Flurry of announcements brings some clarity to tariff agenda

New wrinkles

The new 50% copper tariffs target components like cables, wiring and piping, and will continue to expand as the Trump administration requests information from domestic producers about foreign competition, though the tariffs do not stack, applying only to the copper components of products.

The White House also says it is imposing export controls for copper, under the authority of the Defense Production Act, to require 25% of high-quality copper scrap produced in the U.S. to be sold in the U.S., and that the Commerce Department will require more export licenses for high-quality copper scrap, while also planning similar export restrictions and domestic sale requirements on copper input materials (ore, cathodes, concentrates) beginning in 2027, and expanding to 40% of U.S. market in 2029.

In addition, Trump also established a new 40% penalty duty for transshipment, the practice of moving a product from a higher tariff jurisdiction to a lower tariff jurisdiction, without additional substantial transformation, in order to pay a lower duty on import into the U.S. Items determined by Customs and Border Protection to originate from one jurisdiction subject to higher tariffs, but imported to the U.S. via a lower tariff jurisdiction in order to evade the higher duties will be subject to an additional 40% duty, as well as additional fines and penalties.

Every six months the Trump administration will publish a list of countries or facilities it considers to be involved in circumvention schemes.

The president’s early suspension of the de minimis exception for shipments of $800 or less is effective 12:01 a.m. on Aug. 29. Trump previously suspended de minimis treatment of Chinese shipments, and the broad economic and immigration enforcement law his administration pushed for, the OBBBA, repealed de minimis shipments universally. However, that part of the law was to take effect on July 1, 2027, to give preparation time for businesses utilizing the tariff exception and for CBP, which has to enforce it. Trump suspended the exception under the same law (IEEPA) he has used for tariffs on Canada, Mexico, and China, though this is subject to active legal challenge (see below).

In the July 30 order suspending the de minimis exception, the president also ordered tariff tiers for those low-value shipments, corresponding to the Aug. 1 tariff rates he set using IEEPA on a country-by-country basis.

• Countries with an effective IEEPA tariff rate of less than 16%:  $80 per item
• Countries with an effective IEEPA tariff rate between 16-25% (inclusive):  $160 per item
• Countries with an effective IEEPA rate above 25%:  $200 per item.

Looming uncertainties: Legal challenges, economic data, and ‘deal’ details

Despite more of the outlines of the Trump tariff tapestry being filled in on Aug. 1, seemingly alleviating some retaliatory risk, several uncertainties remain around the U.S.’s posture in international trade.

• Japanese and EU officials have expressed different understandings about investment in and purchase agreements with U.S. businesses than the eye-popping numbers included on White House fact sheets, and no agreement text from those negotiations appears to be public yet.
• An agreement with the UK from May appears to hold more substance, though the document outlining it notes that it is not legally binding, in contrast to typical trade agreements made by previous administrations. The UK government also continues to press for lower tariffs on some key exports, while the U.S. continues to press the UK on its digital services tax.
• The White House also acknowledges tariff rates will be subject to more change, pending ongoing dialogue with countries, meaning the situation for many tariffs could remain fluid.
• The country-specific tariffs imposed by the administration could also be ruled an overreach – again – in court. In May, multiple federal courts agreed with plaintiffs who sued the government over the Trump tariffs put into effect by IEEPA, but the tariffs have been allowed to stay in place pending appeal by the government. On July 31, oral arguments took place as the next step in an appeals process likely to end up before the Supreme Court. 

Finally, adverse economic data could weigh on how long some punitive trade actions remain in place. Negative equity and Treasury bond market reaction to the April 9 tariffs directly led to Trump’s temporary pause of those country-by-country duties, until the new orders, effective Aug. 1. Similar market reaction could force reconsideration of the administration’s current course of action. The dollar declined 10% in value against currencies of major trade partners ꟷ more than it has since 1973 ꟷ in the first six months of this year. That could exacerbate inflationary effects of tariffs, though the president has in the past expressed a desire to maintain a lower value for the dollar, in context of global currencies, to spur more manufacturing export growth.

Job growth has also slowed, and employment figures for May and June were revised down by 258,000, a significant number. U.S. GDP also shrank in the first quarter of this year, by -0.5%, largely attributed to increased investment in internationally sourced inventory to front-run tariff costs, and policy uncertainty chilling major business decisions. 

Trump warned of upfront economic pain associated with his vision of reshoring more physical production and reversing 80 years of international trade policy. The tariffs are the largest U.S. tax increase in decades, possibly exceeding the average per household tax cut enacted as part of the OBBBA in early July. They are the highest effective import duty rates since the 1930s or 1940s, with the exact percentage depending on how purchasing behavior shifts, according to multiple independent estimates.  

U.S. Trade Representative Jamieson Greer, one of the administration’s chief negotiators, said in an Aug. 1 interview that tariff rates would now be “pretty much set.”

“There are trade ministers who want to talk more and see how they can work in a different way with the United States, but I think that we have, we're seeing truly the contours of the president's tariff plan right now with these rates,” Greer said in an interview with CBS’s “Face the Nation.”

* Additional tariffs of 40% were imposed in a Brazil-specific executive order issued July 30, and a Sec. 301 investigation initiated on July 18 could result in additional tariffs.