Mexico Receives 90-Day Reprieve After Sheinbaum Call
Former US President Donald Trump has put the brakes on a scheduled tariff increase against Mexico, affording the nation a 90-day period to iron out a larger trade deal. The action came on the heels of a Thursday morning call with Mexican President Claudia Sheinbaum, who later tweeted that they’d had a “very good” discussion.
Thanks to the extension, Mexico avoids a 30% tariff on most of its non-automotive, non-metal exports that already were in compliance with the US-Mexico-Canada Agreement (USMCA) rules. That’s about 85% of Mexican exports, Mexico’s economy ministry said.
Nevertheless, the relief is not complete. The US maintains its 50% tariff on Mexican steel, aluminum, and copper. A 25% tariff also remains in effect for cars and any products that don’t meet USMCA criteria part of a larger Trump plan connecting trade penalties to the fentanyl crisis.
Trump also stated Mexico had agreed to drop “non-tariff trade barriers,” though he did not provide any specifics.
India and Brazil Are in the Hot Seat
As Mexico is given some space, India and Brazil are tightrope walking. Negotiations with India have collapsed on granting access to its farm market, and Trump’s team is set to slap Indian products with a 25% tariff. There’s also a prospect of additional penalties for India’s continued oil purchases from Russia.
India’s government is not opening up its farm sector, which has triggered political backlash domestically and weakened the rupee. Talks are ongoing, but time is running out.
Brazil too wasn’t spared from the tariff web. Trump imposed a high 50% tariff on nearly all Brazil’s exports in a fit of rage over the prosecution of his friend and former Brazil President Jair Bolsonaro. Certain sectors such as planes, energy, and orange juice were left untouched.
South Korea Cuts a Deal, China Negotiations Still on the Go
South Korea, in turn, made a concession to escape the full brunt of Trump’s tariffs. It consented to take a 15% tariff on its exports (a reduction from the threatened 25%) and vowed a whopping $350 billion investment in US-vetted projects.
China remains in deep negotiations. Treasury Secretary Scott Bessent informed CNBC that a agreement with Beijing is “not 100% done” and awaits Trump’s approval. China has until August 12 to seal a deal to prevent the second wave of tariffs, after previous deals were concluded in May and June.
Prices Rise as Tariffs Take Effect
Americans are already beginning to feel the bite. New data from the Commerce Department shows that home goods prices leapt 1.3% in June the biggest jump of more than two years and prices for recreational gear and clothing rose as well. It’s the strongest sign yet that Trump’s tariffs push is beginning to drive into inflation.
Judges Question Legal Right of Trump
To add to all of this, Trump’s legal ground is being tested. A US appeals court is deliberating whether his application of the 1977 International Emergency Economic Powers Act (IEEPA) to sanction blanket tariffs in fact passes muster. Even a judge noted that the law never uses the word tariffs.
A lower court has previously determined that Trump overstepped his bounds, and the appeals panel was equally dubious in Thursday’s hearing.
Final Deals or Final Tariffs? Deadline Nears
As Friday night’s deadline nears, nations that have yet to sign trade agreements are holding their breath. “Foreign leaders are calling his phone,” White House Press Secretary Karoline Leavitt said, implying that some nations are still racing against the clock to circumvent the tariffs.
Trump’s belligerent trade policy is obviously back in full swing and no one wants to be on the receiving end of it.
