The Trump administration changed the rules of global trade and started what became known as the “tariff war.” Countries that relied heavily on the U.S. market have faced serious challenges.
For example:

• Canada sends more than 70% of its exports to the United States and now pays a 35% tariff.

• India, which exports about 20% of its goods to the U.S., faces tariffs of over 25%.

• Vietnam, known for its growing trade with America, pays a 20% tariff, and if it re-routes Chinese goods to the U.S., the tariff can reach 40%.

• Brazil is hit even harder, with tariffs increased by 40%.

These rising tariffs create worries about supply chain disruptions and import-driven inflation. The U.S. has warned that any country trying to bypass tariffs through “transshipment” (sending goods through another country) will face even higher rates.

All of this reflects the intensification of Trump’s “America First” trade strategy; even against nations with small trade volumes. While some of these countries represent a minor share of U.S. trade, the broader goal seems to be to limit Asian supply networks and counter low-cost exports.
Such actions risk destabilizing global trade flows and deepening the trust crisis within the World Trade Organization (WTO).

Negotiating a trade deal with the European Union was one of the Trump administration’s toughest challenges. Although President Trump often complained about the slow pace of talks, the negotiations eventually concluded—yet not everyone in Europe was happy with the outcome. Many European leaders described the deal as more of a “damage control agreement” than a true diplomatic success. Some critics even argued that Europe had sacrificed its long-term interests for short-term relief. The French Prime Minister called it “a dark day when free nations surrender instead of defending their interests.” European industries, especially German automakers, were dissatisfied because U.S. tariffs on their cars remained high. Under the deal, the EU agreed to:

• Purchase $750 million worth of American energy products.

• Accept a 15% tariff on specific goods.

• Allow U.S. companies free access to Europe’s $20 trillion market.
  
  

In return, Europe continues to import around $235 billion worth of goods from the U.S. each year. To avoid tariffs, European firms now face a tough choice: either move production to the U.S. (onshoring) or pay the duties. For pharmaceutical companies, exporting drugs to America now requires local U.S. production, though the EU managed to limit tariffs on medicines to 15% to reduce further pressure. The U.S., in turn, agreed not to impose tariffs on natural resources like oil and gas.

In recent months, Washington has applied broad tariffs even on traditional allies. Reports of “exorbitant tariffs” on Switzerland suggest that the U.S. is using trade pressure to gain leverage in areas such as pharmaceuticals, finance, and banking policy. This is especially concerning for Germany, the EU’s largest economy, since Europe’s banking and supply chains are deeply connected to Switzerland.

The overall impression is that the United States is increasing pressure on Europe, not only through tariffs, but also by targeting the European Union’s tax structure. Washington seems determined to rewrite the global trade rules, not just to gain short-term tariff advantages. One of Europe’s biggest challenges lies in non-tariff barriers, such as regulations and internal taxes. The Value Added Tax (VAT) system in the EU is sometimes seen by the U.S. as a kind of hidden subsidy, giving European producers an unfair edge in global competition.

Recent U.S. actions show a shift toward broader, unilateral tariff policies. By focusing on tariff comparisons without acknowledging the principle of reciprocity, Washington signals that it intends to maintain higher tariffs than its trading partners. In practice, this means that other countries are being pushed to open their markets freely to the U.S., while the U.S. itself keeps a protective trade stance—a fundamental change in the balance of global trade relations.

The general tariff on Vietnam now stands at 20%, but the situation is even more complex for Japan. The U.S. has imposed tariffs on all Japanese products, regardless of whether they pass through other countries.

Japan’s economy depends heavily on the automotive industry, which simply cannot absorb a 25% U.S. tariff. Cars are central to Japan’s economic strength, and Tokyo is unwilling to compromise this sector in any trade deal. Similarly, Japan refuses to sacrifice its agriculture industry just to reach an agreement with Washington.

Interestingly, the trade deal makes no mention of currency policy. This is notable because President Trump had previously accused Japan of deliberately weakening the yen to boost exports. By omitting any reference to foreign exchange, the agreement appears to sidestep one of the most sensitive points in U.S.–Japan trade relations. The White House’s main goal is to reduce the U.S. trade deficit with Japan while strengthening its key domestic industries such as aerospace, agriculture, and defense. Recent details from the U.S.–Japan agreement show significant commitments by Tokyo:

• Purchase of 100 Boeing aircraft,

• A 75% increase in U.S. rice imports,

• $8 billion in agricultural and related purchases, and

• A rise in defense spending with U.S. companies—from $14 billion to $17 billion per year.
  
  

President Trump described this as “the biggest trade deal in U.S. history.” However, many analysts note that the economic impact of these deals is still unclear, even if financial markets initially reacted positively.

Following the deal, Japan’s recession risk slightly decreased, giving the Bank of Japan (BoJ) more flexibility to adjust interest rates. For now, the BoJ is likely to wait, but if inflation remains stable and global conditions improve in the second half of the year, a surprise rate hike could happen. Meanwhile, Japan entered a new chapter in its history by electing its first female prime minister, Sanae Takaichi, a fiscal dove who favors growth-oriented policies. Her early agenda includes an economic stimulus package and lower fuel taxes, signaling a move away from austerity and toward expansion.

The United States has also announced a 50% tariff on copper imports, a move that seems contradictory considering the country’s major infrastructure plans and its growing demand for electricity, power grids, electric vehicles, and manufacturing plants. America depends heavily on imported copper, and domestic production cannot meet either current or future needs. Recently, U.S. officials have turned their focus to copper smelting capacity, which is mostly concentrated in China.

In reality, Trump’s decision highlights the strategic importance and global shortage of copper, and it could trigger a new wave of resource protectionism and supply-security politics around the world. Despite policy uncertainty, the news has reinforced expectations of a long-term upward trend in copper prices. China responded strongly, condemning the politicization of trade and economic relations. While the new tariff doesn’t directly affect China; since it’s not a major copper exporter to the U.S.—Beijing has voiced concern about Washington’s overall trade direction.

President Trump has also stated that he intends to prioritize sector-specific tariffs, a step that will eventually target Chinese-made goods once again. These developments signal rising trade tensions between Washington and Beijing. If new tariffs on Chinese products are introduced, analysts expect several outcomes:

• The Chinese yuan could come under pressure.

• Global prices of metals and raw materials, including copper, aluminum, and rare metals—could become more volatile.

• Geopolitical risks could increase in Asian and emerging markets.

President Trump announced that gold will not be subject to tariffs. This decision helped ease market fears, since many investors had worried that the U.S. might also include gold in its tariff list. In the short term, this policy is expected to support gold prices, as it removes the risk of higher import costs. The immediate effect could be a rise in spot gold prices and a narrower gap between spot and futures prices.

Meanwhile, China has increased its gold reserves for eight consecutive months, a move widely seen as part of Beijing’s effort to reduce reliance on the U.S. dollar. Gold holdings in global central banks have been rising and now rank second only to the U.S. dollar in terms of global reserves.

Gold producers are currently enjoying record profit margins. Since the cost of mining one ounce of gold remains far below its global market price, profits have soared. The total market value of gold has grown by $10 trillion in the past year. Before Russia’s invasion of Ukraine, central banks and institutions bought around 10–20 tons of gold per month. After the war began, this number jumped to 80 tons per month.

Interestingly, about a century ago, gold held the dominant position in global reserves before being replaced by the dollar. As of 2024, China leads the world in gold production with 380 tons, followed by Russia (330 tons), Australia (284 tons), Canada (202 tons), and the United States (158 tons).

The key drivers behind this remarkable rally include:

• Geopolitical tensions,

• Lower U.S. Federal Reserve interest rates, and

• Global mistrust toward the dollar.

Together, these factors have supported a 50% rise in gold prices so far this year.

Under Trump’s new trade policy, countries aligned with the BRICS group; including India, will also face extra tariffs. Recently, the U.S. imposed an additional 25% tariff on Indian imports, bringing the total tariff level to 50%.

This move comes partly in response to India’s increased oil trade with Russia since the start of the Ukraine war. Indian refineries have been buying discounted Russian crude oil, refining it into products such as diesel and gasoline, and selling them to other nations, including Western countries. Washington interprets this as a way of bypassing sanctions and indirectly supporting Russia’s revenues.

Although India is considered a U.S. ally, Washington argues that India has maintained limited trade with the United States in recent years because of its high import tariffs and strict non-tariff barriers, some of the toughest in the world. Furthermore, India still buys most of its military equipment from Russia and, alongside China, remains one of the largest buyers of Russian energy.

Starting August 1, India will face the new 25% tariff plus additional penalties for these actions. In response, New Delhi has suspended defense procurement talks with the U.S., stating that it will not proceed with new weapons purchases until tariff negotiations show progress. At the same time, India officially approved a plan to remove the U.S. dollar from 90% of trade transactions with Russia, marking a significant shift toward alternative currency settlements.

For the first time, China’s yuan has overtaken the U.S. dollar in cross-border transactions and international payments involving Chinese companies. In 2010, the yuan’s share in China’s global trade was almost zero, but it has now surged to about 53%, becoming the primary currency for China’s external trade. This explosive growth reflects China’s effort to reduce its dependence on the U.S. dollar, especially after the U.S. imposed financial sanctions on Russia following the Ukraine war and threatened similar actions against China. Beijing appears to have recognized the strategic risk of relying too heavily on the dollar-based financial system.

Tariffs on Russia and Secondary Measures
Although U.S.–Russia trade volume is small, Washington has imposed 100% tariffs on Russian imports. The direct effect of these tariffs is limited, but the U.S. plans to apply “secondary tariffs” on countries that continue buying oil from Russia, aiming to discourage indirect support for Moscow’s economy.

Earlier in July, Trump had offered Russia a 50-day peace window, which passed without progress. Following that, the U.S. signaled that it would tighten trade pressure. Interestingly, the U.S. will not impose tariffs on China’s purchases of Russian oil, unless Europe agrees to act jointly. Washington insists that European countries must “do their part”, highlighting a push for shared responsibility in enforcing trade sanctions.