US Tariff Monitor – The new tariff regime begins to take shape
The new tariff regime is shaping trade dynamics, with key countries facing varying rates. Investigations into labour practices may lead to further adjustments.
The new tariff regime is taking shape, with the effective US tariff rate projected to rise to 9.7% from 9.3% as Section 301 tariffs replace the expiring Section 122 tariffs. This change, effective from late July, is not expected to significantly impact GDP or inflation forecasts.
Key trading partners, including Canada, the EU, and Mexico, will face a 10% tariff rate, while 54 other countries will see a slightly higher rate of 12.5%. Brazil will experience a 25% tariff rate, although exemptions will moderate the effective rates for many countries.
Ongoing investigations into forced labour practices and digital trade will influence future tariff adjustments. The USTR has recommended a 10% tariff for countries with partial prohibitions on forced labour and a 25% rate for Brazil, with adjustments expected to follow the conclusion of these investigations.
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