Harsh punishment of India completes Trump’s tariffs on Washington’s major suppliers

With all possible caveats — which are many in the case of a president as volatile as Donald Trump — the implementation of a levy of up to 50% on imports from India closes the U.S. tariff circle on its former trading partners, now relegated to the role of mere suppliers. Negotiations with several of them (with India itself, as well as China, Canada, and Mexico, the trio of nations that accounts for almost half of U.S. imports) remain ongoing, but all of them already have a base figure, a tariff floor on which to build — or, in most cases, deconstruct — their once-solid trade ties.

Domestic and foreign policy aside, the new tariff framework paints a new picture for trade. It anticipates less international commerce. Slowing growth. Fewer imports from the United States, by far the largest consumer on the planet. Higher prices for American businesses and households, even though the initial blow is not being felt with the force expected in the initial inflation readings: time will tell. And it also suggests significant competitiveness gaps between the countries that serve the voracious demand of the United States, with nearly 350 million inhabitants and the undisputed cradle of consumerism.

Competitiveness gaps

There are those who, despite the blow that any tariff represents and despite the obvious resignation and sense of surrender, come out relatively well in comparative terms. This is the case of the United Kingdom, whose historical ties — and a surprisingly good relationship between the Republican and Prime Minister Keir Starmer, ideologically at odds with each other — have earned them an additional cost of only 10%. The lowest in the world, along with Australia, also Anglo-Saxon, also part of the Commonwealth, and, paradoxically, also governed by a Labour administration.

One step behind is the European Union, a prime target of Trump’s invectives and singled out for its surrender in the July negotiations, but whose tariff (15%) limits the damage to its exports’ ability to compete. The EU-27 are thus related to New Zealand, a key U.S. ally in a region as fundamental as the Asia-Pacific. With Japan, essential in the game of counterweights against China; With South Korea, whose economy and defensive capabilities depend heavily on Washington and which, like the EU, has just sealed its trade pact in the White House; With Recep Tayyip Erdogan’s Turkey, on whom Trump heaped great praise in his first term; And with Benjamin Netanyahu’s Israel, to whom he has given a free hand in Gaza, with very few reproaches for the atrocities he is committing against the Palestinian population.

The trade landscape is much more open with Mexico and Canada, two economies highly dependent on the U.S. but which still benefit from the USMCA agreement — signed at the end of 2018 at Trump’s own request — as an important protective umbrella for the bulk of their sales. In the former case, the general tariff on goods not covered by the treaty is 25%. In the latter, the figure has just increased from 25% to 35%.

Brazil and Switzerland

Other major exporters are faring much worse. The 50% tariff the White House is imposing on products from India starting this Wednesday not only places it — along with Brazil — as the most heavily taxed country in the world among its main trading partners. It also means the virtual elimination of trade: few goods can withstand such a heavy burden and still be competitive. Hence, the figure is considered more a starting point for negotiations with the world’s most populous country — in parallel with what the talks with Russia to end the invasion of Ukraine may bring — than the end of the road.

The cases of Brazil and, to a lesser extent, Switzerland, are the most paradigmatic. In the former, due to the amount (50%) and the reasons given by Trump: it is not due to any imbalance — the South American country is, in fact, one of the few that buys more from the U.S. than it sells — but rather a purely political issue and preferential treatment for his friend Jair Bolsonaro, the former president under house arrest and recently tried for his involvement in the 2023 coup attempt.

The Swiss Confederation, immersed in a permanent state of stupefaction since Washington imposed a 39% tariff on it — a figure surpassed only by the aforementioned cases of India and Brazil, as well as Laos, Myanmar, and Syria — is perhaps the best example of how the Republican magnate operates. A failed conversation with the Swiss president and chief financial officer, Karin Keller-Sutter, on July 31 resulted in a humiliating tax and a “horror scenario” for its companies, according to the employers’ association.

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