Latest tariffs: Trump's unrest is back

Trump's most recent tariff threats have caused global markets to revert to their social media-driven anxiety

Trump's most recent tariff threat demonstrates that the turbulent April days aren't necessarily over.

Trump threatened to impose 100% tariffs on Chinese imports on Friday, October 10, after Beijing announced the day before that it would be restricting exports of rare earth metals starting on December 1. On October 10, the SandP 500 fell 2 points and 7 percent as a result of the stock market selloff triggered by Trump's remarks.

"As US-China relations keep investors on edge, volatility is back on the menu," stated Matt Britzman, senior equity analyst at Hargreaves Lansdown. "The market is once again reacting to social media posts, and headline risk is making things jittery after a period of relative calm.

Trump declared a broad range of tariffs on all US trading partners worldwide on April 2, which he called "Liberation Day." Ending the US's reliance on imports was their goal in order to boost domestic industry and lower the nation's trade deficit.

This has caused nations to rush to negotiate trade agreements with the US in an effort to lessen the impact on their export-oriented industries.

It frightened markets as well. Following April 2, the S&P 500 dropped 12% in four sessions before Trump postponed most of the announced tariffs until after additional trade negotiations with specific nations.

The markets stabilized as a result of this pause, and the acronym TACOwhich stands for Trump always chickens outwas born.

This time, it may be the beginning of the so-called TACO trade, in which markets reverse losses on the presumption that Trump will retract earlier tariff threats. Markets somewhat recovered the next session after Trump wrote, "Don't worry about China, it will all be fine!" on his Truth Social platform on October 12.

In the upcoming weeks, Trump is scheduled to meet with Chinese counterpart Xi Jinping for trade talks between the United States and China.

According to Louise Loo, head of Asia economics at Oxford Economics, "the timing of the announcements ahead of the much-anticipated meeting between presidents Xi Jinping and Donald Trump later this month suggests tactical positioning, rather than elevation."

Are tariffs profitable?

Tariffs are justified economically by the fact that the money they generate for the US government can be used to protect US domestic producers from foreign competition while also funding tax breaks and/or increased public spending.

Tariffs generated £28 billion in June, according to official US data, which is three times the monthly revenue from 2024. At this rate, tariffs could bring in an extra £1.33 trillion by the end of Trump's presidency and £2.08 trillion through 2034, according to the Committee for a Responsible Federal Budget.

On the other side of this ledger, however, is the price paid by American consumers. In essence, tariffs are taxes that businesses that import goods must pay.

Tariffs, according to many experts, will increase US inflation. On October 12, Goldman Sachs released a report indicating that up to 55% of the additional expenses imposed on American businesses by tariffs are already being borne by US consumers.

The most recent court challenge to Trump tariffs.

Trump had to implement tariffs through an unusual method because of concerns that they might hurt the US economy.

Typically, Congress must vote on trade policies like tariffs. However, Trump evaded US lawmakers by implementing the majority of the tariffs through executive orders under the International Emergency Economic Powers Act (IEEPA).

Two court cases filed by US small businesses that will see a sharp increase in costs due to the tariffs have since contested this. They argue that trade deficits do not, in any case, meet the unusual and extraordinary threat threshold required by the Act, and that IEEPA does not grant the president the power to impose tariffsthat power is granted to Congress under Article 1 of the US Constitution.

The White House has appealed a May ruling by a federal trade court in New York that upheld one of these challenges. To give the US government time to appeal the ruling to the US Supreme Court, the Appeals Court dismissed a portion of the case that demanded that the tariffs be immediately removed, but upheld the original ruling (to invalidate the tariffs). The date of that hearing is November 5.

The tariffs as they currently stand will be lifted if the case is ultimately successful, but they may also have to return the hundreds of billions of dollars in money they have already raised.

The court's ruling will not affect all of Trump's tariffs. The case concerns the global reciprocal tariffs imposed on goods originating from particular nations. Import taxes on specific items, like the 50% tax on steel and aluminum imports, won't change.

Which nations are subject to the highest tariffs from the US?

According to import share, the following are the current tariff rates on the top 15 trading partners of the United States.

White House, n.d. uses the BBC to import data from the US Census Bureau (2024).

Which commodities and goods are subject to the highest US tariffs?

All imports of goods from the specified nations into the US are subject to the tariffs mentioned above. However, certain types of strategically significant commodities and goods, irrespective of their origin, are subject to separate tariffs.

Trump wants to encourage tech companies to invest in the US by imposing a 100 percent tariff on semiconductors made abroad. Large chipmakers like TSMC, SK Hynix, and Samsung that have made large investments in the US appear to have escaped the new tariff.

Since October 1, branded medications manufactured abroad are subject to a 100% tariff.

There have also been individual tariffs applied to certain commodities. Imports of copper were subject to a 50% tariff as of August 1. Most countries currently impose a 50% tariff on imports of steel and aluminum; in the UK, the tariff is 25%.

Trump's 25% duties on upholstered furniture, bathroom vanities, and kitchen cabinets, as well as his 10% tariffs on imported lumber and timber, went into effect on October 14.