Trump’s new tariffs see shares worldwide slip as US dollar sinks

US president Donald Trump’s new tariff rates of up to 41 per cent on US imports from dozens of countries drew expressions of relief on 1 August, Friday, from some countries that negotiated a deal or managed to whittle down rates announced in April. Others expressed disappointment or frustration over running out of time after hitting Trump's 1 August deadline for striking deals with America's trading partners.

The new rates are due to take effect on 7 August, but uncertainty over what Trump might do next remains.

The way ahead for China, which runs the largest trade surplus with the US, is unclear after talks earlier this week in Stockholm produced no deal. Trump has yet to say if he'll extend a 12 August pause on the painfully high import duties on Chinese products.

The reaction from financial markets was muted. Benchmarks fell in Asia, with South Korea’s Kospi dropping nearly 4 per cent after the tariff rate for the US ally was set at 15 per cent.

The US dollar weakened against the Japanese yen, trading at more than 150 yen per dollar.

For Canada and Switzerland, regret and disappointment

Canadian prime minister Mark Carney said his government was disappointed by Trump’s move to raise the US tariff on goods from America's northern neighbour to 35 per cent from 25 per cent, effective Friday. Goods transshipped from unspecified other countries face a 40 per cent import duty.

Trump cited what he said was a lack of cooperation in stemming trafficking in illicit drugs across the northern border. He also slammed Canada’s plan to recognise a Palestinian state and has expressed frustration with a trade deficit largely due to US oil purchases.

“Canada accounts for only 1 per cent of US fentanyl imports and has been working intensively to further reduce these volumes,” Carney said in a statement.

Many of Canada’s exports to the US are covered by the US–Mexico–Canada Agreement and face no tariff. But steel, lumber, aluminium and autos have been subject to still higher tariffs.

Switzerland was reeling after Trump ordered a 39 per cent tariff rate for the land of luxury watches, pharmaceuticals and financial services. That was up from his original proposal of a 31 per cent duty.

“The Federal Council notes with great regret that, despite the progress made in bilateral talks and Switzerland's very constructive stance from the outset, the US intends to impose unilateral additional tariffs on imports from Switzerland,” the government said in a post on X. It said it would continue to seek a negotiated solution.

Still working on it

New Zealand officials said on Friday that they would keep lobbying Trump to cut the 15 per cent tariff he announced for their country's exports to the US, up from the original 10 per cent baseline set in April.

“We don’t think this is a good thing. We don’t think it’s warranted,” trade minister Todd McClay told Radio New Zealand. The exporter of meat, dairy, wind and farm machinery ran a USD 1.1 billion trade surplus with the US in 2024, according to US Trade Representative data.

McClay said New Zealand exporters had reported they could absorb a 10 per cent tariff or pass it on to US consumers through increased costs. A further increase would “change the equation”, he said.

Neither New Zealand nor its neighbour Australia have struck tariff deals with the Trump administration. Australian steel and aluminium exports have faced a steep 50 per cent tariff since June.

Australian trade minister Don Farrell said the 10 per cent overall tariff on Australia’s exports to the United States was a vindication of his government's “cool and calm negotiations”. But he said even that level was not justified. The US exports twice as much to Australia as it imports from its bilateral free trade partner, and Australia imposes no tariffs on US exports.

Japan watches, while Taiwan keeps trying for a deal

Japanese chief cabinet secretary Yoshimasa Hayashi was cautious in welcoming Trump’s executive order setting Japan’s tariff at 15 per cent after the two sides worked out an agreement, much to Tokyo’s relief.

“We believe it is necessary to carefully examine the details of the measure,” Hayashi said. “The Japanese government will continue to urge the US side to promptly implement measures to carry out the recent agreement, including reducing tariffs on automobiles and auto parts.”

Taiwan’s president Lai Ching-te said the self-ruled island had yet to engage in final negotiations with the US side, owing to scheduling difficulties, and that he was hopeful the final tariff rate would be reduced even further after a final round of talks.

The Trump administration lowered its tariff for Taiwan to 20 per cent from the originally proposed 32 per cent. Taiwan is a key supplier of advanced semiconductors needed for many products and technologies.

“20 per cent from the beginning has not been our goal, we hope that in further negotiations we will get a more beneficial and more reasonable tax rate,” Lai told reporters in Taipei on Friday.

The US is Taiwan’s largest ally, even though it does not formally recognise the island. “We want to strengthen US–Taiwan cooperation in national security, tech and multiple areas,” Lai said.

For some trading partners, relief that tariffs are lower than they might be

Cambodia’s deputy prime minister Sun Chanthol, who led his nation's trade talks with the United States, thanked Trump for setting the tariff rate on Cambodian goods at 19 per cent and said his country will impose zero tariffs on American goods.

The rate for Cambodia that Trump proposed in April was 49 per cent, one of the highest in the world. He said the US estimated average Cambodian tariffs on US exports at 97 per cent.

Cambodia has agreed to up purchases of US goods. Sun said it would purchase 10 passenger aircraft from Boeing in a deal they hoped to sign later this month. Several other nations had already announced similar aircraft purchase deals as part of their trade packages.

Trump had threatened to withhold trade deals from Cambodia and Thailand if they didn't end an armed conflict over border territory. The two nations agreed on a ceasefire that began 29 July, Tuesday.

Thailand also is subject to a 19 per cent tariff, a rate that its finance minister Pichai Chunhavajira said “reflects the strong friendship and close partnership between Thailand and the United States”. That was down from 36 per cent proposed earlier.

“The outcome of this negotiation signals that Thailand must accelerate its adaptation and move forward in building a stable and resilient economy, ready to face global challenges ahead,” he said.

For Bangladesh, a new 20 per cent tariff warded off an earlier threat of a 35 per cent import duty for the South Asian exporter of garments and other light manufactured goods. “That’s good news for our apparel sector and the millions who depend on it,” said Khalilur Rahman, the country's national security advisor and lead negotiator.

"We’ve also preserved our global competitiveness and opened up new opportunities to access the world's largest consumer market,” Rahman said. “Protecting our apparel industry was a top priority, but we also focused our purchase commitments on US agricultural products. This supports our food security goals and fosters goodwill with US farming states.”

World shares retreated on Friday following choppy trading on Wall Street that saw more losses and as investors assess President Donald Trump's order imposing new tariffs on 68 countries and the European Union starting in seven days.

Trump's order, which pushed back the tariff deadline earlier set on 1 August, has injected a new dose of uncertainty in an already uncertain process.

In early European trading, Germany's Dax fell 1.5 per cent to 23,697.31. Britain's FTSE 100 dropped 0.7 per cent to 9,068.97. In Paris, the CAC 40 shed 1.6 per cent to 7,647.56.

The future for S&P 500 was down 0.8 per cent and that for the Dow Jones Industrial Average was also 0.8 per cent lower.

Japan's Nikkei 225 slid 0.7 per cent to 40,799.60 while South Korea's Kospi tumbled 3.9 per cent to 3,119.41.

Hong Kong's Hang Seng index shed 1.1 per cent to 24,507.81, while the Shanghai Composite slipped 0.4 per cent to 3,559.95.

Australia's S&P ASX 200 shed 0.9 per cent to 8,662, India's BSE Sensex lost 0.4 per cent to 80,837.19 and Taiwan's TAIEX slid 0.5 per cent to 23,434.38.

“Trump's new tariff directive, signed behind closed doors just ahead of the 1 August deadline, slaps a new floor under global trade costs: a 10 per cent minimum rate for nearly all partners, with surcharges of 15 per cent or higher for surplus nations,” with Canada drawing particular ire, Stephen Innes of SPI Asset Management said in a commentary.

“This wasn't just an update — it was a structural rewrite. The average US tariff jumps from 13.3 per cent to 15.2 per cent, a seismic shift from the 2.3 per cent average before Trump retook office. This reshapes the cost calculus for everything from semiconductors to copper pipes,” he added.

Benjamin Picton, senior market strategist at Rabo Bank, said in a commentary about the US tariffs, “The USA is cherry-picking high value-add industry for its own economy while forcing trading partners to grant preferential market access for its exports and supply it with cheap imports. Make no mistake, this is imperial trade.”

On Wall Street on 31 July, Thursday, stocks capped the trading day with more losses after an early big tech rally faded and a healthcare sector pullback led the market lower.

The S&P 500 fell 0.4 per cent, its third straight decline. The benchmark index, which is just below the record high it set Monday, notched a 2.2 per cent gain for the month of July and is up 7.8 per cent so far this year.

The Dow Jones Industrial Average lost 0.7 per cent and the Nasdaq composite closed less than 0.1 per cent lower.

Roughly 70 per cent of stocks in the S&P 500 lost ground, with health care companies accounting for the biggest drag on the market.

Health care stocks sank after the White House released letters asking big pharmaceutical companies to cut prices and make other changes in the next 60 days. Eli Lilly & Co. fell 2.6 per cent, UnitedHealth Group slid 6.2 per cent and Bristol-Myers Squibb dropped 5.8 per cent.

Gains by some big technology stocks with hefty values helped temper the impact of the broader market's decline.

Meta Platforms surged 11.3 per cent after the parent company of Facebook and Instagram crushed Wall Street's sales and profit targets even as the company continues to pour billions of dollars into artificial intelligence.

Microsoft climbed 3.9 per cent after posting better results than analysts expected. The software pioneer also gave investors an encouraging update on its Azure cloud computing platform, which is a centrepiece of the company's artificial intelligence efforts.

Big Tech companies have regularly been the driving force behind much of the market's gains over enthusiasm for the future of artificial intelligence.

In other dealings on Friday, US benchmark crude oil added 15 cents to USD 69.41 per barrel, while Brent crude, the international standard, also rose 15 cents to USD 71.85 per barrel.

The US dollar fell to 150.55 Japanese yen from 150.67 yen. The euro rose to USD 1.1419 from USD 1.1421.