On April 2, U.S. President Donald Trump announced a sweeping new U.S. trade policy that could result in the most far-reaching trade reshuffle seen in nearly a century. A 10% baseline tariff on all U.S. imports was officially enacted on April 5. This across-the-board measure will be followed by the implementation of additional measures termed “reciprocal tariffs” on April 9, with rates determined on a country-by-country basis. The rates appear to be determined in large part by U.S. bilateral trade deficit amounts. According to Trump administration statements, while companies may have the opportunity to negotiate down reciprocal tariffs on a case-by-case basis, no country will be allowed to negotiate lower tariffs than the 10% baseline tariff. Nevertheless, some countries at the 10% tariff level have indicated plans to continue negotiations, including the United Kingdom and Australia.
Several key products were exempted from these measures, including copper, unspecified critical minerals, pharmaceuticals, semiconductors, lumber, energy and oil products, and certain fertilizers and chemical products. President Trump also extended the exclusion of United States-Mexico-Canada Agreement goods from tariffs indefinitely, which was previously set to expire on April 2.
China and EU announce countermeasures while other countries pursue negotiations
Following the announcement of these measures, countries around the globe are now considering their responses. China has announced the most detailed response, which will enact a blanket 84% tariff on all U.S. goods effective April 10. In response to an earlier threat of a 34% tariff on all U.S. goods, President Trump had threatened to impose an additional 50% tariff in China unless Beijing reverses its new tariffs by April 8. This measure came into force with the other reciprocal tariffs on April 9.
In addition to the tariff, China will also implement export controls targeting the rare earth minerals samarium, terbium, gadolinium, dysprosium, lutetium, scandium, and yttrium. China has also initiated several regulatory probes into U.S. companies, including an antimonopoly investigation into DuPont Chemical and an antidumping probe targeting X-ray tubes used in medical CT scans from the U.S. and India. Furthermore, imports of sorghum, bone meal, and poultry have been suspended from five U.S. companies, while 16 companies have been added to its export control list and 11 companies have been added to its “unreliable entity” list.
The European Union has also prepared counter-measures scheduled to go into effect on April 15, with a second round likely in mid-May should negotiations with the U.S. fail. E.U. negotiators have offered a “zero-for-zero” tariff rate on some U.S. goods, but a White House official has indicated that this is unlikely to be approved. The first round of E.U. tariffs, which will be formally voted on April 9, will impose 25% tariffs on an unspecified list of goods that includes diamonds, eggs, dental floss, sausages and poultry. The bloc will also enact tariffs on almonds and soybeans from December 1. Negotiations are ongoing on what will be included in the May tariff round. Some policymakers have suggested additional tariffs on U.S. digital services and are considering using the E.U. anti-coercion instrument, which would broaden the policy instruments available and allow lawmakers to limit the operations of U.S. services, including technological services and social media operations, while other countries are more reluctant to respond harshly.
Elsewhere, many countries are taking a negotiations-first approach. Mexico has confirmed its focus on supporting its domestic industry rather than immediately imposing tariffs but has not entirely ruled out future measures. Meanwhile, Taiwan is exploring options like increasing energy imports from the U.S. and cutting domestic tariffs, along with preparing a support package for local companies; it is not currently planning any retaliatory tariffs. Other countries, including Vietnam, Thailand, India, the United Kingdom, Japan, South Korea, Australia, Brazil, Indonesia, Singapore, and Israel, have not announced retaliatory tariffs but are either entering negotiations or developing domestic relief plans for industries likely to be impacted by the U.S. tariff regime.
Shipping companies anticipate decreased demand amid lower consumer spending
Leading up to the April 2 tariff announcement, logistics companies reported a rush of shipments as companies scrambled to get goods to the U.S. before tariffs increased. However, many freight shippers, train operators, and trucking companies have reported remaining capacity to handle shipments, and ocean and truck shipping rates remain stable. Ocean shipping companies have reported that activity has slowed since the initial wave of tariffs was enacted. Some companies have opted to temporarily pause shipments to the U.S. as they adapt to the evolving tariff environment. For example, Volkswagen AG has halted rail shipments of vehicles from Mexico and is holding European auto shipments at port until pricing adjustments are determined by the end of April. Jaguar Land Rover Automotive PLC and Audi AG have also halted car shipments to the U.S. for a month while they assess the impact of tariffs. Shipping companies including Maersk have indicated increased demand for bonded storage at ports as companies hold off on customs clearance for their goods.
Additionally, general concern that the tariffs will slow import demand in the U.S. has raised financial challenges for ports. Ro-ro cargo operators such as Wallenius Wilhelmsen and Atlantic Container Line and ports dependent on automobile cargo including the Port of Seattle have expressed concerns about the new tariffs on finished automobiles affecting ro-ro cargo bookings, while management at the Port of Los Angeles has indicated container traffic could drop by as much as 10% due to decreased demand.
However, ongoing uncertainty regarding tariff rates continues to delay operations at customs facilities. Increased congestion persists at the U.S. land borders with Canada and Mexico, and may occur at other customs facilities as agents navigate new protocols. Additionally, on April 2, President Trump signed an executive order revoking the de minimis exception effective May 2, which previously allowed low-value Chinese goods to bypass tariffs. The exception was first revoked in February but was temporarily reinstated within days due to confusion over the policy contributing to heavy congestion at customs clearance and postal facilities.
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