Countries under the most pressure include key BRICS members, but even some allies like Canada have been hit hard. Those in the 10% club seem to have gotten the best deal. Who are they?
After months of threats and negotiations, US President Donald Trump’s revised tariff regime has officially come into effect. With rates ranging from 10% to 41%, the new tariffs affect around 70 countries and have triggered fear of inflation and global retaliation.
At 12.01am on 7 August, the EU, Japan, and South Korea were hit with 15% tariffs, while Vietnam, Bangladesh, and Taiwan were subjected to rates of 20%. Thailand and Pakistan face tariffs of 19%. India was hit with an initial 25% tariff, with a potential surcharge due to its continued purchases of Russian oil, which provides Moscow with crucial revenue to sustain its war in Ukraine. War-torn Syria faces the highest tariff, at 41%.
Tariffs on Canada have risen from 25% to 35%. Trump has stated that the US’s relationship with its northern neighbour is “complicated” and “intertwined,” although Canada remains the US’s top trade partner, with annual exchanges surpassing $500bn. In the first quarter of this year, Canadian exports to the US were valued at $109bn, compared to $87.3bn in US imports, resulting in a $21.5bn American trade deficit.
Switzerland, one of Europe’s wealthiest nations, has been hit with a 39% tariff—higher than the previously considered 31%. This is despite its hosting of major UN offices and its position as the sixth-largest foreign investor on US soil. The US recorded a trade deficit with Switzerland of approximately $38bn last year. Other nations hit with elevated tariffs include Algeria, Libya, and South Africa (30%), Iraq (35%), and Tunisia (25%).
Trump has hiked tariffs on Brazil to 50%, the steepest in the new regime
The 10% club: friends of the US?
Countries maintaining a balanced trade relationship with the US have retained a 10% tariff, foremost among them the UK, which is considered the most effective negotiator, having secured all its demands regarding luxury car exports. Trade between London and Washington reached $148bn last year.
Several Arab and African countries, including the GCC nations, Egypt, Morocco, Lebanon, and Sudan, have also benefited from reduced tariffs, either because their trade volumes with the US are below target levels or due to mutual investment interests. Mexico, meanwhile, was granted a 90-day grace period to resolve files related to immigration, narcotics, and border controls.
"Tariffs are going to be the greatest thing we've ever done as a country," asserted Trump, stating they would make the US "rich again." He also described the process as causing "a little disturbance"—a familiar mantra he uses to tie foreign trade policy to domestic economic priorities.
Any nation facing tariffs above 10% is deemed an indirect contributor to the US's trade deficit and will be required to open its markets, increase imports from the US, and bear the associated costs.
Punitive tariffs on Brazil: 50%
Trump has hiked tariffs on Brazil to 50%, the steepest in the new regime, targeting raw materials like copper, although refined copper is exempt due to its importance to US industries. Agricultural products, such as fruit juice, have also been spared.
President of China Xi Jinping, President of Brazil Luiz Inacio Lula da Silva, South African President Cyril Ramaphosa and Prime Minister of India Narendra Modi gesture during the 2023 BRICS Summit.
Brazilian President Lula da Silva, a known ally of China and Russia within the BRICS group, was quoted as saying he wants to avoid any trade confrontations with the US to protect Brazil's economic interests in US markets.
However, tensions between Washington and Brasília are also influenced by Brazil's formal recognition of Palestine, a move opposed by the US administration, which views it as undermining its Middle East strategy. Additionally, the US government's position on the prosecution of former Brazilian President Jair Bolsonaro—who resides in the US and remains an ally of Trump—further complicates bilateral relations amid ongoing trade disputes.
Despite the new tariff regime, the brewing trade war between the US and the rest of the world appears to be heading towards a truce, although no clear winner or loser has emerged. The new tariffs largely reflect revised, lower, or renewed baseline rates established during previous rounds of negotiation in Geneva and London earlier this year.
Having once brandished threats of triple-digit tariffs against nations exacerbating the US's trade deficit, industrial decline, and ballooning federal debt, Trump has now retreated from many of his earlier demands. Analysts view this as the birth of a "new Trump realism," despite the fact that current tariff levels are the highest since 1911 and are undeniably protectionist in nature.
Central to this tentative truce are the ongoing negotiations with China—the US's top trading partner and fiercest economic rival. Talks in Stockholm, which concluded on 29 July, aimed to either forge a new trade agreement or maintain the tariff levels set in Geneva and London, pending a potential summit between Trump and Chinese President Xi Jinping. Although described as "constructive" and "candid," the talks ended without a final agreement to extend the tariff truce, which is set to expire on 12 August.
India was hit with an initial 25% tariff, with a potential surcharge due to its continued purchases of Russian oil
On the eve of the announcement of the new, reduced tariffs, the International Monetary Fund (IMF) issued an optimistic report on global economic prospects. Forecasting global growth to surpass 3% by the end of 2025 and reach 3.1% in 2026, the report buoyed oil prices, signalling a rebound in global demand. The IMF projects global trade to grow by 2.6% this year, coinciding with a near-6% growth in China's economy in Q1.
US companies, meanwhile, have been stockpiling consumer goods and manufacturing supplies in anticipation of trade disruptions, boosting demand and stabilising prices. US firms are expected to benefit from $100bn in tax cuts in the 2026 budget, helping them absorb the new tariff burden.
Reducing the federal deficit
Trump's tariff policies carry important fiscal implications. Beyond their impact on trade and prices, tariffs are a source of government revenue. It is this revenue that Trump seeks to increase by encouraging US consumers to buy more US-made goods, generating government revenue through customs duties, and using tariffs as leverage to reduce trade deficits, protect domestic industries, and strengthen national security.
Yet, a study by the Congressional Budget Office (CBO), seen by Al Majalla, indicated that reciprocal tariffs might not yield significant short-term benefits for the US economy and could fuel a 0.4% rise in inflation through 2025 and 2026. Should higher tariffs on imports from China and Hong Kong be implemented, consumer prices could increase by up to 25%. However, the study estimates that tariff revenues will generate $2.5tn over the next decade and reduce the federal deficit by approximately $2.8tn.
Average new tariffs now stand at 17%—up from a mere 2.5% before Trump's announcement of a barrage of tariffs on 'Liberation Day' (2 April). Experts suggest the additional cost burden on American consumers would be around half the VAT rates applied in many global economies, including the EU. US Treasury data confirms customs revenues reached $87bn by June's end, up from $79bn in 2024.
US President Donald Trump shakes hands with European Commission President Ursula von der Leyen after signing a trade agreement between the two sides, July 27, 2025.
Investments and tariff reductions
In exchange for slashing tariffs to 15% on so-called "friendly nations," Trump has demanded that these countries invest in the US an amount equivalent to their trade surplus with the US. Brussels, represented by European Commission President Ursula von der Leyen, pledged $600bn in investments over three years, alongside $750bn in additional purchases of US energy and defence products.
Analysts, however, question the feasibility of these commitments, given the EU's economic state and the internal divisions over transatlantic relations.
European stocks endured a bleak day on the Friday new tariffs were announced—the worst since 'Liberation Day.' Yet tariffs are far from the only problem facing the EU, which has been internally fragmented for years, with disparities in economic growth and trade benefits with the US.
Germany, which exported $162bn to the US, Ireland ($72bn), and Italy ($76bn), are viewed as the main beneficiaries of the new agreement.
Germany, Ireland, and Italy are viewed as the main beneficiaries of the new agreement
Japan, South Korea, and Taiwan
Japan has pledged to invest $550bn in the US as part of a new trade agreement announced in July. Japan is the US's fifth-largest supplier, followed by South Korea ($135bn) and Taiwan ($118bn). Analysts believe the US is determined to maintain its historic industrial ties with these nations to prevent them from drifting towards China.
These countries rival—and in some areas surpass—Beijing in critical industries such as AI chips, semiconductors, telecommunications, smartphones, and electric vehicles.
Combined, the three nations exported to the US goods totalling $406bn in 2024. The geopolitics of the China Sea, Japan, and the Pacific are expected to dominate Washington's strategic agenda post-Middle East and Ukraine wars.
In the first five months of 2025, the US trade deficit with China stood at $101bn—a slight improvement from $104bn the previous year. However, with bilateral trade totalling $582.4bn in 2024—US exports accounted for only $143.5bn—the deficit with Beijing exceeded $295bn, marking a 5.8% year-on-year increase, while US exports declined by 2.9%.
US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng stand for a photo during meetings in Stockholm, Sweden, on July 28, 2025.
China: the tough negotiator
In late July, trade talks with China concluded in Stockholm with no public breakthrough. Both sides are eager to extend negotiations beyond the looming 12 August tariff deadline to avert a full-blown trade war, which global institutions like the IMF and World Bank warn could have devastating global economic consequences. Together, the US and China represent 50% of global GDP and 40% of international trade.
US and Chinese negotiators confirmed their intent to maintain "timely communication" on trade and economic issues. Currently, the US imposes tariffs on about 50% of Chinese imports. In Stockholm, Chinese officials urged their US counterparts to lift a 20% tariff linked to China's role in the fentanyl trade. US officials, however, expressed dissatisfaction with Beijing's efforts to curb the illicit production of synthetic drugs.
According to the Observatory of Economic Complexity, should the US impose elevated tariffs, Chinese exports to the US could drop by $485bn by 2027, while US exports to China may fall by $101bn over three years. However, given China's dominant position in global trade, the larger blow will be felt in the US.
The European Central Bank noted that the EU could see a further influx of Chinese goods, similar to the 2-3% surge experienced during the 2018-2019 US-China trade war. This would benefit the euro at the expense of the dollar in global commerce.
Meanwhile, the US is expected to ramp up imports from Canada by $128bn, Mexico by $77bn, and the UK by $23bn, while US exports to European markets could rise by 12% in 2027. Yet, the expected decrease in Chinese imports is inevitable in the next two years. Nevertheless, Beijing is likely to utilise third-party countries in Southeast Asia, Africa, and the Middle East to route its goods into the US, rendering tariffs alone insufficient to tame the Chinese dragon.
