U.S. Maintains High Tariffs on Key Trade Partners Amid Diplomatic Tensions

The U.S. administration has reaffirmed its commitment to the high tariff rates imposed during President Donald Trump’s first term, signaling no immediate exemptions for major trade partners despite ongoing diplomatic efforts. Senior Trade Representative Jamieson Greer emphasized during a televised interview that the tariffs are part of a broader economic strategy aimed at protecting American industries and reducing trade deficits. The firm stance has sparked concerns among U.S. business leaders and foreign governments, who warn of global supply chain disruptions and rising costs [1].

Tariff rates across key markets remain largely unchanged, with Canada facing 35%, Brazil 50%, India 25%, and rates between 20% and 39% on imports from China, Switzerland, and Taiwan. Greer stated that these rates are not open to negotiation at this stage, underscoring a shift from earlier, more flexible approaches during this year’s trade talks. In contrast to the U.S.-EU agreement, which included reduced rates in exchange for concessions, the current tariffs are framed as non-negotiable [1].

The administration has also imposed a new 39% tariff on Swiss imports—up from the initially proposed 31%—after Switzerland failed to reach a deal before the deadline. The Swiss Federal Department of Economic Affairs noted that pharmaceutical exports, which make up about 60% of Swiss exports to the U.S., are likely exempt from the new levies. However, sectors like watches, machinery, and precision instruments face heightened uncertainty [2].

Trade analysts suggest the U.S. strategy reflects a more disciplined and aggressive application of "America First" policies, designed to leverage foreign governments through tariff escalation or concessions. While the immediate imposition of higher tariffs has raised inflation concerns—evidenced by a 2.6% annual rise in the PCE price index in June—analysts predict that the effective tariff rate will likely settle near 15% by year-end, aligning with recent trade agreements that have eased some market uncertainties [2].

Notably, the U.S. has taken a more measured approach in its dealings with China, particularly in the rare earth materials sector. Greer expressed optimism about maintaining a steady supply of rare earth magnets and minerals from China, which are critical for U.S. technology and defense industries. China controls over 80% of the global supply, making stable trade in this area a strategic priority for Washington [3].

The administration has also extended talks with Mexico for 90 days, while Asia has seen mixed tariff outcomes—lower rates for advanced economies and higher rates for transshipment hubs. South Korea and Japan, for example, face 15% tariffs in exchange for significant U.S. investment [3].

Meanwhile, the administration has directed 17 pharmaceutical companies to comply with Most Favored Nation (MFN) pricing to bring drug costs in line with international standards. While the policy lacks legislative backing, it signals a broader push to lower healthcare costs domestically. Analysts, however, note that the impact may be limited if the policy only applies to the Medicaid channel, which already receives substantial rebates [2].

Gold has seen increased demand amid global trade tensions, with central bank purchases and ETF inflows supporting the metal’s price. The World Gold Council reported strong second-quarter demand, and analysts continue to recommend a mid-single-digit gold allocation in portfolios as a hedge against geopolitical risk [2].

The U.S. tariff policy reflects a broader shift toward economic nationalism, prioritizing domestic manufacturing and strategic sectors. However, the long-term sustainability of such policies remains uncertain, particularly as trade partners consider retaliatory measures and global trade flows face potential disruptions [1].

Source:

[1] Mitrade, [https://www.mitrade.com/au/insights/news/live-news/article-3-1008079-20250804](https://www.mitrade.com/au/insights/news/live-news/article-3-1008079-20250804)

[3] UBS, [https://en.wikipedia.org/wiki/Tariffs_in_the_second_Trump_administration](https://en.wikipedia.org/wiki/Tariffs_in_the_second_Trump_administration)