2 days ago
22
TEMPO.CO, Jakarta - The President of the United States (US), Donald Trump, has officially implemented a new import tariff policy, also known as the Trump tariffs, which has shaken the global market.
Through an Executive Order announced on "Liberation Day" in the Rose Garden of the White House, Trump set a basic tariff of 10 percent for almost all countries, with higher tariffs imposed on about 60 countries deemed to have the "most unfair" trade relationship with the US. However, amidst this broad policy, four countries are actually exempt from this tariff, which are Russia, North Korea, Belarus, and Cuba.
"Cuba, Belarus, North Korea, and Russia are not included in the Reciprocal Tariff Executive Order because they have already faced very high tariffs and sanctions that we have previously imposed, which have hindered trade with these countries," said a White House official speaking anonymously as reported by Antara.
According to a US official who briefed journalists before the official announcement, imports from about 60 countries will be subject to tariffs above 10 percent. Documents distributed to reporters showed several reciprocal tariffs imposed, including a 34 percent tariff for goods from China, 20 percent for the European Union, 46 percent for Vietnam, and 44 percent for Sri Lanka.
Interestingly, some countries such as the UK, Kenya, Iceland, Panama, Ethiopia, Lebanon, and Togo are among the countries subject to a minimum 10 percent tariff. Singapore is also listed in the group of countries subject to the basic 10 percent tariff.
Trump tariffs are generally imposed on almost all countries that trade with the US. Countries like Singapore, the UK, and some other countries fall into this category. Possibly, this 10 percent tariff is considered as an initial or "standard" tariff imposed to create greater equality in global trade relations.
As reported by Al Jazeera, higher tariffs are imposed on countries that the US deems to have "unfair" trading practices or impose higher tariffs on US goods.
For example, China (34 percent), the European Union (20 percent), Vietnam (46 percent), and Sri Lanka (44 percent). The higher tariff rates are likely based on an analysis of the comparison of tariffs imposed by these countries on US products.
This policy directly shook the global market. The Nasdaq index dropped more than 5.3 percent, while the Dow Jones fell 3.3 percent in trading before noon. Investors are concerned about the possibility of inflation due to the increase in prices of imported goods, and experts warn of the risk of recession or even stagflation in the US.
US companies are worried about the broader impact of this move: higher costs will be passed on to their customers. "What we hear from various companies of various scales, in all industries, from across the country is that these broad tariffs are a tax increase that will raise prices for American consumers and harm the economy," said Neil Bradley, policy chief at the US Chamber of Commerce, a business lobbying group.
Axios reported that experts see a stronger possibility of an economic recession this year, alongside higher prices and weaker growth due to the trade war. Trade policy uncertainty places businesses in uncertainty and the stock market is restless. The latest economic surveys show that consumers plan to reduce spending and prepare to face higher prices.
If widespread enough, decreased demand and stable price hikes will result in the feared outcome for Americans: economic "stagflation." Stagflation can be understood as an economic situation characterized by slow growth and high unemployment rates accompanied by inflation.
Sita Planasari and Ida Rosdalina contributed to the writing of this article.
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