President Donald Trump introduced new tariffs of 10% or 12.5% on imports from more than 60 countries on July 24, covering approximately 99.4% of U.S. imports under the justification of combating forced labor. The administration claims that these countries are failing to do enough to prohibit the use of forced labor, which undercuts wages for U.S. workers. The move has drawn immediate objections and statements of disagreement from Australia, Brazil, Chile, and New Zealand, heightening global trade tensions.
President Donald Trump’s trade strategy has shifted following a February Supreme Court ruling that struck down his previous attempt at emergency-powers tariffs as unconstitutional. Instead of relying on emergency powers, the administration’s new July 24 policy targets imports from more than 60 countries by asserting that these trading partners fail to prohibit the use of forced labor adequately. Two small businesses have already filed a lawsuit challenging Trump’s new tariffs, mirroring the legal battles that undid previous tariff rounds.
Global Pushback and Market Response to New Tariffs
The sweeping measures cover approximately 99.4% of U.S. imports, with duty rates set at 10% or 12.5%. While the tariffs have not triggered a repeat of the market crash seen during previous trade announcements—the S&P 500 index is up slightly since the new tariff announcement—international reaction has been swift and critical. Australia, Brazil, Chile, and New Zealand have all issued statements of disagreement and objection.
Legal challenges are already underway as two small businesses have filed a lawsuit challenging Trump’s new tariffs. Other countries will try to find exemptions and carve-outs to allow their companies’ exports to avoid the new tariffs, and the new tariffs might also be fought in court and ruled illegal, just like the last batch.
Brussels Adopts a Strategy of Restraint Against Washington
While nations object directly to the administration’s actions, the European Union is handling Washington’s latest escalation with deliberate calm. Confronted with new tariff threats, a threat to immediately initiate a trade investigation over the European Commission’s $1 billion fine against Google, and ongoing pressure from Washington over drug pricing, Brussels has shown public restraint.
European officials are looking toward November midterm elections with a chance that Trump’s grip on Washington loosens, and Europeans are happy to play for time. Rather than engaging in public shouting matches that play into the White House’s negotiating style, European capitals are opting to buy time through dialogue.
It is a strategy of buying time through dialogue,
Bernd Lange, a German member of the European Parliament and chair of its Committee on International Trade, said in an interview.
Lange noted that the Commission’s approach is to move away from anything that could be seen as legally binding and focus instead on dialogue forums, consultation and areas where cooperation is possible.
The Legacy of Nautical Deals and Standoffs
The current restraint stems in part from a hard-fought truce reached last year at U.S. President Donald Trump’s golf resort in Turnberry, Scotland. After months of delays that tested Washington’s patience, and amid tariff threats that at times reached as high as 50 percent, the EU fulfilled its side of the bargain by passing legislation in June to allow U.S. industrial and some agricultural goods to enter the bloc duty-free.
A USTR official, granted anonymity to share the administration’s thinking, credited the EU for implementing key commitments,
in the Turnberry deal, such as massive tariff reductions for U.S. exports, and has made concrete commitments on a number of other burdensome regulatory matters.
The official added that any technical talks will be about implementing the remaining commitments, and the U.S. side anticipates this will move at pace, while the White House did not respond to a request for comment. While a 10 percent U.S. tariff rolled out July 23 does not violate the Turnberry agreement—which caps U.S. duties on most EU goods at 15 percent—Trump’s threats to investigate Europe’s digital restrictions in the wake of the Google fine would likely do so. The Office of the U.S. Trade Representative has yet to launch an official investigation, but the official there confirmed to POLITICO that the agency expected to initiate the investigation soon,
allowing the White House to layer on more tariffs on EU imports.
Sovereignty at Stake as Investigations Loom
U.S. Trade Representative Jamieson Greer is conducting a separate trade investigation into Germany’s pharmaceutical pricing and has suggested he could launch similar reviews of other European countries’ drug pricing practices as well. Those investigations, however, will take months to resolve, if not longer.
The second phase of the trade war touches a nerve in Europe: sovereignty. Whether it concerns taxation, health care systems or competition policy, these are areas the EU sees as core to its autonomy,
said Jeromin Zettelmeyer, a former International Monetary Fund and German government official who now heads Brussels-based think tank Bruegel.
At the same time, Trump no longer appears as politically untouchable as he did at the start of his presidency, as weakening poll numbers ahead of the midterms, controversy over the Iran war and legal setbacks in the U.S. Supreme Court have exposed vulnerabilities.
