In the United States, the impact of tariffs imposed by President Trump is becoming increasingly evident. The 'America First' policy, which emphasizes tariffs as a key tool in foreign policy, aims to reshape global trade and benefit American citizens. However, this strategy is leading to intricate consequences on both national and international fronts. Businesses and consumers are feeling the pressure as costs rise and economic uncertainty looms.
American companies are largely absorbing the higher costs of tariffs, but this is not universally the case. Recent inflation reports show that appliances, toys, and other electronics sensitive to tariff changes are becoming more expensive. Major corporations like Walmart and Procter & Gamble have already warned of potential price hikes. The uncertainty caused by tariffs has also led companies to delay hiring new employees, resulting in fewer job opportunities.
Specific examples of this impact include Starbucks potentially raising prices due to a 50% tariff on Brazilian coffee imports. The alcohol sector, comprising 57 firms, has warned that 15% tariffs on EU products could slash alcohol sales by nearly $2 billion and jeopardize 25,000 jobs. Honda Motor reported a 50% drop in operating profit, partly due to Trump's tariffs and a stronger yen.
Apple is a particularly notable case. The company is shifting much of its iPhone production to India, especially for the U.S. market. If these products face new tariffs, American consumers could see significant price increases, as importers typically pass most costs onto customers. However, smartphones are currently on an exempt list, sparing Apple from a more severe impact.
President Trump has frequently highlighted the record revenue from tariffs, claiming the U.S. government is receiving unprecedented amounts of money. Last month, the U.S. collected nearly $30 billion in tariff revenue, a 242% increase from the previous year. Since April, when 10% tariffs and higher rates were implemented, the government has amassed $100 billion in tariff revenue.
These revenues are deposited into a general fund managed by the Treasury Department, used to pay government bills like Social Security. While this tariff revenue doesn't eliminate the current budget deficit, it helps reduce it, meaning the government needs to borrow less money than it would without these revenues. Trump has suggested using these funds to pay down national debt or issue 'tariff rebate checks' to Americans.
Recent tariff actions by Trump have been swift and globally impactful. In India, a 25% additional tariff was imposed on oil purchases from Russia, raising the total to 50%. Canada saw tariffs on imports rise to 35%, though USMCA goods are exempt. Brazil faced 50% tariffs on many products, with exceptions like orange juice and aircraft parts, following the detention of former President Jair Bolsonaro.
Tariffs of 50% were imposed on semi-finished copper products starting August 1, affecting imports valued at over $15 billion in 2024, potentially pressuring U.S. manufacturers with inflation. Trump also ended the 'de minimis' exemption for low-value imports, applying tariffs from August 29. He has threatened sectoral tariffs, including 100% on all chips and semiconductors entering the U.S. and up to 250% on pharmaceuticals.
Trade negotiations with key partners have yielded mixed results. The U.S. reached a trade agreement with South Korea, setting a 15% tariff rate for imports from that country. With the European Union, a trade deal was reached imposing 15% tariffs on EU goods, though many terms are still being finalized. Despite this agreement, alcohol industry associations have expressed concern over potential sales and job losses.
