Why Trump's new tariffs might not be effective till October
What's the story
Donald Trump's executive order on reciprocal tariffs offers a grace period that extends to October. The new tariffs come into effect on August 7, instead of the previously announced date of August 1. However, if any country signs a trade deal with Washington during this period, things could change. The White House has clarified that goods loaded onto ships before August 7 and arriving in US by October 5 will be subject to pre-existing tariff rates, and not new ones.
Tariff timeline
Canada's tariffs set to take effect today
Most of the new tariffs are set to take effect within a week. The only exception is Canada, which is being slapped with a 35% tariff on exported goods from today. To note, not all goods trading under the US-Mexico-Canada Agreement (USMCA) renegotiated by Trump in his first presidential term are exempted from these tariffs.
Tariff details
Trump's order imposes 40% tariff on transshipped goods
Trump's order also imposes a 40% tariff on goods that US Customs and Border Protection determines have been "transshipped" to avoid higher duties elsewhere. This is usually done when Chinese goods are sent to another nation, repackaged or otherwise superficially changed. Interestingly, these provisions were included in the trade deal with Vietnam that Trump announced four weeks ago, but were missing from subsequent agreements.
Trade transformation
Reordering global trade
A senior US official who briefed reporters after the announcement said, "The president has essentially reordered global trade." The official added that Trump is achieving "the type of outcomes that the WTO and the multilateral trading system have failed to accomplish at scale over the last 25 years." This marks a departure from historical practices where countries worked together to lower tariffs globally.