President Donald Trump sent out tariff letters to seven smaller U.S. trading partners on Wednesday with a pledge to announce import taxes on other countries later within the day.
Not one of the countries targeted in the primary batch of letters — the Philippines, Brunei, Moldova, Algeria, Libya, Iraq and Sri Lanka — is a serious industrial rival to the US. It’s an indication that a president who has openly expressed his love for the word “tariff” remains to be infatuated with the concept taxing trade will create prosperity for America.
Most economic analyses say the tariffs will worsen inflationary pressures and subtract from economic growth, but Trump has used the taxes as a solution to assert the diplomatic and financial power of the U.S. on each rivals and allies. His administration is promising that the taxes on imports will lower trade imbalances, offset a few of the cost of the tax cuts he signed into law on Friday and cause factory jobs to return to the US.
Officials for the European Union, a serious trade partner and source of Trump’s ire on trade, said Tuesday that they will not be expecting to receive a letter from Trump listing tariff rates. The Republican president began the strategy of announcing tariff rates on Monday by hitting two major U.S. trading partners, Japan and South Korea, with import taxes of 25 per cent.
In accordance with Trump’s letters, imports from Libya, Iraq, Algeria and Sri Lanka can be taxed at 30 per cent, those from Moldova and Brunei at 25 per cent and people from the Philippines at 20 per cent. The tariffs would start Aug. 1.
The Census Bureau reported that last 12 months U.S. ran a trade imbalance on goods of US$1.4 billion with Algeria, US$5.9 billion with Iraq, $900 million with Libya, US$4.9 billion with the Philippines, US$2.6 billion with Sri Lanka, US$111 million with Brunei and US$85 million with Moldova. The imbalance represents the difference between what the U.S. exported to those countries and what it imported.
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Taken together, the trade imbalances with those seven countries are essentially a rounding error in a U.S. economy with a gross domestic product of $30 trillion.
The letters were posted on Truth Social after the expiration of a 90-day negotiating period with a baseline levy of 10 per cent. Trump is giving countries more time to barter together with his Aug. 1 deadline, but he has insisted there will probably be no extensions for the countries that receive letters.
Maros Sefcovic, the EU’s chief trade negotiator, told EU lawmakers in Strasbourg, France, on Wednesday that the EU had been spared the increased tariffs contained within the letters sent by Trump and that an extension of talks until Aug. 1 would supply “additional space to succeed in a satisfactory conclusion.”
Trump on April 2 proposed a 20 per cent tariff for EU goods after which threatened to lift that to 50 per cent after negotiations didn’t move as fast as he would have liked, only to return to the ten per cent baseline. The EU has 27 member states, including France, Germany, Italy and Spain.
The tariff letters are worded aggressively in Trump’s form of writing. He frames the tariffs as an invite to “take part in the extraordinary Economy of the US,” adding that the trade imbalances are a “major threat” to America’s economy and national security.
The president threatened additional tariffs on any country that attempts to retaliate. He said he selected to send the letters since it was too complicated for U.S. officials to barter with their counterparts within the countries with recent tariffs. It may take years to broker trade accords.
Japanese Prime Minister Shigeru Ishiba interpreted the Aug. 1 deadline as a delay to permit more time for negotiations, although he cautioned in remarks that the tariffs would hurt his nation’s domestic industries and employment.
Malaysia’s trade minister, Zafrul Aziz, said Wednesday that his country wouldn’t meet the entire U.S. requests after a Trump letter placed a 25 per cent tariff on its goods. Aziz said U.S. officials are looking for changes in government procurement, halal certification, medical standards and digital taxes. Aziz he indicated those were red lines.
State pf Secretary Marco Rubio is ready to reach Thursday in Malaysia’s capital of Kuala Lumpur.
—Associated Press writers David McHugh in Frankfurt, Germany and Eileen Ng in Kuala Lumpur, Malaysia, contributed to this report.
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