Trump's tariffs sink the stock markets, 15% for the EU

Three months after Liberation Day, Donald Trump has once again sent stock markets into a tailspin by issuing an executive order imposing tariffs ranging from 15% to 50% on over 90 countries. This essentially confirms the agreement with the EU, but specifically targets Canada, Brazil, and Switzerland, for various reasons. A baseline tariff of 10% applies to all countries not named in the order, including Russia.

The move threatens to increase costs for businesses and prices paid by consumers, as well as slow the global economy, even though the IMF was less pessimistic on Tuesday than it was three months ago. But the markets' initial reaction was negative: Wall Street opened in the red, while European stock markets lost €269 billion (€22 billion of which in Milan, with the FTSE MIB index falling 2.55%), and most Asian markets closed lower. The impact of the tariffs on the economy is frightening, as are the disappointing US macroeconomic data: GDP grew but less than expected, inflation rose, and, on Friday, a slowdown in the labor market, with only 75,000 new jobs created in July (the weakest month in four years) and unemployment rising to 4.2%.

The tariffs will go into effect for everyone on August 7th, not August 1st as initially planned, to allow US Customs to organize their collection. Furthermore, tariffs on goods shipped by sea will not be changed before October 5, 2025. Three months ago, the tycoon had promised 90 agreements in 90 days. He has only secured eight: the short list includes the EU, the United Kingdom, Vietnam, Indonesia, the Philippines, South Korea, Japan, and Pakistan. For now, the political agreement with Brussels is holding, with tariffs at 15% pending the finalization of a joint declaration and the establishment of exceptions and quotas.

This means that for now, the auto and automotive components sector, currently subject to 27.5% tariffs, remains exempt from Trump's executive order. For European Trade Commissioner Maros Sefcovic, who negotiated the agreement, the US president's measure is "a first step." "The new US tariffs reflect the initial results of the EU-US agreement, particularly the 15% cap on all-inclusive tariffs. This strengthens the stability of European businesses and confidence in the transatlantic economy," he wrote on X, emphasizing that "the work continues." In an interview with NBC News, Trump explained that it was "too late" for the countries named in his executive order to avoid the tariffs, but that he remains open to offers. "That doesn't mean someone won't show up in four weeks and say we can reach a deal," he said.

The least affected country remains Great Britain, with tariffs at 10%. Tariffs are also at 15%, like the EU, for Japan and South Korea. The hardest hit country is Brazil, with a tariff of 50% in retaliation for its trial of former President Bolsonaro, a friend of the tycoon and under investigation for coup plots. Among the major countries, Switzerland follows, with tariffs of 39% due to a trade deficit deemed excessive, although some analysts believe this is a punishment for Swiss banks for withdrawing from American markets and a warning to Swiss pharmaceutical companies to lower their drug prices in the US. Canada has also been hit (tariffs at 35%), guilty of poor cooperation in the fight against fentanyl and of wanting to recognize Palestine. For the other North American partner, Mexico, Trump made the only exception due to the "complexity" of bilateral relations: another 90 days to negotiate a comprehensive agreement, while 25% tariffs remain in place. China has a separate deadline, August 12, but an extension of the current truce is expected. High tariffs are also imposed on South Africa (30%), accused of persecuting white farmers. A 25% tariff applies to India, while it drops to 20% for Taiwan and 19% for Cambodia and Thailand. Punitive tariffs apply to some of the poorest and most war-torn countries, including Syria (41%), Laos and Myanmar (40%), Iraq (35%), Libya (30%), and Sri Lanka (20%). Others, however, will continue to pay a standard 10% tariff: Australia (which recently opened its doors to US meat), Russia, Ukraine, Egypt, Morocco, Argentina, Colombia, and Peru.