BUSINESS – On July 31, 2025, U.S. President Donald Trump signed an executive order instituting steep new “reciprocal tariffs” on imports from dozens of countries, ranging from 10% to 41%, set to begin between August 1 and August 7, depending on the country and category. Canada, in particular, faces a significant hike from 25% to 35%, as the administration accuses it of failing to curb fentanyl trafficking and meet trade expectations.
Under the new measures, tariff rates will include 50% for Brazil, 25% for India, 20% for Taiwan, and 39% for Switzerland. Other nations will see duties adjusted between 10% and 41%, depending on trade imbalances and ongoing negotiations with Washington. Products from countries not specifically listed in the agreement will face a baseline 10% import tax, though that rate may rise in the future.
Mexico continues to benefit from a 90-day reprieve on goods unrelated to automotive or metals sectors, while China’s trade deal remains unresolved, with a separate deadline set for August 12. The tariffs were deployed under the 1977 International Emergency Economic Powers Act, leveraging national-security grounds to sidestep trade agreements and impose broad duties on importers. A U.S. federal appeals court has since questioned the legality of this executive decision.
Financial markets reacted rapidly: Asian and European stocks fell, and U.S. futures dipped nearly 0.9%, reflecting investor anxiety over trade disruption and inflation risks. Still, analysts note some countries—including the EU, UK, Japan, and South Korea—negotiated reduced rates and retained favorable terms ahead of the deadline.
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Canada has voiced strong opposition to the 35% tariff increase. Prime Minister Mark Carney, elected in March 2025, condemned the decision and vowed to pursue retaliatory measures while diversifying trade ties beyond the U.S. In a notable ripple effect, U.S. chocolate makers face rising costs, while manufacturers in Canada and Mexico gain competitive advantage under existing USMCA rules that exempt their goods from the new duties—even if inputs originate outside North America.
Economists warn that higher tariffs will push up consumer prices in the U.S.—projected to rise by as much as 2.3%, costing the average household nearly $3,800 annually—and could result in a GDP contraction of nearly one full percentage point globally.
Trump has characterized the tariffs as economic leverage to correct trade imbalances and support American manufacturing. However, critics argue the policy undermines global norms and risks legal and diplomatic fallout. Market watchers expect prolonged global trade volatility and pressure on dollar valuations.
The sweeping tariffs highlight Trump’s intensified economic nationalism and foreshadow increased trade friction unless successful bilateral agreements deliver relief.
