Donald Trump is determined to keep the pot boiling. In a signal that his trade wars are far from over, the US has informed 14 nations of new tariffs ranging from 25 to 40 percent. Close allies, too, have not been spared. South Korea and Japan, among the US’s strongest military and trade partners, will face 25 percent tariffs from August 1 unless they reach a deal before the extended deadline. South Africa will face 30 percent tariff, Serbia and Bangladesh 35 percent, and for Laos and Myanmar it climbs to 40 percent. Trump threatened these countries with even higher rates in case they fought back with reciprocal duties on US exports.
Given that the cat-and-mouse game of tariff announcements and withdrawals has been on since April, some negotiators are not too worried. They are hopeful of striking deals before the new deadline. Trump has also indicated he is flexible, stating he is “firm, but not 100 percent firm”. The stock markets seem to be in sync. American bourses initially dipped on Monday; but by the next morning, most Asian markets shrugged off the uncertainty. Despite all the sabre-rattling, the US so far has only clinched two comprehensive deals—with the UK at 10 percent tariff on most goods and with Vietnam at around 20 percent. In these circumstances, countries like Bangladesh and Laos, who are heavily export-reliant, are seriously concerned.
For India, Trump has indicated the talks are “close to a deal”. However, there are serious hold-outs on India’s protective rates on agriculture and dairy products, auto components and steel. One expects these to be ironed out for at least an interim deal by August. In the long run, there is a greater push for regional alliances among developing countries, which may provide an alternative to the US market. For instance, despite Trump threatening the BRICS countries with an additional 10 percent tariff, the bloc’s leaders went ahead with their agenda at the Rio de Janeiro summit. President Lula da Silva of Brazil retorted: “We don’t want an emperor; we are sovereign countries.” While India is playing a delicate balancing game between mollifying the US and developing alternative platforms, moving towards multiple trading alliances among emerging nations could mean greater independence and lower risks.