Trump's global tariff war escalates: What’s changing on August 1 and what it means for US economy

US President Donald Trump’s trade policy is entering more aggressive gear. On August 1, his administration will begin imposing higher tariffs—some up to 50% —on imports from over 20 countries including Mexico, Canada, South Korea, Thailand and Brazil. The move adds to an already complex web of duties on friends and foes alike, which had been meant to push US allies to enter bilateral trade deals and stimulate manufacturing at home, the New York Times reported.

While some countries get offers, others get threats

Whereas nations such as Germany, Japan and France are met with preliminary agreements with the US, others such as South Korea, Brazil and Thailand are met with astronomical tariffs. Brazil will most likely be hit hard, with tariffs rising to 50%, following Trump’s tirade against how the country treated ex-President Jair Bolsonaro. The administration has threatened that any retaliation will be met with even worse consequences, demonstrating the volatile nature of this phase of Trump’s trade war.

Old menaces return to haunt as tariff pauses lapse

The White House instituted a series of “reciprocal tariffs” in April based on trade deficits, but delayed implementing them. The delay runs out in August, and countries like China, India and Switzerland could see sudden import tax jumps unless deals are renegotiated. China, for example, currently enjoys a 30% starting rate, which could rise if negotiations collapse.

Baseline tariffs and industry-specific duties are still operational

Even countries not directly targeted for fresh tariffs are being assessed an across-the-board 10% duty on all US shipments Another wave of those tariffs has already been applied on foreign autos with a 25% levy and steel and aluminium with a 50% rate, and there are impending tariffs on copper, drugs and semiconductors, which threaten even more cost strain on American companies and consumers.

Canada, Mexico and China remain at the heart of tariff strategy

While there are existing trade deals like USMCA, neither Mexico nor Canada is exempt. Both countries will have their imports hit with new tariffs of 35% and 30% respectively for items that do not fall under existing trade deals. China remains a specific focus, with the administration leaving on the table the possibility of reinstating retaliatory 145% tariffs if a more favourable deal can’t be reached before the August 12 deadline.

What’s next for trade and inflation

The impact of Trump’s hawkish tariff policy has already been witnessed, and inflation will increase as importers pass on their expenses to consumers. Although Trump is convinced that foreign producers will absorb the expense, experts generally opine otherwise. As the new agreements are still vague and enforcement in doubt, August 1 can be the beginning of a more destabilizing period for world trade relations.