At the end of his own deadline day, Donald Trump poured out a tax -rain on Thursday by decree on countries that have not yet closed a trading deal with the US. And because deadlines at Trump are always stretchable, he once again extended his own deadline: Landen without a deal can still turn to the White House in the coming week to drag a better deal from it before these new taxes will apply from 8 August.
Where Trump’s taxes were still experienced as shocking and absurd on 2 April, the now -ordained taxes are conceived as the new. Within four months he has fucked almost all trading partners in the world. China and Canada were the only countries that took retaliation measures, making them confronted with much higher levies than other countries. Almost all other trading partners have swallowed taxes that were previously considered unthinkable.
The average entry tax of the US is now about six times higher than for Trumps. And approaches the level of taxes after the infamous smoothy law, which unleashed a trade war in the world at the beginning of the great depression in the 1930s. With disastrous consequences for the then already weak global economy. The lesson after the Second World War seemed: never again.
But the world of taxes is completely back thanks to Trump. In which world have we ended up by Trump and how are we going to operate in that?
Search for logic behind Trumps taxes
It is still a search which system the Trump government applied to determine the amount of the taxes.
Countries that have a commercial surplus with the US, such as the United Kingdom, are nevertheless imposed a levying of 10 percent. As a punishment for good behavior. For all countries with which the US has a trade deficit in terms of goods, five different tax heights have been established, rising from 15 to 40 or 41 percent.
You could recognize patterns. All US military allies who are also a large trading partner have received a levy of 15 percent. Japan was the first to conclude a deal, the EU and South Korea followed this week. The models of these framework agreements show many similarities. All three trading partners promised major investments in the US, where it is unclear what these actually entail.
For emerging economies in South-East Asia, the model of the deal with Vietnam has followed. Countries such as Thailand, Cambodia, Malaysia and Indonesia have all received a 19 percent levy. That is considerably lower than taxes of more than 40 percent, to which they were treated by Trump on 2 April. And also much more favorable than the levies that larger economies such as India and South Africa now have to adapt: they are hiking against taxes of 25 and 30 percent.
Neighboring countries Mexico and Canada are also still negotiating. Friction was rising between Canada and the US and so Canada was given a levy of 35 percent. Trump had better conversations with Mexican President Claudia Sheinbaum, but that negotiating theadline has shifted ninety days and until that time the levy for Mexico is 25 percent. Incidentally, it is only for goods that do not fall under the trade treaty between the US, Canada and Mexico, that Trump signed in 2020 itself.
Trump and his team only think in terms of winners and losers, not in the theory that there are more winners in free trade
Why the economy is holding itself
In the White House, a spokesperson jubilated on Thursday that with the new taxes the billions will flow into the American treasury. Trade representative Jamieson Greer praised the ‘fair and balanced trade’ that can now arise. The decline of American trade shortages must now start! And with the promised investments of nearly $ 1,500 billion by trading partners such as Japan, South Korea and the EU, the new factories and thousands of jobs that Trump has pre-reflected on his voters. So mission reaches!
That import duties can have harmful economic effects, and, for example, increase prices and slowing down investments, is a warning from many economists who like to slide the Trump camp under the table. Nevertheless, higher prices for American importers and consumers are inevitable, and therefore a brake on economic growth, the prognoses of those economists are.
Although higher levies have been on goods from many countries since April, the effect of it can hardly be seen in the economic figures published in the past week. Economic growth rose by 3 percent in the second quarter in the US, it turned out. In the first quarter, so for the taxes, there was still a decrease of 0.5 percent. An important cause for this is that importers laid out massive stocks in the first quarter for the taxes, which they brought to the market in the second quarter without price increases. With the disappearance of those stocks, prices will have to go up in the coming months. With a further moderation of economic growth as a result.
However, American growth also has other driving engines. Such as the investments of hundreds of billions in artificial intelligence. And the recently adopted Big Beautiful Bill, the law that will encourage spending and investments due to a substantial tax reduction and deregulation.
They can make the moderating effect of taxes on growth invisible. To what extent that is the case, in turn depends on whether companies will count higher prices, or shrink on profit margins while they abandon investments.
In their forecasts, both the IMF and the FED, the US Central Bank, assume gradual increase in consumer prices in the coming months. Partly for that reason, the Fed postponed an interest rate reduction. The IMF stated that these price increases will indeed have a moderating influence on economic growth in the US, but nevertheless it is the prognosis for US growth positively for this and next year, from 1.8 to 1.9 percent and from 1.7 to 2 percent.
Companies now know what to do
Brightness. That is what many companies were craving. And they have received them to a certain extent, now that they know what taxes they can expect – even though there are still question marks about separate taxes in sectors that Trump has previously threatened, such as for pharmaceuticals and chips.
In the presentations of their half -year figures, some European and American companies gave more prize about the costs they incur due to taxes and about their plans.
The costs are often high. Take the automotive industry, for which a levy of 27.5 producer has been in recent months and in which there is some relief that it has now been adjusted to 15 percent for both European and Japanese producers. German manufacturers such as Volkswagen and Mercedes indicated that they had been hunted for 1.3 billion euros respectively and several hundred millions on extra costs. They swallow the costs for the time being by lowering their profit margins and consider expanding production in the US.
But the American car industry also suffer from the taxes, GM with $ 1.1 billion and Ford with 800 million in extra costs. For them it is bitter that the import duties from Mexico and Canada are currently at a higher level, so that they will pay relatively more levies for parts that they purchase in those countries or cars they assemble there. Even though Ford assembles 80 percent of his cars in the US, for GM that is 50 percent.
Price increases can be expected from brand article manufacturers such as Adidas and Nike. Adidas probably said he would not get away from that, after the import duties had delivered the company 200 million in extra costs.
This fear lives not only among foreign companies, but also with American who mainly produce in the US itself. They see their costs rising for the purchasing of raw materials, a food manufacturer such as Procter & Gamble (including Gilette razor blades) with 1.1 billion, tool manufacturer Black & Decker with $ 800 million. Both indicated that they consider price increases.
The Tariff Warrooms Those large companies have arranged, can now also calculate how production and purchasing can best be shifted to mitigate the impact of taxes. That will also apply to smaller companies. The size of the shifts will become clear in the coming period.
Of disorder
The world has changed strongly in a few months. With the deals with the US, where numerous countries have resigned this week, they participated in breaking down the international economic order that has been built up since the Second World War. A long period of globalization has come to an end. It is no longer about how to produce as efficiently as possible on the world scale in the places that are the most suitable for that, which increases trade, prices fall and the economy is growing more.
Trump and his negotiators see trade as a zero-sumgame, in which limiting the trade of another country leads to increasing their own trade. They only think in terms of winners and losers, not in the theory that the total size increases in free trade and there are more winners.
Trade agreements have also been given a completely different character. Beyond the years in which for a long time there is negotiating and agreements are recorded in the deepest details in large books. That gave all parties certainty for a period of many years.
Now the agreements in the trading deals are laid down on A4 tjes. How firm those agreements are, nobody knows. When Trump changes his mind again, he can set new requirements. Certainly if he does not achieve his objectives. Even in the coming weeks, surprises cannot be excluded if the details of the deals are further negotiated.
Given the whimsiness of Trump, nothing is excluded in the coming three years.