News - Trump's tariff hike sparks global trade tensions

In a significant development, President Trump has declared an immediate increase in the global tariff rate from 10% to 15%. This decision, taking the tariff to its maximum permissible level under Section 122, aims to leverage 150 days to explore further legal tariff options. Notably, existing deals under the USMCA are exempt from this hike, although future uncertainties loom over these agreements. While U.S. officials emphasize the importance of existing trade deals, USTR Greer aims to distinguish these agreements from the newly implemented tariff, underscoring the evolving complex trade dynamics. The tariff adjustment favors countries such as China and Brazil, historically critiqued by Trump, but poses notable challenges for U.S. allies like the UK, EU, and Japan. This shift has triggered a strategic review in Europe, with the European Parliament's trade chief contemplating a freeze on ongoing U.S. trade deal ratifications pending further clarity on U.S. trade policies. French Trade Minister Forissier is actively engaging EU counterparts, asserting the EU’s readiness to retaliate against such tariffs if needed. In parallel, German Chancellor Merz anticipates alleviated economic pressures following recent U.S. judicial decisions, and plans a coordinated European response to maintain a unified trade stance. The ECB's President Lagarde and member Panetta express concerns over potential disruptions to the established trade equilibrium with the U.S., highlighting the tariffs’ potentially adverse economic impact on both sides. In the UK, efforts focus on negotiating the most favorable tariff deal for British enterprises, in light of the new U.S. policy. The ripple effects are felt as far as Asia, where Indian trade delegations and Japanese commentators describe the tariff scenario as chaotic. In response, Hong Kong calls the tariff situation a 'fiasco,' and South Korea indicates its commitment to maintaining positive consultations with the U.S. over ongoing trade engagements.