August 9, 2025 | 09:47 am
TEMPO.CO, Jakarta - On Thursday night, President Donald Trump announced new tariffs ranging from 10 to 41 percent on imports from dozens of countries, including those in the European Union.
Initially scheduled to take effect on Friday, August 1, 2025, the White House has postponed their implementation until August 7, giving affected countries a brief window to negotiate better trade terms with the US.
The main takeaway for anyone expecting the August 1 deadline to mark the end of trade tensions, Axios noted, is that the trade war is far from over.
Rather than signaling its conclusion, the current tariff rollout marks the beginning of a new phase in an evolving conflict characterized by frequent unilateral tariff changes and complex global reactions. Unlike previous eras when negotiations sought stable, long-term agreements, today’s trade battles are ongoing and unpredictable.
Are There Patterns in Current Trade Negotiations?
In contrast to past decades, trade negotiations no longer follow predictable start-to-finish patterns aimed at producing durable agreements. The US now uses tariffs as a flexible tool, applying them to any country at any time, with Trump often disregarding previous agreements or informal deals. Recent developments illustrate this dynamic:
Despite months of assurances that a trade deal with India was imminent, Trump imposed an initial 25 percent tariff, then doubled it shortly after, citing India’s purchase of Russian oil—while China, an equally significant buyer of Russian energy, avoided similar penalties.
According to Business Times, some tariffs serve overtly political purposes, such as pressuring Brazil to drop charges against Trump ally and former president Jair Bolsonaro, or warning Canada over its plan to recognize Palestine at the UN.
Trump announced plans for a 100 percent tariff on semiconductors even before the official investigation concluded, exempting companies building semiconductor facilities in the US—effectively giving discounts to major global chipmakers.
The German finance minister openly criticized the EU tariff deal and traveled to Washington to seek renegotiation before it was finalized. Similarly, Switzerland’s president protested unexpected US tariffs but returned without concessions.
Chinese export data showed a surge in July shipments routed through third countries often used to evade US tariffs. The Trump administration imposed a 40 percent tariff on such transshipments but has not clarified enforcement.
How Have Markets and Businesses Responded?
The announcement rattled global financial markets, sending stock indexes in Hong Kong, London, and New York sharply lower as investors weighed the uncertainty. The timing worsened concerns, coming on the heels of weaker US employment data showing slower-than-expected job growth and a small uptick in unemployment to 4.2 percent, Business Times reported.
In the US, however, surveys by the Conference Board and Business Council recorded a sharp drop in CEO concerns about tariffs, reflecting easing tensions with China. Stock markets neared record highs, buoyed by expectations of semiconductor tariff exemptions and reduced volatility across equities, bonds, and currencies.
Economic Implications of Trump’s Trade Tariffs
According to Al Jazeera, the tariffs are fueling inflationary pressure, economic inefficiency, weakened business sentiment, and negative spillover effects worldwide—factors that threaten to slow growth both in the US and abroad.
Rising Costs and Inflation
Tariffs raise import prices, increasing costs for businesses and consumers. This erodes real wages and purchasing power, dampening consumer spending.
Reduced Efficiency and Productivity
By disrupting global supply chains, tariffs make economies less efficient. Higher costs and uncertainty discourage hiring and investment, risking stagnation or erosion of productive capacity, NPR noted.
Trade Deficit and Investment
While intended to shrink the US trade deficit, tariffs have in some cases increased it as importers rushed to stockpile goods. Although some foreign investment is diverted to the US, overall uncertainty curbs economic activity.
Uncertainty and Sentiment
Constantly shifting tariff policies undermine business confidence, delaying hiring and capital spending. Analysts liken the effect to “sand in the gears,” slowing economic momentum and raising recession risks.
Employment and Wages
Although tariffs can shield certain manufacturing jobs, they also cause losses in other sectors. Real wages often stagnate as higher costs squeeze employers.
Looking ahead, the outlook remains uncertain. More tariffs loom, with ongoing investigations into industries such as lumber and pharmaceuticals.
Sanctions on Russia may trigger additional measures. The current trade truce with China expires on August 12. Beijing is open to extending it, but Washington’s stance is unclear.
Evercore ISI projects decisions on new anti-dumping and countervailing tariffs in the coming months, affecting a broad array of industrial and consumer products.
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