New Trump order brings U.S. effective tariff rate up to 16.1% - Wolfe Research

Published 01/08/2025, 11:44
© Reuters

Investing.com - President Donald Trump’s latest trade-related executive order will raise the effective U.S. tariff rate to 16.1%, "less than threatened and less than feared" but above current levels, according to analysts at Wolfe Research.

Ahead of a much-anticipated August 1 deadline for his "reciprocal" duties to come into effect, Trump signed a proclamation on Thursday night lifting tariffs to as much as 50% on dozens of countries, as he steps up his drive to upend a global trading system he has described as unfair to U.S. interests. The levies are now set to activate at 12:01 am on August 7.

Major industrialized economies such as the European Union, Japan and South Korea will face duties of 15%, while other countries who run a trade surplus with the U.S. will be hit with tariffs of 10%.

Even higher tariffs are set to be slapped on other nations, including 50% levies on Brazil. Trump increased tariffs on Canada to 35% for goods that do not comply with the U.S.-Mexico-Canada Agreement, which was signed during Trump’s first term.

Meanwhile, Trump and Mexican counterpart Claudia Sheinbaum said Mexico was granted another 90-day reprieve to forge an agreement with Washington.

In a note, the Wolfe analysts estimated the aggregate tariff hike would amount to roughly $58 billion, below its prior projection of $85 billion, due largely to additional deals with countries notched this week.

"The incremental easing from deals with South Korea et al. was partially offset by higher tariffs on India, Taiwan, and some other countries not covered by Trump’s letters," the strategists wrote.

Meanwhile, the anticipated total effective U.S. tariff rate of 16.1% could rise further when separate sector-specific levies on semiconductors and pharmaceuticals roll out in the weeks ahead, the analysts suggested.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2025 - Fusion Media Limited. All Rights Reserved.