Trump's tariffs are about to officially take effect, and the test of the global economy has just begun

The radical measures taken by the Trump administration to reshape the global trade landscape are pushing the United States into a new stage of protectionism full of uncertainty and posing a severe test to the global economy. Whether this policy can revive the US manufacturing industry as expected remains to be seen, but the potential risks of triggering inflation and impacting financial markets have become increasingly prominent.
According to the latest media reports on Thursday, the comprehensive tariff policy of the United States will come into effect after early Thursday morning New York time. Previously, the US Customs and Border Protection was given one week to make necessary adjustments. After months of chaotic threats and fluctuations, almost all of America's trading partners will face higher tariff barriers.
It is estimated that the new tariffs will push the average tariff rate in the United States from 2.3% last year to an astonishing level of 15.2%. According to CCTV News, on July 31st local time, the White House issued an executive order to reset the "equivalent tariff" tax rate standards for some countries: Annex 1 of the executive order specifies that countries will be subject to individual tax rates, while countries not specified will be uniformly subject to a 10% tax rate; If a country or region avoids tariffs through third-party transportation, its goods will be subject to a 40% transportation tax. The White House announced that the new tariffs will take effect on August 7th.
This measure has raised awareness in the financial market. Analysts from major Wall Street institutions warn that investors should be prepared for a market correction. Morgan Stanley, Deutsche Bank, and Evercore ISI all pointed out in their reports on Monday that the S&P 500 index may face short-term declines in the coming weeks or months.
The details of tariffs remain unresolved, and the global supply chain continues to be under pressure
Since Trump first announced and subsequently suspended tariffs in April this year, the global economy has been shrouded in turmoil, with countries engaging in months of tense negotiations with the United States. This uncertainty has brought widespread anxiety to businesses about supply chain disruptions and rising costs.
Nowadays, the framework of new tariffs has been implemented, and most economies have accepted the reality that high tariffs will exist for a long time. Many countries have promised to invest hundreds of billions of dollars in the United States in exchange for lower tariff rates.
However, key details of Trump's plan remain unresolved, bringing ongoing uncertainty to the global supply chain.
For example, the automobile tariff preferences for the European Union, Japan, and South Korea have not yet been legislated and confirmed, and until then, cars will still face higher costs. Negotiators from countries such as the European Union, Japan, and South Korea that have reached agreements with Trump are still working behind the scenes to negotiate further reductions for key export industries with US officials. In addition, specific details regarding investment commitments and market access policy adjustments have not yet been announced.
At the same time, some countries' final efforts to strive for more favorable conditions have failed. The Swiss President left Washington on Wednesday, failing to successfully reduce the 39% tariff he faces. According to CCTV News, on Wednesday, Trump signed an executive order imposing an additional 25% tariff on goods from India in response to India's continued "direct or indirect imports of Russian oil".
At present, tariff negotiations with the largest trading partners of the United States, Mexico and Canada, are still independently underway on another track. Trump also vowed to soon announce tariff plans targeting key industries such as pharmaceuticals. CCTV reported that Trump has announced the imposition of approximately 100% tariffs on chips and semiconductors.
Economic Alert: Difficult Times Drop
Trump insists that high tariffs will significantly reduce the trade deficit and force companies to relocate manufacturing back to the United States. But critics argue that this move could lead to uncontrolled inflation and cause shortages of goods on store shelves.
Although the comprehensive economic impact has not yet been apparent, recent economic data has shown a red light. It is reported that the employment data in July showed that the employment growth in the United States had the steepest downward revision since the new coronal epidemic. Meanwhile, due to the slowdown in consumer spending and businesses adapting to changes in trade policies, economic growth in the United States has slowed down in the first half of this year.
At present, the unemployment rate remains low and prices have not surged, partly due to companies digesting most of the increased costs so far. But experts warn that this situation is difficult to sustain. Wendy Cutler, Vice President of the Asia Society Policy Institute and former US trade negotiator, said, "There are signs that more difficult times are coming. Many companies built up inventory before the tariffs came into effect." She believes that "price increases are almost inevitable" because companies are unlikely to bear lower profit margins in the long run.
The contradiction between tariff revenue growth and manufacturing prosperity
Despite facing numerous challenges, Trump insists that his measures will usher in a new economic golden age and refutes economic data that does not fit his narrative. At the same time, he praised the growing tariff revenue, and even suggested that it might bring tax rebate checks to some Americans. According to data from the US Treasury Department, tariff revenue has surged to a record high of $113 billion in the nine months ending in June.
However, it is unclear whether progress has been made on the other clear goal of the plan - to bring production back to the United States. Brad Jensen, a professor at the McDonough School of Business at Georgetown University, pointed out the inherent contradictions between its policy objectives. He said that it is difficult to achieve both tariff revenue growth and manufacturing employment prosperity at the same time.
Both cannot be true at the same time, "he explained." If the domestic manufacturing industry rebounds, then we won't have as much tariff revenue, "because imported goods will decrease. This fundamental contradiction has raised a huge question mark on the long-term feasibility of Trump's trade agenda.
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