Insight: Following a rapid series of tariff impositions, escalations, countermoves and retreats, the current picture – which may well have changed again by the time you read this – is that the US has imposed a baseline 10% import tariff on most goods from most of the world, with a 90-day pause for higher rates while it potentially negotiates bilateral deals. The key exception is China: after a series of retaliatory measures, the US is proposing to charge a 125% tariff on Chinese imports, while China has imposed an 84% levy on US goods.
Impact: After the multiple announcements and market swings since ‘liberation day’ on April 2nd, President Trump’s tariff war may be entering a calmer phase. Time perhaps to draw some tentative conclusions: having advanced a maximalist position, Trump now appears open to deals. Japan, for example, can probably avoid higher tariffs by buying lots of US natural gas and strengthening the yen; South Korea can promise further US investments by its corporate sector; most ASEAN nations have less to offer; and any short-term deal with China appears unlikely, though with Trump one never knows. Meanwhile, even the lower tariffs still in place will hit economic growth and boost inflation, particularly in the US. And a new ‘uncertainty premium’ will weigh on both global growth and financial valuations for the foreseeable future.
