
The Fed has a dual mandate to keep inflation to its long-term target while also delivering maximum employment.
Its main tool to achieve this is the economy’s key interest rate – raising rates tends to curtail economic activity and high prices, while lowering them encourages hiring and investment but can also stoke inflation.
The U.S. labor market has largely stabilized, with steady unemployment despite zigzagging job growth, leaving policymakers mostly focused on inflation.
“‘Resolute commitment’ is, in my opinion, insufficient to tighten monetary policy and curb any inflationary pressures,” said Gregory Daco, chief economist at EY-Parthenon.
With Warsh largely remaining silent, several other policymakers have been vocal about their concern over high prices and the potential need for action in the near term.
“When you create a vacuum, it’s oftentimes the case that the vacuum gets filled,” said Daco.
With headline inflation dipping in June, ahead of further rises expected ahead, analysts say they do not expect a rate hike at this meeting, but that the decision will likely see some dissenting voices.
“We may have a new chairman, but the old guard is now worried about where the economy has moved since the beginning of the year,” Diane Swonk, chief economist at KPMG, told Agence France-Presse (AFP).
Inflation has been under pressure not just from rising fuel prices due to the war, but also due to heightened demand from the AI boom and the continued effect of Trump’s tariffs rippling through the economy.
“The hawkish core of the Fed has not only hardened, but it’s broadened,” said Swonk, who expects two rate hikes later this year.
U.S. President Donald Trump did not wait long, nor did he pursue lengthy tariff investigations when he returned to office last year, opting instead to pressure trading partners into making concessions right away.
What followed was a chaotic start to a trade agenda that was eventually upended by a stinging Supreme Court defeat this year.
Now he and his team are moving into a new phase to build a more durable U.S. tariff wall using more traditional and court-tested trade laws, those he appeared to have little patience for 18 months ago.
His latest global tariff salvo – duties of 10% or 12.5% on 60 countries over allegedly weak enforcement of forced-labor bans – marks the first of numerous tariff actions to be unveiled in the months ahead.
They include probes into excess industrial capacity, alleged intellectual property theft by Vietnam, and national security protections for strategic industries from semiconductors to robotics and industrial machinery.
“We’re at the end of the beginning of the Trump tariff agenda,” said Dan Ujczo, associate general counsel at Canadian oil producer Cenovus Energy, who specializes in U.S.-Canada trade.
“Within the next few weeks, and certainly by the end of the summer, we will see large parts of President Trump’s trade policy fully in effect.”
This could bring more clarity and certainty for businesses on Trump’s ultimate tariff structure, along with dread in foreign trade ministries that they may have to cough up more concessions to protect access to a $3.4 trillion U.S. import market.
Direct replacements
Trump’s new anti-forced labor duties imposed under Section 301 of the Trade Act of 1974, the unfair trade practices statute used against China during his first term, almost directly replace a global 10% temporary tariff that expired on Friday.
They cover 99.4% of U.S. imports, the U.S. Trade Representative’s (USTR) office said.
This rebuilds part of Trump’s signature “Liberation Day” tariffs of 10%-50% on nearly every country, which the U.S. Supreme Court struck down as illegal under an untested national emergencies law Trump used to impose them.
Another part of the baseline tariffs is likely to be rebuilt by another Section 301 investigation into excess industrial capacity, targeting 16 big trading partners, including China, the EU, Japan, South Korea, Mexico and Vietnam. That ongoing probe targets industrial subsidies and other export-focused policies.
Amid a wider uproar over Trump’s move, some viewed it as largely maintaining the status quo.
Mark Bissell, CEO of Michigan-based vacuum maker Bissell Inc, said the newest tariffs were largely what the company anticipated and it hadn’t frontloaded inventory from China and elsewhere to try to beat them.
“We continued to run the business based on the belief that the tariffs would stay in the 10%-15% range,” Bissell said in an email to Reuters.
Budget impact
Trump’s gamble on quick but untested tariffs right out of the gate did four things. It heaped added costs onto retailers and other import-dependent industries; it brought dozens of trading partners to the negotiating table, yielding concessions for lower rates; it prompted swift retaliation and tariff escalation from China that led to a delicate truce; and it filled U.S. fiscal coffers with hundreds of billions of dollars.
The Liberation Day tariffs alone yielded $166 billion in revenue, a major offset to a growing federal deficit, but refunds to importers have now turned those collections negative.
The 150-day temporary tariffs, based on a law meant to quell balance-of-payments crises, have added $31 billion in assessed revenue through July 5. But if a federal court ruling against them stands, that money, too, is subject to refund.
With U.S. public debt approaching $40 trillion, Josh Lipsky, chair of international economics at the Atlantic Council, said subsequent administrations may become addicted to tariff revenue that is likely to be sustained.
“The tariff wall is being rebuilt strong brick by strong brick, and it’s very durable,” Lipsky said.
Trump’s broad use of Section 301 in the forced-labor case prompted an immediate legal challenge by small businesses, but trade and legal experts say this will take time to play out.
The statute has a solid track record in the courts, and judges may be reluctant to enjoin actions aimed at curbing forced labor and lowering barriers to U.S. goods.
More to come
U.S. Trade Representative Jamieson Greer made clear this week that Trump will use everything at his disposal to erect tariffs to reshore production and shrink the trade deficit.
“The specific authorities this administration is using have changed, but the trade strategy has not,” Greer told the U.S. Senate Finance Committee.
Greer, who has not committed to a timeline for the industrial capacity investigations, has said the layers of tariffs being rebuilt will not exceed caps included in deals he has been negotiating, including 15% for the EU, Japan and South Korea and higher rates for Southeast Asian countries.
Administration officials say even though China is viewed as the world’s largest source of excess manufacturing, its rates will not exceed the cap of about 20% agreed by Trump and Chinese President Xi Jinping last November, which is on top of the 25% tariffs from his first term.
Some nominal – or announced – duties may be higher than actual applied rates, which analysts say may be an enforcement mechanism for countries to stick to agreed trade deal terms.
Still, some things continue to come out of the blue, including the 50% duties on Canadian beer, dairy, hockey sticks and other products Trump announced on Monday over Ottawa’s refusal to make trade concessions, and his threat to cut off all trade with Spain over not meeting NATO military spending targets.
That proclivity for spontaneous tariff announcements remains an ongoing risk, said Eswar Prasad, a trade professor at Cornell University and former head of the International Monetary Fund’s (IMF) China department.
“Trump’s eagerness to impose tariffs to address a whole range of grievances will not only continue disrupting the global trading system but will have significant adverse effects on American households and businesses.”
Türkiye’s hydropower generation has reached record highs this year, helping the country avoid nearly $5 billion in energy imports by displacing natural gas in electricity generation, according to a top industry representative.
The strong hydropower output was helped by favorable rainfall, snowpack and groundwater conditions following a drought last year, said Elvan Tuğsuz Güven, chair of the Hydroelectric Power Plants Industrialists Association (HESIAD).
Hydroelectric power plants account for 32,314 megawatts of Türkiye’s 125,800-megawatt total installed power capacity and generated 33.8% of the country’s electricity in the first half of the year.
Güven said hydropower generation has made a significant contribution not only to Türkiye’s electricity system but also to its external trade balance.
“During the first six months, when energy and oil crises dominated the agenda, hydropower created tremendous value for Türkiye. We estimate that the electricity generated displaced roughly $5 billion worth of natural gas imports,” she told Anadolu Agency (AA).
Türkiye has invested heavily in hydropower over the past two decades, with the country’s existing installed capacity representing an estimated $80 billion in investments, Güven said.
These investments have helped Türkiye rank among the world’s top 10 countries and second in Europe in terms of hydropower capacity.
Güven said record hydropower generation helped cushion the impact of higher oil, natural gas and liquefied natural gas (LNG) prices during the Iran war.
However, while favorable water conditions led to record electricity production this year, the positive picture has not been reflected in revenues, she said.
Hydroelectric power plants continue to face financial sustainability challenges because of low electricity market prices despite higher output, she added.
Renewables are a key part of Türkiye’s broader push to diversify energy supply, reduce its heavy import dependence and strengthen long-term energy security.
Major pumped-storage hydropower potential
Government data shows Türkiye has more than 13 gigawatts of pumped-storage hydropower (PSH) potential ready for investment, which Güven says could provide a major boost to grid flexibility and energy security as solar and wind capacity expands.
But, she added, stronger regulatory and financial support is needed to unlock investment.
Güven noted that although support for PSH projects exists under the Renewable Energy Resources Support Mechanism (YEKDEM), the necessary secondary legislation has yet to be finalized.
“Funding has already been allocated within the renewable energy support mechanism for PSH projects. There is also a price support mechanism,” she said.
“However, because the secondary legislation and implementing regulations have not yet been completed, and because the support level currently determined is insufficient to make these projects financially viable under project-finance models, investment progress has been slower than expected,” Güven added.
PSH boosts grid flexibility
Güven said around 99% of global electricity storage capacity is provided by PSH plants, adding that countries with abundant hydropower resources continue to combine renewable energy investments with such facilities.
She said closed-loop systems allow water to be pumped back into an upper reservoir during periods of low electricity demand and reused to generate power when demand rises.
This makes pumped-storage plants increasingly important for grid flexibility as solar and wind capacity expands, she added.
Referring to the Energy and Natural Resources Ministry’s previously announced target of 2 gigawatts of PSH capacity, Güven expressed hope that investment decisions would soon be taken.
“We hope investment decisions will be taken in 2026 and 2027 so PSH plants can begin contributing to energy supply security as soon as possible,” she said.
Low daytime prices create storage opportunity
Güven said Türkiye’s installed solar capacity had reached around 24 gigawatts, creating opportunities for PSH plants to store electricity during periods of low daytime prices and generate power when demand rises.
Such systems could improve grid flexibility while supporting the greater integration of renewable energy, she said.
Güven also called for greater use of digitalization and artificial intelligence to maximize the efficient use of water resources for electricity generation.
“New technologies and digital solutions, including artificial intelligence, must be used much more extensively to ensure that water allocated for energy production is utilized more effectively and efficiently,” she said.
Güven said hydropower plants have an operational life span of 80 to 100 years, adding that the rehabilitation of existing facilities, adoption of advanced technologies and expansion of hybrid power plant applications would further strengthen Türkiye’s energy security.
She described hydropower as the “insurance policy” and “backbone” of solar and wind power, stressing that greater grid flexibility would be crucial to achieving the country’s 2035 and 2053 energy targets.
Turkish households’ and real sector’s inflation expectations edged down in July, while forecasts by market participants rose slightly, a survey showed on Friday.
The Central Bank of the Republic of Türkiye (CBRT) said expectations for inflation in 12 months time fell 0.6 percentage points from the previous month to 32.50% among the real sector and 1.19 percentage points to 44.94% among households.
Expectations among market participants rose 0.14 percentage points to 23.95%, the survey showed.
The share of households expecting inflation to decline over the next 12 months increased by 1.93 percentage points to 17.63%.
Treasury and Finance Minister Mehmet Şimşek said household inflation expectations had fallen by a cumulative 6.6 percentage points over the past three months, while real-sector expectations had declined by 1.2 percentage points, despite uncertainty stemming from geopolitical developments.
“We formulate our policies to combat inflation with a view to achieving lasting gains. The ultimate goal of our policies is to ensure sustainable growth and a lasting increase in prosperity through high-value-added production,” Şimşek wrote on the social media platform X.
Annual inflation eased to 32.1% last month from 32.6% in May. The decline had stalled following a sharp rise in energy prices caused by the Iran war. On a monthly basis, consumer prices rose 0.99% in June, slowing from 1.7% in May.
The CBRT raised its end-2026 inflation forecast to 24% from 16% in its quarterly inflation report published in mid-May, saying the short-term inflationary effects of the Iran war would remain “pronounced.”
The bank projects inflation falling to 15% at the end of 2027 and 9% at the end of 2028.
Friday’s survey showed households continued to identify food and energy as the categories with the largest price increases over the past year and those expected to see the strongest inflation over the next 12 months.
The proportion of respondents identifying food as the fastest-rising category increased 0.4 percentage points to 39.7%.
Households’ expectations for annual house price inflation over the next 12 months declined 1.33 percentage points to 32.49%.
The survey also showed gold remained the most preferred investment choice, although the share of respondents selecting it fell 4 percentage points to 40.3%.
The proportion preferring to invest in real estate, including homes, commercial property or land, increased 1.4 percentage points to 38.5%.
Russian e-commerce giant Wildberries, Moscow’s answer to Amazon, said on Friday that three more of its warehouses had been attacked by Ukraine overnight, part of a widening campaign by Kyiv to damage Russia’s economy and logistics chains.
A video from the scene of the attacks in St. Petersburg and nearby showed two giant plumes of thick smoke rising into the sky.
Tatyana Kim, Wildberries’ founder and Russia’s wealthiest woman, said the latest attacks had targeted warehouses in St. Petersburg, in the surrounding Leningrad region and in Simferopol, the main city in Russian-annexed Crimea.
“We managed to save some of the premises and goods. I would like to thank our staff, our heroes – a swift evacuation was carried out at all warehouses,” Kim said in a statement. “According to preliminary reports, there were no casualties.”
“All of our efforts are now focused on redistributing goods across our warehouses to ensure more efficient stock turnover and the economic stability of our partners,” she said.
Wildberries, whose banking arm had sanctions imposed on it by the European Union this week over its financial contribution to the Russian budget, plays a central role in Russia’s consumer economy.
Its targeting by Ukraine appears to be part of Kyiv’s attempts to ensure ordinary Russians feel the impact of the war, which has raged on Ukrainian territory for more than four years.
Sellers face serious losses
The strikes, the fourth on Wildberries’ facilities since last weekend, threaten serious losses for businesses that sell through Wildberries and potential disruption to customers who use it to buy clothing, appliances, medicines, cosmetics and a host of other products.
Ukrainian President Volodymyr Zelenskyy has described the targets as logistics hubs involved in supplying Russian forces with drone components and other equipment. The Kremlin has denied that Wildberries handles military supplies. Kim has accused Ukraine of attacking ordinary people doing their jobs.
Eight Wildberries warehouses, accounting for over 10% of the company’s logistics capacity, have now been attacked since July 18, when the first attack on the retailer killed eight workers.
Kim said the company was working around the clock to try to maintain the quality of its service.
Wildberries can handle over 20 million orders a day.
Together with smaller rivals, Wildberries and top competitor Ozon sell goods and services worth the equivalent of 8.5% of Russia’s gross domestic product and employ 4 million people, or more than 5% of the country’s workforce.
Look at Wildberries
Wildberries was launched in 2004 by Kim, a teacher and a young mother at the time, focusing at first on selling clothes.
Since then, the platform with its distinct purple logo has become an industry leader and household name, allowing big and small businesses alike to sell their goods to customers across the country by storing, shipping and delivering their inventory. In April, Forbes Russia estimated Kim’s fortune at $8.1 billion.
The marketplace features all sorts of goods – clothes, books, cosmetics, toys, appliances, household items, sports gear and much more. There’s an “E-Pharmacy” page and a travel section where users can book plane tickets or hotels.
In 2021, Kim acquired a small bank and turned it into what is now Wildberries Bank, but that institution has since come under sanctions by the U.K. and the European Union.
Last year, the company had more than 200 logistics facilities totaling over 5.2 million square meters (55 million square feet), with plans to expand in 2026, including planned warehouses in Belarus and Kazakhstan, where Wildberries operates as well. It also operates in Russian-held Crimea.
Some 500,000 to 800,000 sellers are involved with Wildberries, estimated Sergei Semko, a leading analyst with Data Insight, a Moscow-based company that analyzes online retail in Russia.
Wildberries currently accounts for 52% of all online orders in Russia, Semko told The Associated Press (AP).
The U.S.’s latest set of tariff hikes drew heated objections Friday from America’s trading partners, with Europe questioning Washington’s rationale for imposing new duties, China warning against trade wars and Brazil and Australia slamming them as unjustified.
The Trump administration announced extra tariffs of 10% to 12.5% on 60 economies late Thursday, saying the countries had failed to adequately enforce a ban on goods made with forced labor.
The move is the White House’s first step in efforts to rebuild President Donald Trump’s near-global tariff wall after the U.S. Supreme Court in February struck down his “reciprocal” duties of 10% to 50% imposed last year under a national emergencies law to try to shrink the U.S. trade deficit.
Those tariffs expired at 12:01 a.m. Friday. The new duties took effect at that exact same moment, with goods in transit exempted until 12:01 a.m. EDT on July 28.
The U.S. imposed a 10% duty on goods of Argentina, Bangladesh, Britain, Cambodia, Canada, Ecuador, El Salvador, Guatemala, Honduras, India, Indonesia, Jordan, Malaysia, Mexico, Pakistan, Sri Lanka, Trinidad and Tobago, saying they had bans or plans to ban forced labor imports but were not effectively enforcing such prohibitions.
The European Union, Taiwan, Japan, South Korea and Switzerland were assigned rates that, combined with preexisting most-favored-nation tariff rates, totaled 10% or 12.5%.
The other 38 countries were assigned a 12.5% rate. These include Vietnam, which issued a new decree this week that sets out more detailed rules banning imports of goods made with forced labor, and China.
A U.S. investigation serving as the basis for the tariffs did not provide meaningful evidence to support allegations of forced labor.
EU seeks clarification, China warns against trade war
European Union foreign policy chief Kaja Kallas questioned the U.S. stance, saying on Friday that allegations of shortcomings in the bloc’s forced labor controls were unfounded.
“You can’t say that for the European Union,” Kallas told Reuters on the sidelines of ASEAN meetings in Manila.
“If you compare our labor laws to the ones of the United States, I mean we have, people have paid vacations, we have very good conditions, labor conditions for our employees, so it’s not really grounded,” Kallas said.
Kallas said the EU will seek clarification from Washington, adding that the bloc had honored commitments under a transatlantic trade agreement reached last year and viewed the new tariffs as a shock.
“We had a deal with America and we have kept to that deal, that side of the deal,” she said. “That’s why this is a negative surprise that this agreement is not kept.”
China, slapped with the highest rate, condemned the fresh U.S. move and warned Washington against waging a trade war.
“We oppose all forms of unilateral tariff measures,” Chinese Foreign Ministry spokesperson Lin Jian told a news briefing on Friday.
“Tariff wars and trade wars are not in the interests of any party,” he warned.
Trade tensions have clouded relations between China and the U.S., two of the world’s biggest economies, as Trump’s hefty “Liberation Day” tariffs resulted in a sharp drop in Chinese exports to the U.S.
Trump and Chinese leader Xi Jinping, who agreed to set up new boards of trade and investment at their mid-May meeting in Beijing, are expected to meet again in September.
Some Chinese exporters say, however, the impacts are so far limited as the latest U.S. tariffs on China are still at lower levels than last year’s rates, which were initially 34%.
Australia and Brazil described the new tariffs as unjustified and said they would seek to have them removed, while Norway said there was “no basis” for them.
Canada – hit on Monday with new Trump tariffs on $20 billion worth of goods – issued a muted response.
“We will continue engaging constructively with the United States on this matter, as well as other outstanding issues, over the coming weeks to the mutual benefit of our citizens,” said Dominic LeBlanc, Canada’s minister in charge of U.S. trade.
Australian Trade Minister Don Farrell rejected claims linking Australia, a major exporter of beef, gold and copper, to modern slavery.
“We believe that amongst all of the countries in the world Australia does take the issue of slavery, modern slavery, seriously, and will continue to do that,” Farrell told reporters in Adelaide.
Australia believes the higher tariffs are “completely unjustified and we will continue to lobby the United States Trade Representative to remove all tariffs on Australian goods,” Farrell said.
New Zealand Prime Minister Christopher Luxon said the tariffs on his country were “extremely disappointing,” unjustified and harmful to trade.
“Tariffs are not the way – they drive up costs and uncertainty for businesses,” Luxon wrote on X.
Also facing a 12.5% tariff, Singapore’s Ministry of Trade and Industry, which reiterated its stance of not condoning the use of forced labor, said it would “continue to engage the USTR (United States Trade Representative) to explore options.”
Some hope to forestall tariff hikes
Japan likewise protested the tariff imposed on its exports, noting Tokyo had been reassured by the Trump administration that there would be no more tariffs on top of an earlier agreement on a 10% U.S. import duty.
“Our understanding is both sides are still committed to that,” Chief Cabinet Secretary Minoru Kihara told a routine news conference.
“It is regrettable that the measure imposes tariffs on the grounds of the non-existence of measures banning imports of goods made by forced labor, even though Japan’s industry and trade are in line with international rules,” Kihara said.
South Korea said it will maintain close communication with the U.S. to preserve a mutual “balance of benefits.”
South Korea’s Trade Ministry said the announcement eased some uncertainty over U.S. trade policy, but noted that a Section 301 investigation into alleged Korean excess production continues.
The combined duties on South Korean exports should not exceed 15%, the ministry said in a statement.
Thailand noted it is subject to the new 12.5% tariff by the U.S. under the forced labor provision, but the measure exempts around 2,120 items, representing more than half the value of Thai goods exported to the U.S.
Thailand also is monitoring the possibility of an additional tariff on the grounds of structural overcapacity under another ongoing U.S. probe against 16 countries, but Washington has not yet announced those results, the Thai Commerce Ministry said in a statement.
Latest import duties might stick
Wendy Cutler, a former senior U.S. trade official, said the latest round of tariffs involved “few surprises” since they range just between 10% and 12.5%.
The U.S. Trade Representative’s office spent four months investigating the basis for those tariffs to meet legal requirements under Section 301 of the U.S. Trade Act of 1974.
“Time will tell whether the third attempt to impose tariffs is the charm and this action stands up to legal challenges,” said Cutler, senior vice president of the Asia Society Policy Institute.
These duties are less likely than earlier ones to be overruled by U.S. courts, she said.
Further tariffs may be coming in the fall related to alleged structural excess capacity of trading partners, she noted.
Washington is generally tending to engage in increased trade friction, William Bratton of BNP Paribas said in a research note Friday.
“On the positive side, however, these tariffs are lower than the earlier (Emergency Powers Act) ‘reciprocal’ tariffs and appear to exempt a substantial proportion of Asia’s current trade flows with the U.S.,” he said.
The Trump administration included many exclusions of products from the tariffs, including for goods the U.S. does not produce, Cutler noted.
“This should reduce the impact of these duties. Nevertheless, they will contribute to higher prices both for end consumers and businesses importing inputs and machinery,” she said.
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