Adapting his “flood the zone” tactic to foreign trade, US President Donald Trump announced on Wednesday another flurry of take-it-or-leave-it letters imposing tariffs on Brazil and six smaller economies that have resisted him or are too small to merit individual negotiating attention.
Late Wednesday, the US president threatened to slap a 50 per cent tariff on Brazil in part as retaliation for its ongoing prosecution of his ally, the country’s former president Jair Bolsonaro. This represented a five-fold jump from the rate Trump imposed in April.
“It is a Witch Hunt that should end IMMEDIATELY!” he wrote on his social media account.
On Monday, Brazilian President Luiz Inácio Lula da Silva responded to Trump’s earlier criticism over a trial Bolsonaro is facing for an attempted coup.
“I think it’s very wrong and very irresponsible for a president to be threatening others on social media,” Lula told reporters. “People have to learn that respect is a good thing.”
Trump also slammed Brazil’s “unsustainable Trade Deficits” against the United States even though the US had a US$7.4 billion goods surplus with the country in 2024.
The move against Brazil followed unilateral actions against six smaller economies earlier in the day. These were 20 per cent tariffs on the Philippines, 25 per cent on Moldova and Brunei, and 30 per cent on Iraq, Algeria and Libya, effective August 1. These, the letters added, are separate from any sectoral tariffs that may be imposed later.
The nearly identical letters released on Trump’s social media account said “It is a Great Honor for me to send you this letter” that demonstrates Washington’s willingness to continue trading despite America’s “significant trade deficit with your great Country”.
“Our relationship has been, unfortunately, far from reciprocal,” the letters said. “This deficit is a major threat to our Economy and, indeed, our National Security!” the president added, signing off “With best wishes”.
The build-up follows this week’s announcement that his original deadline for reaching “90 deals in 90 days” was postponed until August 1 after very few agreements were secured.
The new limit, he quickly added, was “firm, but not 100 per cent firm” if more deals materialised. “I would say final – but if they call with a different offer, and I like it, then we’ll do it”, he added.
Trump, a self-described “tariff man”, has long believed in the punitive trade tool as an elixir to address trade deficits, supply-chain reform, and manufacturing decline and as a way to return America to an earlier time of economic dominance.
He also maintains, in defiance of most economists, that tariffs are paid by foreign governments, not American consumers.
“The Fake News and the so-called ‘Experts’ were wrong again,” Trump posted on his social media network Tuesday. “Tariffs are making our Country ‘BOOM’.”
On Tuesday, the US president announced 50 per cent tariffs on copper, a strategic metal vital for a wide variety of hi-tech industries, sending commodity markets reeling.
He has also hit Washington’s strongest traditional allies, including Canada, Japan, South Korea, the European Union and the United Kingdom, with bilateral and sectoral trade demands that threaten the heart of their respective economies.
However, the lack of progress in translating threats into concrete deals has not only undercut decades of building relationships overseas; it has also raised growing concern even within his own party.
“To my knowledge we do not have a single ratified or inked trade agreement, up to and including the UK,” Republican Senator Thom Tillis of North Carolina said on Tuesday.
“We have memoranda of understanding, but we do not have dispute resolution, or all the other kinds of things you would wrap around the fundamental trade agreement.”
“If you’re going to go into a trade war, it’s good to have allies,” added Tillis, a member of the powerful Senate Finance Committee and former businessman who has fallen out with Trump.
“What we did is alienate the ones we know are naturally inclined to work with us.”
Republican Senator Shelley Moore Capito of West Virginia added, “I think there’s still a lot of uncertainty.”
Meanwhile, signs of the economic impact are building. The US dollar has fallen 10 per cent this year against many currencies.
While Chinese exports to the US have dropped 9.7 per cent so far this year, Beijing’s shipments to the rest of the world are up 6 per cent, leading to more transshipments of Chinese goods into America from other countries despite Trump administration efforts to block those with more tariffs.
Economists also predict that US efforts to build a trade wall around itself will encourage other countries to trade more with each other – as seen in recent trade deals between the EU and Canada and the UK and India.
A leading American business chamber said tariffs and policy changes designed to revamp the US economy could hit the country’s 242,000 small importers with some US$27 billion in added levies even as they reduce overseas appetite for US tech.
“In our effort to remake what our economy looks like, we’re causing other countries to have those questions,” said Neil Bradley, executive vice president of the nearly 3 million-member US Chamber of Commerce. “There’s some indication that ultimately hurts where we’ve had natural advantages, particularly in the technology, information, financial services space.”
Commerce Secretary Howard Lutnick said letters unilaterally announcing the tariffs that other nations will pay without negotiation went out to 20 countries this week.
These involved rates of between 25 and 40 per cent meted out to Japan, South Korea, Malaysia, Thailand, Cambodia, Bangladesh and Indonesia. Other known targets so far include South Africa, Kazakhstan, Tunisia, Serbia, Laos, Myanmar and Bosnia and Herzegovina.
The blast of unilateral declarations follows weeks of administration officials teasing big imminent deals as deadlines were sequentially pushed back.
Trump’s rapid, constantly changing approach to trade dovetails with the flood-the-zone approach widely seen in Trump 2.0, evidenced in the 160-plus executive orders signed in less than six months, his ability to dominate the news cycle with a flurry of threats and policy turnarounds, and his bid to push legal and regulatory limits that have left the judiciary and American public struggling to keep up.
Trump on Tuesday said the administration could make trade deals with different nations, but “it’s too time-consuming” and “complicated”.
The US president announced an agreement in May with the UK to cut tariffs on cars, steel and aluminium in return for London easing tariffs on US exports.
The administration announced a deal last week with Vietnam setting imports from that country at 20 per cent.
Analysts, though, say these are more like loose frameworks that push off negotiation on many thorny issues, such as non-tariff barriers, digital taxation and labour standards.
The protracted uncertainty and repeated cycle of threats and climbdowns have made it extremely difficult for companies to plan and seen a revolving door of foreign negotiators cycle through Washington hoping to flatter, appease and influence Trump.
Bloomberg calculated that Asian trade negotiators alone have racked up 350,000 miles (563,000 kilometres) trying to influence the US president, the equivalent of 14 trips around the globe, led by Japan, South Korea and Taiwan. - SOUTH CHINA MORNING POST
