Tariff Wars: What is the Position Right Now?

This week has taken tariff wars to another level and trying to keep up with Trump’s announcements, counter-measures, U-turns and pauses (across several time zones as well) is anything but easy.  

Below we outline the position as of this morning: 

U.S. Tariffs: 

The working week started with a new baseline tariff of 10% effecting imports into the U.S.  This impacted the vast majority of goods with only a selected few excluded due to their own measures already being introduced (such as steel, aluminium, cars and car parts) or further research is being done on products independently. 

Over 60 countries were due to be further impacted on the 9th April due to the introduction of their retaliatory tariff measures.  For example, the EU tariff rate was due to rise to 20%, 24% for Japan and 26% for India. 

However, hours after these tariffs were introduced on the 9th, President Trump announced that he would be pausing the retaliatory tariffs for a period of 90 days.  Throughout this period, countries would still be subjected to the 10% baseline tariff rate.  

U.S. & China Trade Wars: 

There is no question that the American tariffs were hitting China the hardest and that China have been the most forceful in their response.   

Following some tit-for-tat increases, we now have tariff rates of 145% from U.S. on Chinese imports and a retaliatory 125% on imports of U.S. goods into China.  However there may be some light at the end of the tunnel as a spokesperson for the Beijing’s Commerce Ministry stated, when announcing the latest rises, that these would be the last retaliatory increase because the duties “have become a numbers game with no practical significance in economics...it will become a joke”. 

Away from the tariff escalation, President Trump also announced the removal of the $800 De Minimis for Chinese-origin goods.  This means that all Chinese goods will be subjected to tariffs and there is no longer an exemption for goods under the $800 threshold. 

EU: 

On Wednesday (9th) the European Commission announced that the EU Member States had given their approval on retaliatory measures to be introduced from 15th April. 

However, just hours later President Trump announced a 90-day pause on the U.S import tariff rises.  As such, the EU swiftly followed the same suit and paused their own retaliatory tariffs for a 90-day period.  

UK: 

Except for launching last week (3rd April) their business engagement to gather views on how the UK should respond to U.S. tariffs, the UK has stayed relatively quiet and refused to take any knee-jerk action.  

So what is the picture? 

Overall, the baseline rate of 10% has been introduced however countries that were expecting a further tariff increase on Wednesday have seen a 90-day reprieve. Of course, this does not take into account China, where tit-for-tat tariff rises have continued to the point where we now see 125% and 145% tariff rates in both directions.