Archive July 31, 2025

As the US prepared to implement reciprocal tariffs, the world’s trade markets were on edge on Thursday as negotiations for a trade deal with Washington approached.

US President Donald Trump has already announced steep trade tariffs for many of the country’s largest trading partners, even as dozens of countries scramble to secure last-minute deals or extensions for negotiations beyond the Friday, August 1 deadline.

More than 120 days after President Trump’s administration first declared a string of tariffs on the infamous “Liberation Day,” Friday’s deadline comes.

His administration appears to be set to start imposing new tariffs on those nations that don’t reach a trade agreement by the end of today despite several delays since Trump took office in January of this year.

So, what will happen tomorrow? Which nations have deals in place already? Who hopes to seal a last-minute deal, then?

What will happen on August 1?

Experts claim that the US’s decision to impose a significant round of reciprocal tariffs on imports from various nations marks a pivotal moment in global trade dynamics as the clock runs down.

Trump is steadfast in saying that he won’t be extending this deadline. “THE AUGUST FIRST DEADLINE IS THE AUGUST FIRST DEADLINE – IT STANDS STRONG, AND WILL NOT BE EXTENDED. A BIG DAY FOR AMERICA, ” On Wednesday, Trump made a post on Truth Social, his social media platform.

At midnight Eastern Time tonight, therefore, US Customs and Border Protection will begin enforcing these new duties, which will range from 15 percent to 50 percent – or even higher in some cases – depending on the trading partner, the nature of the goods being traded and whether the trading partner and the US have specific agreements in place.

Certain industries will be subject to additional sector-specific tariffs. For instance, most nations will have a 50% tariff on copper, steel, and aluminum, while most nations will have a 20% levy on pharmaceutical goods.

The White House confirmed that Trump will sign new executive orders on Thursday, formally imposing all these higher tariffs. Some of the US’s biggest trading partners, including Mexico, Taiwan, and Canada, are likely to be recipients.

Many nations are likely to experience immediate economic repercussions as well as potential changes in diplomatic relations as a result of sweeping new tariffs on all exports to the US.

Tariffs may also cost the US economy. In its most recent analysis, the Yale Budget Lab, a non-partisan research center, noted that higher import prices could add an additional $2,400 to US households in 2025.

As businesses struggle to pay costs or pass on profits from imported goods like electronics, pharmaceuticals, and clothing, they may have to deal with new supply chain disruptions.

Trump is introducing so many new tariffs, why?

Trump instituted a “national emergency” in April with his “Liberation Day” tariff plan, which imposed a standard 10 percent baseline tariff on all imports, followed by higher, country-specific “reciprocal” tariffs.

The US has large trading deficits with many countries, which Trump believes are deeply unfair.

Therefore, the Trump administration argued that these new rates were necessary to repair these trade imbalances in order to boost US manufacturing and employment, despite the fact that economists contend that deficits are not actual proof of unfair trade practices.

Beyond trade, experts point to the Trump administration’s use of these tariff threats to advance agendas like reducing immigration, tackling the opioid and fentanyl crisis, and pressing allies and partners on geopolitical issues, such as Brazil’s legal action against Trump ally Jair Bolsonaro.

In the last-minute run-up to the August 1 deadline, Trump’s administration has strong-armed trading partners, including Japan, the European Union, Indonesia and the Philippines, into new deals under which they accept higher US tariffs in exchange for continued market access and investment commitments – and in most cases, a promise not to levy counter-tariffs of their own.

Who already has US deals in the bag?

European Union

The EU has agreed to a 15 percent tariff on most of its exports to the US, including cars and pharmaceuticals, in exchange for zero tariffs on select US exports and commitments to buy US gas and increase investments. Trump had initially threatened a 30% rate.

Japan

Japan promises to invest $550 billion in the US economy after reducing the threat of a 25% tariff on its exports to the US.

United Kingdom

Exports to the US are subject to a 10% tariff rate from the UK. Additionally, steel and aluminum were subject to a 25% sectoral tariff, half of which were applied to other nations.

South Korea

A lower 15 percent tariff will apply to South Korean imports to the US, in return for a $350bn investment pledge and zero tariffs on US exports like cars and agricultural products.

Indonesia

By agreeing to purchase US Boeing aircraft and to remove or reduce trade barriers, Indonesia has negotiated a 19% tariff on its exports to the US, down from the 32 percent that is currently threatened.

Vietnam

Vietnam has agreed to a 20 percent tariff on most exports to the US, with an additional 40 percent levy to be applied to “transshipped” goods – those entering the US via another location – while also agreeing to zero tariffs on US imports like large-engine automobiles.

Philippines

Along with commitments for improved military cooperation, this Philippines has agreed to a 19% tariff on its exports to the US. There are also no tariffs on US exports to the Philippines.

Pakistan

Despite the US’s agreement to develop oil reserves, specific tariff rates for goods are still undetermined.

Which big US partners have no deal yet?

As of Thursday, there were no trade agreements signed between the top three trading partners of the US, including China, Canada, and Mexico.

Mexico

With nearly $ 840 billion in total trade, driven by industries like agriculture and cars, the US ranks first among its trade partners. With no new deal for August 1, existing tariffs of 25 percent on most imports will persist under earlier 2025 trade war measures, with some exemptions under the United States-Mexico-Canada Agreement (USMCA).

Canada

With about $700 billion in revenue flowing between the two nations, primarily in energy, vehicles, and aerospace products, it is second in terms of size. Trump has threatened to impose a 35 percent tariff on goods that don’t comply with the USMCA if no agreement is reached before the August 1 deadline.

China

Third among the top US trade partners, Beijing trades about $532bn with the US, focused on electronics, machinery and consumer goods. Following a agreed pause until August 12, a 30% combined tariff will be applied without a permanent agreement. That came after an imports tariff of 145 percent had already been implemented.

Who would like a last-minute deal in the hopes?

India

Even a “very good friendship” with Washington couldn’t stop Trump’s reciprocal tariffs from affecting India, the fourth-largest economy in the world and the most populous nation.

On Wednesday, Trump announced a sweeping 25 percent tariff on all Indian goods exported to the US, plus an unspecified penalty for buying energy from Russia, as trade deal negotiations remain unresolved.

Trump will not ignore the trade deficit that the US and India had estimated to be worth about $ 130 billion in 2024, with US exports to India worth $ 41.8 billion and imports from India at $ 87.4 billion.

Trump wrote on his Truth Social platform, “While India is our friend, we have done relatively little business with them because their tariffs are far too high.”

Later, in another post, Trump said he did not “care what India does with Russia. For the time being, they can combine their exhausted economies.

We do very little business with India because their tariffs are among the highest in the world. Likewise, Russia and the USA do almost no business together, “he wrote”. Let’s continue with that.

The Indian government stated in a statement that it was examining the effects of these new tariffs and that it had been discussing a fair, balanced, and mutually beneficial bilateral trade agreement.

The statement further noted that” we remain committed to that objective. By noting that the government places the greatest emphasis on promoting and protecting the welfare of our farmers, entrepreneurs, and MSMEs, New Delhi “seen what it believes may be potential barriers to the deal.”

Pakistan

Prior to and following the military conflict with New Delhi earlier this year, Pakistan, India’s neighbor, saw its stock rise with the Trump administration.

Trump revealed that the US had concluded a deal with Pakistan, where they will work together on developing oil reserves, but did not announce tariffs”. Who knows, maybe they’ll eventually export oil to India.

Taiwan

If no agreement is reached by August 1st, Taiwan will also have a high-stakes deadline, with proposed tariffs set at 32 percent, excluding semiconductors.

Taiwanese officials have engaged in intense negotiations in Washington, spanning four high-level rounds led by Vice Premier Cheng   Li‑chun and US counterparts, addressing not only tariff technicalities but also non‑tariff trade barriers, investments and market access. These discussions reportedly awaiting US approval.

Who has little hope of reaching a deal with the US?

Brazil

President Trump has officially imposed a 50 percent reciprocal tariff on Brazilian imports, making it one of the most severe tariffs among the major US trading partners.

Trump has been unfavorable about the prosecution of former US president Jair Bolsonaro, who is accused of plotting a coup to overturn his 2022 election victory, despite the fact that the US has a trade surplus of nearly $7.4 billion with Brazil.

Trump has publicly called the trial a” witch-hunt “and an” international disgrace”, tying his imposition of a 50 percent tariff on Brazilian imports, announced on July 10, directly to this issue.

The Brazilian government was alarming. Trump’s measures were described as “economic blackmail” and negotiations had stalled, according to President Lula.

Speaking at a news conference in Washington this week, Pierre-Olivier Gourinchas, the IMF’s chief economist, called for an end to the trade war.

Earlier this year, world leaders gathered in Geneva, Switzerland, to mark the 30th anniversary of the World Trade Organization (WTO), the international body established in 1995 to reduce global trade barriers and promote sustainable development. Director-General Ngozi Okonjo-Iweala spoke at the event, underscoring the WTO’s role as a foundation of predictability amid the current turmoil surrounding global trade.

“Uncertainty around global trade has reminded many members why they value the WTO as a bedrock of predictability in the global economy – and as a platform for dialogue and cooperation on trade,” she said.

The “uncertainty”, of course, was a reference to President Donald Trump’s “Liberation Day” tariffs of 10 percent on all US imports in addition to country-specific “reciprocal tariffs”.

The WTO has long been beset by critics – from US and European workers angry over lost jobs, to developing nations hamstrung by rules favouring the West. Now, Trump’s aggressive tariffs and attacks have brought these long-simmering dilemmas to a head, threatening the very foundations of the organisation.

Trump’s trade tensions

Earlier this year, Trump’s tariffs signalled the US’s most protectionist stance since the 1930s. While he later paused his reciprocal tariffs – to be reinstated again on August 1, with exceptions for bilateral deals – the uncertainty caused by the moves has led to increased costs for US consumers and businesses, disrupted global supply chains, and triggered retaliatory tariffs from key trade partners. Tariff measures have sparked WTO disputes and increased the effective US tariff rate to its highest level in over a century, according to The Budget Lab at Yale, a nonpartisan policy research centre.

The role of the WTO – to boost global trade and arbitrate disputes – has been called into question. Trump’s moves threaten to turn an already creaking trade system, the WTO’s “rules-based” order, into a complex web of bilateral deals.

Trump’s complaints

“The most beautiful word in the dictionary is tariff,” Trump told hundreds of business executives at an Economic Club of Chicago event weeks before the 2024 election. For decades, the club had championed globalisation, but last year, its guests rallied behind Trump’s protectionist promises. After winning the election, he announced his “Liberation Day” plan.

“Tariffs are a legitimate policy tool,” says Ian Fletcher, economist at the Coalition for a Prosperous America, noting they can lead to reshoring production.

Trump has criticised the WTO for prioritising low prices over protecting homegrown jobs and wages. “When someone like Trump says ‘I’m against all this stuff’ that’s caused [the demise of labour-intensive manufacturing], how do you expect people to behave?” Fletcher asked.

Trump believes the US has lost out economically to China. China’s 2001 WTO entry allowed cheap goods into a market in which US manufacturing was already struggling. From 1974 to 2024, US trade deficits totalled $20 trillion, while China’s trade surpluses hit nearly $7 trillion. Trump has argued that this is a national emergency.

Though Beijing claims to follow WTO rules, it has been accused of distorting trade with import quotas, subsidies, and tax breaks. Trump argues the WTO lets China undermine US workers. He has also objected to China’s “special and differential treatment” as a developing country, giving it favourable terms.

In September 2020, Trump promised to “do something about the WTO” because it has “let China get away with murder”.

But Trump is not the first to criticise the WTO. In fact, it has faced scrutiny since it was founded.

The WTO’s troubles in wealthy countries first became visible in 1999.

Battle in Seattle

In late 1999, 50,000 people gathered in the streets of Seattle, Washington, to express their grievances with the WTO, which was hosting its ministerial meeting in the city. The throngs of protesters in Seattle were diverse – from trade unionists and farmers to church groups and NGOs – but most people were united by a common cause: railing against the interests of large corporations.

The Seattle protestors also argued that the WTO’s ability to override domestic labour, health and environmental protections threatened standards they had long fought for at home.

Many felt that the economic system was rigged against them in favour of multinational companies, such as Microsoft, Nike and Ford. Indeed, inflation-adjusted earnings for most US workers fell between 1969 and 1999. Over the same period, the real (inflation-adjusted) return of the S&P 500 increased by several hundred percent, reflecting a substantial increase in investors’ purchasing power. Demonstrators felt left behind and wanted to push back.

Protests also broke out in other cities. The New York Times reported that demonstrators in New York smashed windows at downtown stores, such as Nordstrom, Starbucks and Gap, carrying signs that read “End Corporate Rule” and “We Want Fair Wages”.

Mounted police, armoured cars and even torrential rain did not stop the Seattle protesters from postponing the WTO meetings. Eventually, after four days of standoffs, the talks were abandoned, and the demonstrators went home feeling vindicated.

While US companies had been outsourcing jobs long before the creation of the WTO, its rules were seen as locking in such practices. Over time, that whipped up a nostalgia for an era when blue-collar workers could earn middle-class wages.

By 2016, that nostalgia had reached a fever pitch, fuelling populist politics like Trump’s. Meanwhile, far from the spotlight, developing countries were growing increasingly frustrated with WTO rules that limited their development ambitions.

Developing country dissent

The WTO sets the global ground rules for trade, negotiating agreements, enforcing policies, and arbitrating disputes when countries believe rules have been broken. It replaced the General Agreement on Tariffs and Trade (GATT) and serves as the only forum where trade conflicts can be settled through binding decisions. Without the WTO, countries could raise tariffs, subsidise industries, or otherwise break rules – ushering in a new era of trade uncertainty.

To understand Seattle and disillusionment with the WTO, it’s important to look at the historical context. Ten years before the protests, in 1989, the Berlin Wall had come down. The Cold War ended, and the contest between Soviet communism and Western capitalism had been roundly decided in the US’s favour.

Free markets and limited government intervention – together presented as necessary conditions for sustained growth – became gospel. Along with the World Bank and the IMF, the WTO became an expression of the globalisation era, promoting policies in developing countries that emphasised privatisation, balanced budgets and the liberalisation of trade. It was dubbed the “Washington Consensus”.

But even in the 1990s, the Washington Consensus had its critics. Many analysts expressed frustration at the WTO’s treatment of poor countries.

For Jayati Ghosh, a professor of economics at the University of Massachusetts Amherst, “trade agreements at the WTO have always been heavily loaded in favour of developed country industries. TRIPS is a classic example.”

In 1995, the Trade Related Aspects of Intellectual Property (or TRIPS) was adopted, and for the first time, intellectual property rights (IPRs) became enforceable under international law with the WTO as referee.

Several Global North industries benefitted enormously, including, most controversially, pharmaceutical companies. Meanwhile, technology transfers – which are important for developing countries trying to move up the economic value chain – became blocked behind legal barriers.

TRIPS first received widespread attention in the late 1990s, when South Africa was in the grip of an HIV/AIDS epidemic. Some of the world’s most powerful pharma companies controlled the distribution of life-saving drugs and simply refused to drop their IPRs.

As a result, South Africa was unable to procure cheap generic drugs, and hundreds of thousands of people died. So it passed a law allowing for the import and manufacturing of cheaper generic medicines. In response, in 2001, 39 pharmaceutical companies, including giants GlaxoSmithKline, Pfizer and Merck, took the South African government to court over alleged IPR violations.

The pharma groups quickly dropped the case amid public outcry from NGOs and public health advocates. But a similar case unfolded again following the outbreak of COVID-19, in which patent protections for vaccines were upheld by a small group of rich countries.

“Pharma companies [such as Moderna and Pfizer] didn’t even create a lot of the intellectual property that went into the COVID vaccines,” Ghosh told Al Jazeera. “They simply bought the patents and limited the supply, creating an artificial supply and raising the price.”

“So many unnecessary deaths occurred in developing countries because of TRIPS,” Ghosh said. “And looking ahead, inhibitive knowledge sharing will limit governments’ ability to cope with the effects of climate change and the green energy transition.”

Developing countries also decry the trade body for blocking “infant” industry protections – like import quotas, subsidies and tax breaks – in favour of free trade practices. At the same time, many rich countries continue to provide huge subsidies to certain sectors.

Oxfam reported that European agricultural subsidies – known as the Common Agricultural Policy (CAP) – inflict “enormous damage” on farmers in poor countries.

The practice of overproducing sugar and dairy products in Europe and then “dumping” it abroad, the UK charity says (PDF), is particularly harmful to agricultural workers in Mozambique, India and Jamaica. In 2024, European farmers received 53.8 billion euros ($61.7bn) through CAP.

“Subsidies in wealthy nations disadvantage companies in developing countries, who struggle to compete,” said Ghosh, noting that this has been especially true of the textile and agriculture industries.

Empirical evidence does not indicate a strong relationship between trade barriers and growth. If anything, most of today’s rich countries climbed the development ladder while pursuing protectionist trade policies.

As such, many developing countries have been frustrated by the WTO for limiting their pursuit of long-term industrial development in favour of free trade. The message from wealthy nations has been clear for roughly 30 years: Do as I say, not as I do.

That message has grown louder under Trump.

Internal WTO wobbles

The longstanding inability to resolve North-South struggles left the WTO vulnerable. Now, with the US both flouting rules and paralysing the dispute mechanism, the institution is facing an existential moment.

The WTO has 166 member states and is consensus-based, meaning that all formal objections have to be resolved before a trade decision is finalised. This can cause gridlock and delays, but “that suited America and the big industrial powers when the WTO was created in the mid-’90s,” says Rob Davies, South Africa’s former minister of trade and industry.

“At the time,” he adds, “small government and free markets were the only game in town. So, the first set of rules established by the WTO was largely determined by wealthy nations, with the US at the forefront.”

In turn, power asymmetries between rich and poor countries were amplified through WTO agreements. But as China emerged as the world’s dominant manufacturing hub, wealthy nations’ grip on the WTO, as well as international markets, loosened. China’s economy was still growing rapidly in 2016, when Trump was first elected president.

Davies says the US’s “non-observance of WTO rules started then”, when Trump banned federal agencies from buying equipment from telecoms giant Huawei in August 2019. Trump also neutralised the WTO by blocking the appointment of members to the Appellate Body, where disputes were resolved. The standoff persisted under President Joe Biden, and the Appellate Body has remained nonoperational, providing no enforceable path to resolving trade conflicts.

In 2022, for instance, the WTO ruled that (then) former President Trump had violated its rules four years earlier when he invoked national security concerns to justify tariffs on steel and aluminium imports. The Biden administration, however, strongly condemned the decision and refused to remove the duties that Trump had imposed.

The backlog of unresolved appeals has now made it easier for countries to break WTO rules without facing penalties, including Trump’s 2025 “reciprocal” tariffs.

Looking ahead, Davies thinks that the WTO will “limp along … until we arrive at a more stable multipolar world.”

He noted that while the WTO was a “major driver of neoliberal structural reform, we’re a far cry from that now”.

If the WTO fails, there would be no neutral forum for countries to resolve disputes, and global trade could slide into bilateral fights and tariff wars, raising prices, threatening jobs, and upending the global economy with uncertainty. Some hope reforms can create rules better tailored to today’s realities and more fair to both North and South. But with deep distrust and no clear US leadership, the odds remain uncertain.

At the WTO’s recent birthday celebrations, Director-General Ngozi Okonjo-Iweala stressed that “I remain convinced – I am ever the optimist – that a bright future awaits global trade, and the WTO, if we do the right thing.”