tariff

WASHINGTON — For all of President Trump’s promises of an economic “golden age,” a spate of weak indicators last week told a potentially worrisome story as the effects of his policies are coming into focus.

Job gains are dwindling. Inflation is ticking upward. Growth has slowed compared with last year.

More than six months into his term, Trump’s blitz of tariff hikes and his new tax-and-spending bill have remodeled America’s trading, manufacturing, energy and tax systems to his liking. He’s eager to take credit for any perceived wins and is hunting for someone else to blame if the financial situation starts to totter.

But as of now, this is not the boom the Republican president promised, and his ability to blame his Democratic predecessor, Joe Biden, for any economic challenges has faded as the world economy hangs on his every word and social media post.

When Friday’s monthly jobs report turned out to be decidedly bleak, Trump ignored the warnings in the data and fired the head of the agency that produces the report.

“Important numbers like this must be fair and accurate, they can’t be manipulated for political purposes,” Trump said on his social media platform, without offering evidence for his claim. “The Economy is BOOMING.”

It’s possible that the disappointing numbers are growing pains from the rapid transformation caused by Trump and that stronger growth will return — or they may be a preview of even more disruption to come.

A political gamble

Trump’s aggressive use of tariffs, executive actions, spending cuts and tax code changes carry significant political risk if he is unable to deliver middle-class prosperity. The effects of his new tariffs are still several months away from rippling through the economy, right as many Trump allies in Congress will be campaigning in the midterm elections.

“Considering how early we are in his term, Trump’s had an unusually big impact on the economy already,” said Alex Conant, a Republican strategist at Firehouse Strategies. “The full inflationary impact of the tariffs won’t be felt until 2026. Unfortunately for Republicans, that’s also an election year.”

The White House portrayed the blitz of trade frameworks leading up to Trump’s tariff announcement Thursday as proof of his negotiating prowess. The European Union, Japan, South Korea, the Philippines, Indonesia and other nations that the White House declined to name agreed that the U.S. could increase its tariffs on their goods without doing the same to American products. Trump simply set rates on other countries that lacked settlements.

The costs of those tariffs — taxes paid on imports to the U.S. — will be most felt by American consumers in the form of higher prices, but to what extent remains uncertain.

“For the White House and their allies, a key part of managing the expectations and politics of the Trump economy is maintaining vigilance when it comes to public perceptions,” said Kevin Madden, a Republican strategist.

Just 38% of adults approve of Trump’s handling of the economy, according to a July poll by the Associated Press-NORC Center for Public Affairs. That’s down from the end of Trump’s first term when half of adults approved of his economic leadership.

The White House paints a rosier image, casting the economy as emerging from a period of uncertainty after Trump’s restructuring and repeating the economic gains seen in his first term before the pandemic struck.

“President Trump is implementing the very same policy mix of deregulation, fairer trade, and pro-growth tax cuts at an even bigger scale — as these policies take effect, the best is yet to come,” White House spokesman Kush Desai said.

Hints of trouble

The economic numbers over the last week show the difficulties that Trump might face if the numbers continue on their current path:

— Friday’s jobs report showed that U.S. employers have shed 37,000 manufacturing jobs since Trump’s tariff launch in April, undermining prior White House claims of a factory revival.

— Net hiring has plummeted over the last three months with job gains of just 73,000 in July, 14,000 in June and 19,000 in May — a combined 258,000 jobs lower than previously indicated. On average last year, the economy added 168,000 jobs a month.

— A Thursday inflation report showed that prices have risen 2.6% over the year that ended in June, an increase in the personal consumption expenditures price index from 2.2% in April. Prices of heavily imported items, such as appliances, furniture and toys and games, jumped from May to June.

— On Wednesday, a report on gross domestic product — the broadest measure of the U.S. economy — showed that it grew at an annual rate of less than 1.3% during the first half of the year, down sharply from 2.8% growth last year.

“The economy’s just kind of slogging forward,” said Guy Berger, senior fellow at the Burning Glass Institute, which studies employment trends. “Yes, the unemployment rate’s not going up, but we’re adding very few jobs. The economy’s been growing very slowly. It just looks like a ‘meh’ economy is continuing.”

Attacks on the Fed

Trump has sought to pin the blame for any economic troubles on Federal Reserve Chair Jerome Powell, saying the Fed should cut its benchmark interest rates — even though doing so could generate more inflation.

Trump has publicly backed two Fed governors, Christopher Waller and Michelle Bowman, for voting for rate cuts at Wednesday’s meeting. But their logic is not what the president wants to hear: They were worried, in part, about a slowing job market.

But this is a major economic gamble being undertaken by Trump and those pushing for lower rates under the belief that mortgages will also become more affordable as a result and boost homebuying activity.

His tariff policy has changed repeatedly over the last six months, with the latest import tax numbers serving as a substitute for what the president announced in April, which provoked a stock market sell-off. It might not be a simple one-time adjustment as some Fed board members and Trump administration officials argue.

‘Universal tariffs’

Of course, Trump can’t say no one warned him about the possible consequences of his economic policies.

Biden, then the outgoing president, did just that in a speech in December at the Brookings Institution, saying the cost of the tariffs would eventually hit American workers and businesses.

“He seems determined to impose steep, universal tariffs on all imported goods brought into this country on the mistaken belief that foreign countries will bear the cost of those tariffs rather than the American consumer,” Biden said. “I believe this approach is a major mistake.”

Boak and Rugber write for the Associated Press.

WASHINGTON — President Trump’s tariff onslaught this week left a lot of losers — from small, poor countries such as Laos and Algeria to wealthy U.S. trading partners such as Canada and Switzerland. They’re now facing especially hefty export taxes — tariffs — on the products they export to the U.S. starting Thursday.

The closest thing to winners may be the countries that succumbed to Trump’s demands — and avoided even more pain. But it’s unclear whether anyone will be able to claim victory in the long run — even the United States, the intended beneficiary of Trump’s protectionist policies.

“In many respects, everybody’s a loser here,’’ said Barry Appleton, co-director of the Center for International Law at the New York Law School.

Barely six months after he returned to the White House, Trump has demolished the old global economic order. Gone is one built on agreed-upon rules. In its place is a system in which Trump himself sets the rules, using America’s enormous economic power to punish countries that won’t agree to one-sided trade deals and extracting huge concessions from the ones that do.

“The biggest winner is Trump,” said Alan Wolff, a former U.S. trade official and deputy director-general at the World Trade Organization. “He bet that he could get other countries to the table on the basis of threats, and he succeeded — dramatically.’’

Everything goes back to what Trump calls “Liberation Day’’ — April 2 — when the president announced “reciprocal’’ taxes of up to 50% on imports from countries with which the United States ran trade deficits and 10% “baseline’’ taxes on almost everyone else.

He invoked a 1977 law to declare the trade deficit a national emergency that justified his sweeping import taxes. That allowed him to bypass Congress, which traditionally has had authority over taxes, including tariffs — all of which is now being challenged in court.

‘Winners’ still paying higher tariffs

Trump retreated temporarily after April announcement triggered a rout in financial markets and suspended the reciprocal tariffs for 90 days to give countries a chance to negotiate.

Eventually some of them did, acceding to Trump’s demands to pay what four months ago would have seemed unthinkably high tariffs to maintain their ability to sell to the vast American market.

The United Kingdom agreed to 10% tariffs on its exports to the United States — up from 1.3% before Trump amped up his trade war with the world. The U.S. demanded concessions even though it had run a trade surplus, not a deficit, with the U.K. for 19 straight years.

The European Union and Japan accepted U.S. tariffs of 15%. Those are much higher than the low-single-digit rates they paid last year, but lower than the tariffs he was threatening — 30% on the EU and 25% on Japan.

Also cutting deals with Trump and agreeing to hefty tariffs were Pakistan, South Korea, Vietnam, Indonesia and the Philippines.

Even countries that saw their tariffs lowered from April without reaching a deal are still paying much higher tariffs than before Trump took office. Angola’s tariff, for instance, dropped to 15% from 32% in April, but in 2022 it was less than 1.5%.

And while the Trump administration cut Taiwan’s tariff to 20% from 32% in April, the pain will still be felt by a U.S. ally that China claims as its territory.

“Twenty percent from the beginning has not been our goal. We hope that in further negotiations we will get a more beneficial and more reasonable tax rate,” Taiwan’s President Lai Ching-te told reporters in Taipei on Friday.

Trump also agreed to reduce the tariff on the tiny southern African kingdom of Lesotho to 15% from the 50% he’d announced in April, but the damage may already have been done there.

Brazil, Canada, Switzerland

Countries that didn’t knuckle under — and those that found other ways to incur Trump’s wrath — got hit harder.

Even some of the poor were not spared. Laos’ annual economic output comes to $2,100 per person and Algeria’s $5,600 — versus America’s $75,000. Nonetheless, Laos got rocked with a 40% tariff and Algeria with a 30% levy.

Trump slammed Brazil with a 50% import tax largely because he didn’t like the way it was treating former Brazilian President Jair Bolsonaro, a close Trump ally who is facing trial for trying to overturn his electoral loss and inspiring a riot in the capital in 2023 — recalling Trump’s role in the Jan. 6. insurrection two years earlier at the U.S. Capitol.

Never mind that the U.S. has exported more to Brazil than it’s imported every year since 2007.

Trump’s decision to plaster a 35% tariff on long-standing U.S. ally Canada was partly designed to threaten Ottawa for saying it would recognize a Palestinian state in light of the humanitarian crisis in the Gaza Strip. Trump is a staunch supporter of Israeli Prime Minister Benjamin Netanyahu.

Switzerland was clobbered with a 39% import tax — even higher than the 31% Trump announced on April 2.

“The Swiss probably wish that they had camped in Washington’’ to make a deal, said Wolff, now a senior fellow at the Peterson Institute for International Economics. “They’re clearly not at all happy.’’

Fortunes may change if Trump’s tariffs are upended in court. Five American businesses and 12 states are suing the president, arguing that his April 2 tariffs exceeded his authority under the 1977 law.

In May, the U.S. Court of International Trade, a specialized court in New York, agreed and blocked the tariffs, although the government was allowed to continue collecting them while its appeal wends its way through the legal system, and may end up at the Supreme Court. In a hearing Thursday, the judges on the U.S. Court of Appeals for the Federal Circuit sounded skeptical about Trump’s justifications for the tariffs.

“If [the tariffs] get struck down, then maybe Brazil’s a winner and not a loser,’’ Appleton said.

$2,400 bill for U.S. households

Trump portrays his tariffs as a tax on foreign countries. But they are actually paid by import companies in the U.S. who typically pass along the cost to their customers via higher prices. True, tariffs can hurt other countries by forcing their exporters to cut prices and sacrifice profits — or risk losing market share in the United States.

But economists at Goldman Sachs estimate that overseas exporters have absorbed just one-fifth of the rising costs from tariffs, while Americans and U.S. businesses have picked up the most of the tab.

Walmart, Procter & Gamble, Ford, Best Buy, Adidas, Nike, Mattel and Stanley Black & Decker have all raised prices due to U.S. tariffs.

“This is a consumption tax, so it disproportionately affects those who have lower incomes,” Appleton said. “Sneakers, knapsacks … your appliances are going to go up. Your TV and electronics are going to go up. Your video game devices, consoles are going to up because none of those are made in America.’’

Trump’s trade war has pushed the average U.S. tariff from 2.5% at the start of 2025 to 18.3% now, the highest since 1934, according to the Budget Lab at Yale University. And that will impose a $2,400 cost on the average household, the lab estimates.

“The U.S. consumer’s a big loser,″ Wolff said.

Wiseman writes for the Associated Press. AP writer Christopher Rugaber contributed to this report.

WASHINGTON — For weeks, President Trump was promising the world economy would change on Friday with his new tariffs in place. It was an ironclad deadline, administration officials assured the public.

But when Trump signed the order Thursday night imposing new tariffs, the start date of the punishing import taxes was pushed back seven days so the tariff schedule could be updated. The change in tariffs on 66 countries, the European Union, Taiwan and the Falkland Islands was potentially welcome news to countries that had not yet reached a deal with the U.S. It also injected a new dose of uncertainty for consumers and businesses still wondering what’s going to happen and when.

Trump told NBC News in a Thursday night interview the tariffs process was going “very well, very smooth.” But even as the Republican president insisted these new rates would stay in place, he added: “It doesn’t mean that somebody doesn’t come along in four weeks and say we can make some kind of a deal.”

Trump has promised that his tax increases on the nearly $3 trillion in goods imported to the United States will usher in newfound wealth, launch a cavalcade of new factory jobs, reduce the budget deficits and, simply, get other countries to treat America with more respect.

The vast tariffs risk jeopardizing America’s global standing as allies feel forced into unfriendly deals. As taxes on the raw materials used by U.S. factories and basic goods, the tariffs also threaten to create new inflationary pressures and hamper economic growth — concerns the Trump White House has dismissed.

Questions swirl around the tariffs despite Trump’s eagerness

As the clock ticked toward Trump’s self-imposed deadline, few things seemed to be settled other than the president’s determination to levy the taxes he has talked about for decades. The very legality of the tariffs remains an open question as a U.S. appeals court on Thursday heard arguments on whether Trump had exceeded his authority by declaring an “emergency” under a 1977 law to charge the tariffs, allowing him to avoid congressional approval.

Trump was ebullient as much of the world awaited what he would do.

“Tariffs are making America GREAT & RICH Again,” he said Thursday morning on Truth Social.

Others saw a policy carelessly constructed by the U.S. president, one that could impose harms gradually over time that would erode America’s power and prosperity.

“The only things we’ll know for sure on Friday morning are that growth-sapping U.S. import taxes will be historically high and complex, and that, because these deals are so vague and unfinished, policy uncertainty will remain very elevated,” said Scott Lincicome, a vice president of economics at the Cato Institute. “The rest is very much TBD.”

The new tariffs build off ones announced in the spring

Trump initially imposed the Friday deadline after his previous “Liberation Day” tariffs in April resulted in a stock market panic. His unusually high tariff rates announced then led to recession fears, prompting Trump to impose a 90-day negotiating period. When he was unable to create enough trade deals with other countries, he extended the timeline and sent out letters to world leaders that simply listed rates, prompting a slew of hasty agreements.

Swiss imports will now be taxed at a higher rate, 39%, than the 31% Trump threatened in April, while Liechtenstein saw its rate slashed from 37% to 15%. Countries not listed in the Thursday night order would be charged a baseline 10% tariff.

Trump negotiated trade frameworks over the past few weeks with the EU, Japan, South Korea, Indonesia and the Philippines — allowing the president to claim victories as other nations sought to limit his threat of charging even higher tariff rates. He said Thursday there were agreements with other countries, but he declined to name them.

Asked on Friday if countries were happy with the rates set by Trump, U.S. Trade Representative Jamieson Greer said: “A lot of them are.”

Thursday began with a palpable sense of tension

The EU was awaiting a written agreement on its 15% tariff deal. Switzerland and Norway were among the dozens of countries that did not know what their tariff rate would be, while Trump agreed after a Thursday morning phone call to keep Mexico’s tariffs at 25% for a 90-day negotiating period. The president separately on Thursday amended an order to raise certain tariffs on Canada to 35%.

European leaders face blowback for seeming to cave to Trump, even as they insist that this is merely the start of talks and stress the importance of maintaining America’s support of Ukraine’s fight against Russia. Canadian Prime Minister Mark Carney has already indicated that his country can no longer rely on the U.S. as an ally, and Trump declined to talk to him on Thursday.

India, with its 25% tariff announced Wednesday by Trump, may no longer benefit as much from efforts to pivot manufacturing out of China. While the Trump administration has sought to challenge China’s manufacturing dominance, it is separately in extended trade talks with that country, which faces a 30% tariff and is charging a 10% retaliatory rate on the U.S.

Major companies came into the week warning that tariffs would begin to squeeze them financially. Ford Motor Co. said it anticipated a net $2 billion hit to earnings this year from tariffs. French skincare company Yon-Ka is warning of job freezes, scaled-back investment and rising prices.

It’s unclear whether Trump’s new tariffs will survive a legal challenge

Federal judges sounded skeptical Thursday about Trump’s use of a 1977 law to declare the long-standing U.S. trade deficit a national emergency that justifies tariffs on almost every country.

“You’re asking for an unbounded authority,” Judge Todd Hughes of the U.S. Court of Appeals for the Federal Circuit told a Justice Department lawyer representing the administration.

The judges didn’t immediately rule, and the case is expected to reach the Supreme Court eventually.

The Trump White House has pointed to the increase in federal revenues as a sign that the tariffs will reduce the budget deficit, with $127 billion in customs and duties collected so far this year — about $70 billion more than last year.

New tariffs threaten to raise inflation rates

There are not yet signs that tariffs will lead to more domestic manufacturing jobs, and Friday’s employment report showed the U.S. economy now has 37,000 fewer manufacturing jobs than it did in April.

On Thursday, one crucial measure of inflation, known as the Personal Consumption Expenditures index, showed that prices have climbed 2.6% over the 12 months that ended in June, a sign that inflation may be accelerating as the tariffs flow through the economy.

The prospect of higher inflation from the tariffs has caused the Federal Reserve to hold off on additional cuts to its benchmark rates, a point of frustration for Trump, who on Truth Social, called Fed Chair Jerome Powell a “TOTAL LOSER.”

But before Trump’s tariffs, Powell seemed to suggest that the tariffs had put the U.S. economy and much of the world into a state of unknowns.

“There are many uncertainties left to resolve,” Powell told reporters Wednesday. “So, yes, we are learning more and more. It doesn’t feel like we’re very close to the end of that process. And that’s not for us to judge, but it does — it feels like there’s much more to come.”

Boak writes for the Associated Press. AP writer Paul Wiseman contributed to this report.

MASERU, Lesotho — The southern African nation of Lesotho has had its U.S. export tariff reduced from a threatened 50% to 15%, but its crucial textile industry still faces massive factory closures, officials said Friday.

Despite a reduction announced by President Trump, the country’s textile sector says it remains at a competitive disadvantage and faces ongoing factory closures and job losses.

In April, the Trump administration announced a 50% tariff on imports from Lesotho, the highest among all countries.

The tariffs were paused across the board, but the anticipated increase wreaked havoc across the country’s textile industry, which is its biggest private-sector employer with more than 30,000 workers.

About 12,000 of them work for garment factories exporting to the U.S. market, supplying American retailers such as Levi’s and Wrangler.

The Associated Press reported this week that clothing manufacturer Tzicc has seen business dry up ahead of the expected tariff increase, sending home most of its 1,300 workers who have made and exported sportswear to American stores, including JCPenney, Walmart and Costco.

David Chen, chairperson of the Lesotho Textile Exporters, has warned that the U.S. government’s move to reduce the tariffs offers little relief for the struggling industry as their competitors have lesser tariffs.

“Other countries which we are competing against are already being charged 10%, which makes it difficult for us to compete on an equal footing,” said Chen, singling out the East African country of Kenya as its strongest competitor with a more favorable 10% tariff.

“As a result, many factories will have to shut down,” Chen said. “They had already been forced to lay off workers when the tariffs were first announced in April.”

According to the Office of the U.S. Trade Representative, in 2024, U.S.-Lesotho bilateral trade stood at $240.1 million. Apart from clothing, Lesotho’s exports also include diamonds and other goods.

Lesotho is classified as a lower-middle-income country by the World Bank, and nearly half of its 2.3 million population live below the poverty line, while a quarter are unemployed.

Lesotho’s minister of Trade, Industry and Business Development, Mokhethi Shelile, said that while several meetings with U.S. trade representatives led to a reduced tariff, more needed to be done to lower it further.

“We remain committed to pushing for a further reduction to the minimum tariff level of 10%, which is essential for our textile sector to compete effectively in the U.S. market,” he said. “I have already communicated with the U.S. Embassy regarding continued negotiations.”

Lesotho’s neighbor and trading partner, South Africa, is also reeling after Trump announced a reciprocal 30% tariff for the country, which is expected to significantly affect its agriculture and manufacturing sectors, among others.

Phakela writes for the Associated Press.

Prices for the eponymous Swiss watches, Swiss chocolate and Swiss cheese could skyrocket in a week as a result of President Trump’s trade war.

Switzerland, home to some the world’s most recognizable luxury brands, now faces an upcoming 39% tariff from the U.S. Industry groups on Friday warned that both Swiss companies and American consumers could pay the price.

Trump signed an executive order Thursday placing tariffs on many U.S. trade partners — the next step in his trade agenda that will test the global economy and alliances — that’s set to take effect next Thursday. The order applies to 66 countries, the European Union, Taiwan and the Falkland Islands.

In Switzerland, officials failed to reach a final agreement with the U.S. after Trump initially threatened a 31% tariff in April. Swiss companies will now have one of the steepest export duties — only Laos, Myanmar and Syria had higher figures, at 40-41%. The 27-member EU bloc and Britain, meanwhile, negotiated 15% and 10% tariffs, respectively.

Figure came as a surprise

The Swiss government spent Friday — the country’s National Day — reeling from the news. Swiss President Karin Keller-Sutter said that the 39% figure was a surprise, because negotiators had hashed out a deal last month with the Trump administration that apparently wasn’t approved by the American leader himself.

“We will now analyze the situation and try to find a solution,” Keller-Sutter told reporters. “I can’t say what the outcome will be, but it will certainly damage the economy.”

The U.S. goods trade deficit with Switzerland was $38.5 billion last year, a 56.9% increase over 2023, according to the Office of the United States Trade Representative. Keller-Sutter said that she believes Trump ultimately chose the 39% tariff, because the figure rounded up from the $38.5 billion goods trade deficit.

“It was clear that the president was focused on the trade deficit and only this issue,” she said.

Time is ticking for watch companies

For Swiss watch companies, whose products already come with price tags in the tens of thousands — if not the hundreds of thousands — of euros, a timepiece for an arm could cost a leg, too, come next week.

The 39% figure was especially galling to the Federation of the Swiss Watch Industry, because Switzerland in 2024 got rid of import tariffs on all industrial goods.

“As Switzerland has eliminated all custom duties on imported industrial products, there is no problem with reciprocity between Switzerland and the U.S.,” the federation said in a statement. “The tariffs constitute a severe problem for our bilateral relations.”

Swiss watch exports were already facing a prolonged slowdown, with significant declines in the United States, Japan and Hong Kong, according to the federation’s June figures, the most recent available.

Swatch and Rolex declined to comment Friday. Representatives for Patek Philippe, IWC and Breitling didn’t respond to requests for comment.

Sour taste for Swiss chocolatiers

Multinational chocolatiers Nestlé and Lindt & Sprüngli said they have production lines in the U.S. for American customers. But small- and medium-sized Swiss companies are predicted to suffer under the tariffs.

Roger Wehrli, chief executive of the Association of Swiss Chocolate Manufacturers. also known as Chocosuisse, said Switzerland exports 7% of its chocolate production to the U.S.

It’s not just the 39% tariff that’s the issue. Once the manufacturers factor in the exchange rate between U.S. dollars and Swiss francs ($1 to 1.23 francs on Friday), Wehrli said, it’s close to a 50% increase in costs for the Swiss companies. And that’s a big number to pass on to American consumers, if the already-slim margins aren’t further reduced.

“I expect that our industry will lose customers in the United States, and that sales volumes will decrease heavily,” he told The Associated Press.

Wehrli said that he wants Swiss chocolatiers to sell to other markets around the globe to make up the difference. Still, he hopes American customers remember that Swiss quality beats cheaper quantity.

“I think even if prices for Swiss chocolate increase due to the very high tariffs, I think it’s worth (it) to buy Swiss chocolate,” he said. “It’s worth (it) to really eat it consciously and to really enjoy it instead of eating a lot.”

Tough pill for Swiss pharmaceuticals

Swiss pharmaceuticals powerhouse Roche says that it’s working to ensure its patients and customers worldwide have access to their medications and diagnostics amid the Trump tariff war.

“While we believe pharmaceuticals and diagnostics should be exempt from tariffs to protect patient access, supply chains and ultimately future innovation, we are prepared for potential tariffs being implemented and confident in managing any impacts,” the statement said.

The company in April announced that it plans to invest $50 billion in the United States over the next five years, creating 12,000 jobs. The company already employs more than 25,000 people in the U.S.

Meanwhile, Novartis, another major Swiss pharmaceutical firm, said in a statement that it was reviewing Trump’s executive order.

“We remain committed to finding ways to improve access and affordability for patients,” it said.

Dazio writes for the Associated Press. AP writers Pietro De Cristofaro in Berlin, and David McHugh in Frankfurt, Germany, contributed to this report.

Published on
01/08/2025 – 15:53 GMT+2

ADVERTISEMENT

US President Donald Trump doesn’t appear willing to ease the pressure on German carmakers. The US executive order on reciprocal tariffs published just before 1 August stopped short of applying the 15% tariffs agreed by Trump and Commission president Ursula von der Leyen to US imports of EU vehicles.

Since 2 April, EU cars have been hit with 25% US tariffs under the section 232 of the US Trade Expansion Act, which allows the US president to restrict imports of goods threatening US national security.

The deal concluded last Sunday with President Ursula von der Leyen was meant to apply the 15% tariffs to EU cars, and to exempt certain strategic products such as aircraft from tariffs, but neither proviso appears in the executive order.

The executive order imposes a blanket 15% tariff on EU goods to apply from 8 August. Goods already in transit before that date will enjoy the previous tariff rate of 10% until 5 October, the US order says. Any attempt to circumvent these tariffs will be penalized with a 40% duty on the goods concerned, the order adds.

Despite the apparent omissions from the order, EU Trade Commissioner Maroš Šefčovič welcomed “the first results of the EU–US deal”.

“This reinforces stability for businesses as well as trust in the transatlantic economy,” he said on X, adding: “EU exporters now benefit from a more competitive position.”

Šefčovič also said, however, that “the work continues”, referring to ongoing negotiations on a joint statement intended to formalise the political trade agreement reached on July 27.

Diverging narratives

The Commission and the US administration are struggling to agree on a joint text, and up to now have pushed diverging narratives on the deal.

Uncertainty remains over the fate of steel and aluminium, currently hit by 50% US tariffs, which, according to the Commission, are expected to soon be subject to lower tariff-rate quotas. Negotiations are also ongoing over a series of exemptions, as pressure mounts from the EU wine and spirits industry.

In a factsheet published on Monday, the US also claimed that the EU committed not to apply telecommunications network usage fees in an upcoming Digital Network Act, which is currently being disputed between EU telecom companies and US tech giants in Brussels.

On Thursday the Commission noted that a white paper on digital networks published in February 2024 assessed that imposing a network fee was “not a viable solution”. “Such an exemption would not apply to US company only,” a Commission spokesperson said.

July 31 (UPI) — President Donald Trump‘s suspension of reciprocal tariffs ends Friday and the United States has only managed a small portion of his goal for new trade deals.

Trump has pushed back his self-imposed deadlines on multiple occasions during his second term but said in a post on social media on Wednesday that Friday’s deadline will not be extended.

A day after the post, Trump announced a 90-day pause on new tariffs on Mexico as trade negotiations continue.

The United States has reached preliminary trade deals with at least five countries, though these framework agreements lack some publicly disclosed details. Trump has also announced an agreement with the European Union for a 15% tariff on most goods from the 27-nation bloc.

The European Union is the largest trade partner of the United States, exchanging about $605 billion in goods annually. The easing of tariffs on the European Union does not extend to the 50% tariffs on steel that Trump imposed earlier this year.

Trump’s tariff gambit sparked immediate economic turmoil with the hope that it would reset global trade in favor of the United States. He claimed to have made 200 deals in April, though details about those deals were never shared, and the administration called “90 deals in 90 days” a possibility.

While the administration is set to fall significantly short on its lofty goals, Trump has lauded the success of his tariff policy.

“We are very busy in the White House today working on Trade Deals,” Trump posted on Wednesday. “I have spoken to the Leaders of many Countries, all of whom want to make the United States ‘extremely happy.'”

Trump announced Wednesday on social media that negotiations continued this week with South Korea. The United States is imposing a 25% tariff on South Korean goods but Trump said South Korea has made an offer to “buy down” that tariff rate.

The agreement materialized on Thursday. The United States will reduce the tariff on South Korea to 15% based on South Korea agreeing to $350 billion in investments “owned and controlled” by the United States and selected by Trump.

China is among the United States’ biggest trade partners and a primary target of Trump’s tariff policy dating back to his first term in office. In June, Trump announced that the United States and China had come to an agreement over the trade of rare earth minerals.

As part of the agreement, China would export rare earth minerals to the United States and both countries would reduce their tariffs for 90 days. The rare earth minerals discussed are a crucial component in energy sources for mobile devices like smartphones as well as electric vehicles.

China is subject to a 34% reciprocal tariff that has been suspended until Aug. 12. The tariff is on all products, including those originating from Hong Kong and Macau. In response, China has increased tariffs on the United States by more than 120% since Trump took office.

July was the busiest month in terms of trade announcements, starting with a deal reached with Vietnam on July 2. According to Trump, Vietnam will pay a 20% tariff on all goods exported to the United States and 40% on goods that are transhipped through Vietnam to the United States.

U.S. exports to Vietnam face no tariff.

As Trump discussed trade with Vietnam, he cast doubt that an agreement would be reached with Japan. He imposed a 24% tariff on the ally nation.

According to the Office of the U.S. Trade Representative, the United States and Japan traded $227.9 billion in goods in 2024. The United States exported about $79.7 billion to Japan, an increase of more than 5% over 2023. The United States also imported about $148.2 billion in goods, or about a $971 million increase.

“Japan will continue to engage vigorously in sincere and honest discussions toward the realization of an agreement that will benefit both Japan and the United States,” said Kazuhiko Aoki, Japan’s deputy chief cabinet secretary.

Trump met with the leaders of five African nations — Senegal, Liberia, Guinea-Bissau, Mauritania and Gabon — in July to discuss increased trade activity.

“We’re shifting from aid to trade,” he said. “In the long run, this will be far more effective and sustainable and beneficial than anything else that we could be doing together.”

Trump said at the time there was a possibility that the five countries would be exempted from reciprocal tariffs. No agreements have been officially announced since the meeting took place.

A similar deal with Indonesia was announced days later by the president. Trump said he reached an agreement that would see Indonesia pay a 19% tariff on U.S. exports while dropping most tariffs on the United States.

Trump added that the agreement includes a commitment by Indonesia to purchase $15 billion in U.S. energy, $4.5 billion in agriculture products and 50 Boeing jets.

According to the White House, the United States and Indonesia seek to eliminate barriers for digital trade as part of their agreement. Indonesia is also committed to improving its labor standards by removing provisions that prevent workers and unions from collective bargaining.

The Philippines has followed suit with cutting tariffs on U.S. products, according to Trump. The United States and the Philippines reached an agreement last week.

The United States will lower its tariff on imports from the Philippines from 20% to 19%.

The United States and the Philippines traded about $23.5 billion in goods in 2024.

WASHINGTON — Appellate court judges expressed broad skepticism Thursday over President Trump’s legal rationale for his most expansive round of tariffs.

Members of the 11-judge panel of the U.S. Court of Appeals for the Federal Circuit in Washington appeared unconvinced by the Trump administration’s insistence that the president could impose tariffs without congressional approval, and it hammered its invocation of the International Emergency Economic Powers Act to do so.

“IEEPA doesn’t even mention the word ‘tariffs’ anywhere,” Circuit Judge Jimmie Reyna said in a sign of the panel’s incredulity at a government attorney’s arguments.

Brett Schumate, the attorney representing the Trump administration, acknowledged in the 99-minute hearing “no president has ever read IEEPA this way” but contended it was nonetheless lawful.

The 1977 law, signed by President Carter, allows the president to seize assets and block transactions during a national emergency. It was first used during the Iran hostage crisis and has since been invoked for a range of global unrest, from the 9/11 attacks to the Syrian civil war.

Trump says the country’s trade deficit is so serious that it likewise qualifies for the law’s protection.

In sharp exchanges with Schumate, appellate judges questioned that contention, asking whether the law extended to tariffs at all and, if so, whether the levies matched the threat the administration identified.

“If the president says there’s a problem with our military readiness,” Chief Circuit Judge Kimberly Moore posited, “and he puts a 20% tax on coffee, that doesn’t seem to necessarily deal with [it].”

Schumate said Congress’ passage of IEEPA gave the president “broad and flexible” power to respond to an emergency, but that “the president is not asking for unbounded authority.”

But an attorney for the plaintiffs, Neal Katyal, characterized Trump’s maneuver as a “breathtaking” power grab that amounted to saying “the president can do whatever he wants, whenever he wants, for as long as he wants so long as he declares an emergency.”

No ruling was issued from the bench. Regardless of what decision the judges’ deliberations bring, the case is widely expected to reach the U.S. Supreme Court.

Trump weighed in on the case on his Truth Social platform, posting: “To all of my great lawyers who have fought so hard to save our Country, good luck in America’s big case today. If our Country was not able to protect itself by using TARIFFS AGAINST TARIFFS, WE WOULD BE “DEAD,” WITH NO CHANCE OF SURVIVAL OR SUCCESS. Thank you for your attention to this matter!’’

In filings in the case, the Trump administration insists that “a national emergency exists” necessitating its trade policy. A three-judge panel of the U.S. Court of International Trade, a specialized federal court in New York, was unconvinced, ruling in May that Trump exceeded his powers.

The issue now rests with the appeals judges.

The challenge strikes at just one batch of import taxes from an administration that has unleashed a bevy of them and could be poised to unveil more on Friday.

The case centers on Trump’s so-called Liberation Day tariffs of April 2 that imposed new levies on nearly every country. But it doesn’t cover other tariffs, including those on foreign steel, aluminum and autos, nor ones imposed on China during Trump’s first term and continued by President Biden.

The case is one of at least seven lawsuits charging that Trump overstepped his authority through the use of tariffs on other nations. The plaintiffs include 12 U.S. states and five businesses, including a wine importer, a company selling pipes and plumbing goods, and a maker of fishing gear.

The U.S. Constitution gives the Congress the authority to impose taxes — including tariffs — but over decades lawmakers have ceded power over trade policy to the White House.

Trump has made the most of the power vacuum, raising the average U.S. tariff to more than 18%, the highest rate since 1934, according to the Budget Lab at Yale University.

Wiseman and Sedensky write for the Associated Press. Sedensky reported from New York.

WASHINGTON — President Trump said Canada’s announcement that it will recognize a Palestinian state “will make it very hard” for the U.S. to reach a trade agreement with its northern neighbor.

Trump’s threat, posted in the early hours Thursday on his social media network, is the latest way he has sought to use his trade war to coerce countries on unrelated issues and is a swing from the ambivalence he has expressed about other countries making such a move.

The Republican president said this week that he didn’t mind British Prime Minister Keir Starmer taking a position on the issue of formally recognizing Palestinian statehood. And last week he said that French President Emmanuel Macron’s similar move was “not going to change anything.”

But Trump, who has heckled Canada for months and suggested it should become the 51st U.S. state, indicated on Thursday that Prime Minister Mark Carney’s similar recognition would become leverage ahead of a deadline he set in trade talks.

“Wow! Canada has just announced that it is backing statehood for Palestine,” Trump said in his Truth Social post. “That will make it very hard for us to make a Trade Deal with them. Oh’ Canada!!!”

Trump has threatened to impose a 35% tariff on Canada if no deal is reached by Friday, when he’s said he will levy tariffs against goods from dozens of countries if they don’t reach agreements with the United States.

Some imports from Canada are still protected by the 2020 United States-Mexico-Canada Agreement, which is up for renegotiation next year.

Carney’s announcement Wednesday that Canada would recognize a Palestinian state in September comes amid a broader global shift against Israel’s policies in Gaza.

Though Trump this week said he was “not going to take a position” on recognizing a Palestinian state, he later said that such a move would be rewarding Hamas, whose surprise Oct. 7, 2023, attack on Israel prompted a declaration of war and a massive military retaliation from Israeli Prime Minister Benjamin Netanyahu.

Trump’s new cudgel against Canada comes after he moved to impose steep tariffs on Brazil because it indicted its former president Jair Bolsonaro, a Trump ally who, like the U.S. president, has faced criminal charges for attempting to overturn the results of his election loss.

Trump signed an executive order Wednesday to impose his threatened 50% tariffs on Brazil, setting a legal rationale that Brazil’s policies and criminal prosecution of Bolsonaro constitute an economic emergency under a 1977 law.

Trump had threatened the tariffs July 9 in a letter to President Luiz Inacio Lula da Silva. The legal basis of that threat was an earlier executive order premised on trade imbalances being a threat to the U.S. economy. But the U.S. ran a $6.8-billion trade surplus last year with Brazil, according to the U.S. Census Bureau.

A statement by the White House said Brazil’s judiciary had tried to coerce social media companies and block their users, though it did not name the companies involved, X and Rumble.

Trump appears to identify with Bolsonaro, who attempted to overturn the results of his 2022 loss to Lula. Similarly, Trump was indicted in 2023 for his efforts to overturn the results of the 2020 U.S. presidential election.

The order would apply an additional 40% tariff on the baseline 10% tariff already being levied by Trump. But not all goods imported from Brazil would face the 40% tariff: Civil aircraft and parts, aluminum, tin, wood pulp, energy products and fertilizers are among the products being excluded.

The order said the tariffs would go into effect seven days after its signing on Wednesday.

Also Wednesday, Trump’s Treasury Department announced sanctions on Brazilian Supreme Court Justice Alexandre de Moraes over Bolsonaro’s ongoing trial and alleged suppression of freedom of expression.

Citing a personal grievance in trade talks with Brazil and now Canada’s symbolic announcement on a Palestinian state adds to the jumble of reasons Trump has pointed to for his trade war, such as stopping human trafficking, stopping the flow of fentanyl, balancing the budget and protecting U.S. manufacturing.

Price writes for the Associated Press. AP writer Josh Boak contributed to this report.

WASHINGTON — President Trump signed an executive order Wednesday to impose his threatened 50% tariffs on Brazil, setting a legal rationale that Brazil’s policies and criminal prosecution of former President Jair Bolsonaro constitute an economic emergency under a 1977 law.

Trump had threatened the tariffs July 9 in a letter to President Luiz Inacio Lula da Silva. But the legal basis of that threat was an earlier executive order premised on trade imbalances being a threat to the U.S. economy. But America ran a $6.8 billion trade surplus last year with Brazil, according to the U.S. Census Bureau.

A statement by the White House said Brazil’s judiciary had tried to coerce social media companies and block their users, though it did not name the companies involved, X and Rumble.

Trump appears to identify with Bolsonaro, who attempted to overturn the results of his 2022 loss to Lula. Similarly, Trump was indicted in 2023 for his efforts to overturn the results of the 2020 U.S. presidential election.

The order would apply an additional 40% tariff on the baseline 10% tariff already being levied by Trump. But not all goods imported from Brazil would face the 40% tariff: Civil aircraft and parts, aluminum, tin, wood pulp, energy products and fertilizers are among the products being excluded.

The order said the tariffs would go into effect seven days after its signing on Wednesday.

Also Wednesday, Trump’s Treasury Department announced sanctions on Brazilian Supreme Court Justice Alexandre de Moraes over alleged suppression of freedom of expression and Bolsonaro’s ongoing trial.

De Moraes oversees the criminal case against Bolsonaro, who is accused of masterminding a plot to stay in power despite his 2022 defeat.

On July 18, the State Department announced visa restrictions on Brazilian judicial officials, including de Moraes.

Boak writes for the Associated Press.

SEOUL, July 31 (UPI) — U.S. President Donald Trump announced Wednesday that the United States will impose a 15% tariff on South Korean goods in what he called a “full and complete trade deal” between the two countries ahead of an Aug. 1 deadline for negotiations.

The deal calls for $350 billion in South Korean investments “owned and controlled by the United States and selected by myself,” Trump wrote on his Truth Social platform.

Seoul will also purchase $100 billion of U.S. liquified natural gas and will announce further investments when South Korean President Lee Jae Myung visits Washington “within the next two weeks,” Trump said.

The arrangement comes just ahead of the Aug. 1 deadline for countries to make deals with Washington before facing higher “reciprocal” tariffs. South Korea was facing a 25% levy if it had not reached an agreement.

“We have overcome a major hurdle,” South Korean President Lee Jae Myung wrote on Facebook Thursday. “Through these negotiations, the government has eliminated uncertainty in the export environment and aligned U.S. tariffs with those of our major export competitors, creating an environment where we can compete on equal or superior terms with major countries.”

Lee said that $150 billion of the announced investment is earmarked for South Korean companies to enter the United States shipbuilding sector. Seoul had touted its world-class capacity as a key negotiating card, as the Trump administration is looking to revive the moribund American shipbuilding industry to counter China’s massive naval growth.

The 15% tariffs will apply to South Korea’s automobile industry — its largest export sector to the United States — U.S. Commerce Secretary Howard Lutnick wrote in a post on X.

“[South Korea] will also not be treated any worse than any other country on semiconductors and pharmaceuticals,” he added.

The major South Korean exports of steel and aluminum will remain at the global rate of 50% that Trump has set, however.

Seoul was able to hold off Washington’s push to further open up its rice and beef markets to U.S. imports, which farmers’ groups in South Korea strongly opposed.

“In the course of the consultations with the United States, there was a strong demand for the opening up of our agricultural and livestock markets,” Kim Yong-beom, the presidential chief of staff for policy, said at a press briefing Thursday.

“However, given food security and the sensitivity of our agriculture, it was agreed that the domestic rice and beef markets would not be further opened,” Kim said.

While South Korea avoided higher tariffs with the new deal, it still represents a major increase over the existing U.S.-Korea Free Trade Agreement, under which roughly 95% of goods were duty-free.

“The 15% tariff by the United States is a different trading environment and challenge than in the past,” Kim said. “The government will actively support our companies in enhancing their competitiveness and diversifying their export markets.”

The South Korean trade deal follows others the Trump administration has made in recent weeks, including 15% reciprocal tariffs on Japan and the European Union, 19% on the Philippines and Indonesia and 20% on Vietnam.

RIO DE JANEIRO — The U.S. Treasury Department on Wednesday announced sanctions on Brazilian Supreme Court Justice Alexandre de Moraes over alleged suppression of freedom of expression and the ongoing trial of former President Jair Bolsonaro.

De Moraes oversees the criminal case against Bolsonaro, who is accused of masterminding a plot to stay in power despite his 2022 election loss to current President Luiz Inácio Lula da Silva.

“De Moraes is responsible for an oppressive campaign of censorship, arbitrary detentions that violate human rights, and politicized prosecutions — including against former President Jair Bolsonaro,” U.S. Treasury Secretary Scott Bessent said in a statement.

The Treasury cited the Global Magnitsky Human Rights Accountability Act, which targets perpetrators of human rights abuse and corrupt officials, as its authority to issue the sanctions.

The decision orders the freezing of any assets or property De Moraes may have in the U.S.

Brazil’s Supreme Court and the presidential palace did not immediately respond to a request for comment.

Wednesday’s announcement follows the U.S. State Department’s announcement of visa restrictions on Brazilian judicial officials, including De Moraes, on July 18.

It also comes after President Trump announced a 50% tariff on Brazilian imported goods that is set to take effect Friday. In a letter announcing the tariff, Trump explicitly linked the import tax to what he called the “witch hunt” trial of Bolsonaro that is underway in Brazil.

Days later, Bolsonaro was ordered to wear an ankle monitor after being deemed a flight risk.

Bolsonaro’s son Eduardo celebrated the Treasury’s announcement on X, calling it a “historic milestone” and a warning that “abuses of authority now have global consequences.”

Eduardo Bolsonaro relocated to the U.S. in March and is under investigation for allegedly working with U.S. authorities to impose sanctions against Brazilian officials.

Hughes writes for the Associated Press.

The world’s largest consumer goods maker said it will have to raise prices on a quarter of its products starting in August.

Procter & Gamble has said it will need to raise prices on a quarter of the goods it sells in the United States starting this month in order to mitigate costs it has faced because of the tariffs imposed by US President Donald Trump.

On Tuesday, in conjunction with its earnings report, the world’s largest consumer goods maker named Shailesh Jejurikar as its new chief executive officer as the company navigates tariff-driven uncertainty weighing on the sector.

The price hikes have been communicated to retailers such as Walmart and Target and are in the mid-single digits across categories, a spokesperson said, and will be seen on shelves starting in August.

In May, Walmart also announced that it would need to raise prices on goods sold at the big box retailer because of the economic impact of tariffs.

P&G topped fourth-quarter estimates for its earnings report. The Cincinnati, Ohio-based firm reported revenue of $20.89bn for the quarter. Organic sales grew about 2 percent in fiscal 2025, driven by P&G’s portfolio of branded pantry staples, as well as higher pricing, particularly for fresher products. But that comes as growth is expected to slow.

Growth stalls

P&G expects fiscal 2026 annual net sales growth of between 1 percent and 5 percent, largely below estimates of a 3.09 percent growth.

Market growth slowed from where it was at the start of the year in both the US and Europe, and volatile macroeconomic, geopolitical and consumer dynamics were resulting in headwinds that were not anticipated at the start of the year, CFO Andre Schulten said during a call with journalists.

“The consumer clearly is more selective in terms of shopping behaviour in our categories, and we see a desire to find value either by going into larger pack sizes in club channel or online or big box retailers or by lowering the cash outlay,” Schulten said.

The comments from the company reinforce how consumers, particularly in the lower-income category, are seeking value as they look to stretch their household budgets. Packaged food maker Nestle said last week that consumer spending in North America remained weak.

“Given the immense pressure put on US consumers in particular, the organic growth is a very good sign that long-term earnings projections should hold up,” said Brian Mulberry, portfolio manager at Zacks Investment Management.

P&G, which makes household basics spanning from Bounty paper towels to Metamucil fibre supplements, estimated tariffs will increase its costs by about $1bn before tax for fiscal 2026. That compares with projections of between $1bn and $1.5bn made in April.

The company rolled out a restructuring effort in June to exit some brands and cut about 7,000 jobs over the next two years to increase productivity. Prices rose about 1 percent in the fourth quarter, while volumes were flat.

P&G expects fiscal 2026 core net earnings per share growth in the range of $6.83 and $7.09, compared with estimates of $6.99, according to estimates compiled by LSEG.

On Wall Street, the company’s stock over the last five days is down 0.5 percent, down 1.1 percent for the month and since the beginning of the year, it has tumbled 5.15 percent.

The International Monetary Fund has raised its global growth forecasts for 2025 and 2026 slightly, citing stronger-than-expected purchases in advance of an August 1 jump in tariffs imposed by the United States and a drop in the effective US tariff rate to 17.3 percent from 24.4 percent.

In its forecast on Tuesday, it warned, however, that the global economy faced major risks including a potential rebound in tariff rates, geopolitical tensions and larger fiscal deficits that could drive up interest rates and tighten global financial conditions.

“The world economy is still hurting, and it’s going to continue hurting with tariffs at that level, even though it’s not as bad as it could have been,” said Pierre-Olivier Gourinchas, IMF chief economist.

In an update to its World Economic Outlook from April, the IMF raised its global growth forecast by 0.2 percentage point to 3 percent for 2025 and by 0.1 percentage point to 3.1 percent for 2026. However, that is still below the 3.3 percent growth it had projected for both years in January and the pre-pandemic historical average of 3.7 percent.

It said global headline inflation was expected to fall to 4.2 percent in 2025 and 3.6 percent in 2026, but noted that inflation would likely remain above target in the US as tariffs passed through to consumers in the second half of the year.

The US effective tariff rate – measured by import duty revenue as a proportion of goods imports – has dropped since April, but remains far higher than its estimated level of 2.5 percent in early January. The corresponding tariff rate for the rest of the world is 3.5 percent, compared with 4.1 percent in April, the IMF said.

US President Donald Trump has upended global trade by imposing a universal tariff of 10 percent on nearly all countries since April and threatening even higher duties to kick in on Friday. Far higher tit-for-tat tariffs imposed by the US and China were put on hold until August 12, with talks in Stockholm this week potentially leading to a further extension.

The US has also announced steep duties ranging from 25 percent to 50 percent on automobiles, steel and other metals, with higher duties soon to be announced on pharmaceuticals, lumber, and semiconductor chips.

Such future tariff increases are not reflected in the IMF numbers, and could raise effective tariff rates further, creating bottlenecks and amplifying the effect of higher tariffs, the IMF said.

Shifting tariffs

Gourinchas said the IMF was evaluating new 15-percent tariff deals reached by the US with the European Union and Japan over the past week, which came too late to factor into the July forecast, but said the tariff rates were similar to the 17.3 percent rate underlying the IMF’s forecast.

“Right now, we are not seeing a major change compared to the effective tariff rate that the US is imposing on other countries,” he said, adding it was not yet clear if these agreements would last.

“We’ll have to see whether these deals are sticking, whether they’re unravelled, whether they’re followed by other changes in trade policy,” he said.

Staff simulations showed that global growth in 2025 would be roughly 0.2 percentage point lower if the maximum tariff rates announced in April and July were implemented, the IMF said.

The IMF said the global economy was proving resilient for now, but uncertainty remained high and current economic activity suggested “distortions from trade, rather than underlying robustness”.

Gourinchas said the 2025 outlook had been helped by what he called “a tremendous amount” of front-loading as businesses tried to get ahead of the tariffs, but he warned that the stockpiling boost would not last.

“That is going to fade away,” he said, adding, “That’s going to be a drag on economic activity in the second half of the year and into 2026. There is going to be pay back for that front loading, and that’s one of the risks we face.”

Tariffs were expected to remain high, he said, pointing to signs that US consumer prices were starting to edge higher.

“The underlying tariff is much higher than it was back in January, February. If that stays … that will weigh on growth going forward, contributing to a really lackluster global performance.”

One unusual factor has been a depreciation of the dollar, not seen during previous trade tensions, Gourinchas said, noting that the lower dollar was adding to the tariff shock for other countries, while also helping ease financial conditions.

US growth was expected to reach 1.9 percent in 2025, up 0.1 percentage point from April’s outlook, edging up to 2 percent in 2026. A new US tax cut and spending law was expected to increase the US fiscal deficit by 1.5 percentage points, with tariff revenues offsetting that by about half, the IMF said.

It lifted its forecast for the euro area by 0.2 percentage point to 1 percent in 2025, and left the 2026 forecast unchanged at 1.2 percent. The IMF said the upward revision reflected a historically large surge in Irish pharmaceutical exports to the US; without it, the revision would have been half as big.

China’s outlook got a bigger upgrade of 0.8 percentage point, reflecting stronger-than-expected activity in the first half of the year, and the significant reduction in US-China tariffs after Washington and Beijing declared a temporary truce.

The IMF increased its forecast for Chinese growth in 2026 by 0.2 percentage point to 4.2 percent.

Overall, growth is expected to reach 4.1 percent in emerging markets and developing economies in 2025, edging lower to 4 percent in 2026, it said.

The IMF revised its forecast for world trade up by 0.9 percentage point to 2.6 percent, but cut its forecast for 2026 by 0.6 percentage point to 1.9 percent.

July 27 (UPI) — President Donald Trump on Sunday announced 15% tariffs on most goods from the European Union, down from the threatened 30%, as part of a trade agreement with the 27-nation bloc.

Trump announced the deal at his Turnberry Isle Country Club in Scotland after his public session with European Commission President Ursula von der Leyen. Trump said the EU won’t impose new tariffs on U.S. imports.

During the meeting with the media, both leaders said the chance of a deal was 50-50.

“You’re known as a tough negotiator and dealmaker,” von der Leyen told Trump, with reporters on hand.

https://www.youtube.com/watch?v=k2w3imNVMSM

Leyen said the agreement “will bring stability. It will bring predictability. That’s very important for our businesses on both sides of the Atlantic.”

Trump said the deal was “satisfactory to both sides” in a second press conference that followed their talks.

The EU is the largest U.S. trading partner with $605 billion in goods yearly. The products are mainly drugs and pharmaceuticals, primarily from Ireland, as well as aircraft and heavy machinery, mainly from France and Germany.

The 50% tariffs on steel, like for most other nations, would remain, and more duties could be imposed for pharmaceutical products, as well as semiconductors. Trump has also threatened a 200% tariff on any drugs imported to the United States.

Trump said that in the deal, the EU has agreed to purchase $750 billion worth of U.S. energy and invest $600 billion into the United States more than they are currently investing, which wasn’t detailed. The EU is opening the bloc to trade for zero tariffs, and it will purchase “a vast amount” of U.S. military equipment, though the exact amount was yet to be determined, Trump said.

Trump also added that the deal will have a great impact on the U.S. car industry, noting that few American vehicles had previously been sold on the continent.

“So, I just want to congratulate you,” Trump said to von der Leyen. “I think it’s great that we made a deal today instead of playing games and maybe not making a deal at all.”

Von der Leyen added that the deal means that “basically, the European market is open.”

“It’s a good deal. It’s a huge deal. It was tough negotiations. I knew it at the beginning and it was indeed very tough, but we came to a good conclusion for both sides.”

On April 2, he said he would impose a 20% duty against the EU, with most trading nations imposed a baseline of 10%. He paused the retaliatory tariffs on April 9 for 90 days.

In a letter to EU nations on July 12, the U.S. president threatened 30% retaliatory tariffs to take effect on Friday.

“Imposing 30% tariffs on EU exports would disrupt essential transatlantic supply chains, to the detriment of businesses, consumers and patients on both sides of the Atlantic,” von der Leyen said after Trump’s letter.

Letters to other nations, including Brazil, have threatened tariffs as high as 50%.

The Trump administration has been negotiating with other nations, including reaching deals with China (30%), Japan (15%), Indonesia (19%) and Vietnam (20%). Britain, which is not part of the European Union, has a reduction in some tariffs of 10% on up to 100,000 vehicles and 25% on steel and aluminum.

Last year, the average U.S. tariff on imports from the EU was 1.2%, according to Capital Economics’ chief Europe economist.

The deal with the European Union is part of a broader trade agreement. The EU had a $58.7 billion overall trade surplus with the United States in 2024. For goods, it was $168.6 billion but the deficit was $126 billion in services trade.

In 2024, the bloc bought nearly $400 billion in goods.

Michael Brown, a senior research strategist at British-based Pepperstone brokerage, told The New York Times that U.S. defense companies likely will emerge as winners from the deal.

In Porciuncula, Brazil, small-scale coffee farmer Jose Natal da Silva is losing sleep – not just to protect his arabica crops from pests, but over fears raised by a new 50% United States tariff on Brazilian goods announced by President Donald Trump.

The tariff, widely seen as a political move in defence of far-right Trump ally ex-President Jair Bolsonaro, who faces trial for an alleged coup plot, could slash demand and prices for Brazilian coffee in its top export market.

Brazil is the world’s largest coffee exporter, sending 85 percent of its output abroad. The US buys 16 percent of that, making it Brazil’s biggest coffee customer. Experts warn the tariff will hurt competitiveness, especially for family farmers who produce two-thirds of Brazil’s coffee and have fewer resources to weather downturns or shift to new markets.

Last year’s climate change-driven drought already devastated crops. Now, falling arabica prices, down 33 percent since February, are compounding losses. “We struggle for years, and suddenly we might lose everything,” said da Silva, who grows 40,000 trees and other crops to survive.

Nearby in Varre-Sai, Paulo Menezes Freitas, another smallholder with 35,000 trees, fears he may be forced to abandon coffee farming. He says the tariff also affects essential imports like machinery and aluminium. “It feels like the ground is crumbling under us,” he said.

Despite the blow, Brazil’s coffee exporters remain cautiously optimistic. The Council of Coffee Exporters of Brazil (Cecafe)’s Marcio Ferreira believes US buyers can’t afford to stop importing Brazilian beans. But on the ground, small farmers fervently hope for a rollback before livelihoods vanish.

President Trump announced a trade framework with Japan on Tuesday, placing a 15% tax on goods imported from that nation.

“This Deal will create Hundreds of Thousands of Jobs — There has never been anything like it,” Trump posted on Truth Social, adding that the United States “will continue to always have a great relationship with the Country of Japan.”

The president said Japan would invest “at my direction” $550 billion into the U.S. and would “open” its economy to American autos and rice. The 15% tax on imported Japanese goods is a meaningful drop from the 25% rate that Trump, in a recent letter to Japanese Prime Minister Shigeru Ishiba, said would be levied starting Aug. 1.

Early Wednesday, Ishiba acknowledged the new trade agreement, saying it would benefit both sides and help them work together.

With the announcement, Trump is seeking to tout his ability as a dealmaker — even as his tariffs, when initially announced in early April, led to a market panic and fears of slower growth that for the moment appear to have subsided. Key details remained unclear from his post, such as whether Japanese-built autos would face a higher 25% tariff that Trump imposed on the sector.

But the framework fits a growing pattern for Trump, who is eager to portray the tariffs as win for the U.S. His administration says the revenues will help reduce the budget deficit and more factories will relocate to America to avoid the import taxes and cause trade imbalances to disappear.

The wave of tariffs continues to be a source of uncertainty about whether it could lead to higher prices for consumers and businesses if companies simply pass along the costs. The problem was seen sharply Tuesday after General Motors reported a 35% drop in its net income during the second quarter as it warned that tariffs would hit its business in the months ahead, causing its stock to tumble.

As the Aug. 1 deadline for the tariff rates in his letters to world leaders is approaching, Trump also announced a trade framework with the Philippines that would impose a tariff of 19% on its goods, while American-made products would face no import taxes. The president also reaffirmed his 19% tariffs on Indonesia.

The U.S. ran a $69.4-billion trade imbalance on goods with Japan last year, according to the Census Bureau.

America had a trade imbalance of $17.9 billion with Indonesia and an imbalance of $4.9 billion with the Philippines. Both nations are less affluent than the U.S. and an imbalance means America imports more from those countries than it exports to them.

The president is set to impose the broad tariffs listed in his recent letters to other world leaders on Aug. 1, raising questions of whether there will be any breakthrough in talks with the European Union. At a Tuesday dinner, Trump said the EU would be in Washington on Wednesday for trade talks.

“We have Europe coming in tomorrow, the next day,” Trump told guests.

The president earlier this month sent a letter threatening the 27 member states in the EU with 30% taxes on their goods to be imposed starting on Aug. 1.

The Trump administration has a separate negotiating period with China that is currently set to run through Aug. 12 as goods from that nation are taxed at an additional 30% baseline.

Treasury Secretary Scott Bessent said he would be in the Swedish capital of Stockholm next Monday and Tuesday to meet with his Chinese counterparts. Bessent said his goal is to shift the American economy away from consumption and to enable more consumer spending in the manufacturing-heavy Chinese economy.

“President Trump is remaking the U.S. into a manufacturing economy,” Bessent said on the Fox Business show “Mornings With Maria.” “If we could do that together, we do more manufacturing, they do more consumption. That would be a home run for the global economy.”

Boak writes for the Associated Press.

US officials are ‘optimistic’ that an agreement could be imminent.

German Chancellor Friedrich Merz has said that negotiations between the European Union and the United States over a long-running trade dispute are making progress.

Speaking in Berlin on Wednesday ahead of a dinner with French President Emmanuel Macron, Merz said, “We have been hearing in the last few minutes that there could possibly be decisions,” referring to ongoing talks aimed at avoiding steep tariffs on European goods.

The United States has threatened to impose a 30 percent tariff on EU exports if no agreement is reached by August 1.

But hopes for a breakthrough rose this week after reports that both sides are close to a deal that would set a 15 percent tariff rate on EU goods – a compromise similar to a recent agreement between the US and Japan.

Macron said that European leaders and the European Commission had been in “constant contact” to coordinate their response to the US pressure.

He added: “We want the lowest possible tariffs, but also to be respected as the partners that we are.”

US Secretary of the Treasury Scott Bessent echoed the optimism, telling Bloomberg Television that the talks were “going better than they had been”, and that progress was being made.

Further discussions between EU Commissioner for Trade Maros Sefcovic and US Commerce Secretary Howard Lutnick also took place on Wednesday, while officials from the European Commission briefed EU member states following the latest round of discussions.

Diplomats say the recent deal between Washington and Tokyo has increased pressure on Brussels to accept a compromise, even if reluctantly.

“The Japan agreement made clear the terms of the shakedown,” an EU diplomat told the Financial Times. “Most member states are holding their noses and could take this deal.”

If finalised, the EU-US deal could include some exemptions, such as for aircraft, medical devices and alcoholic beverages, according to the newspaper.

However, the European Commission, which leads trade policy for the EU, has already prepared a plan to hit back with more than $100bn in tariffs if talks collapse.

It comes as EU exporters have already been facing a 10 percent tariff on goods sent to the US since April, on top of pre-existing levies.