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A snapshot of Trump’s latest Tariff Announcement

11 April 2025

Following President Trump’s announcement from the White House Rose Garden on 2 April 2025 imposing a minimum tariff of 10% on all products (other than those specifically exempted) imported into the United States of America and higher tariffs for specific countries that had thrown world trade and stock markets into disarray, Trump announced on 9 April 2025, a substantial rollback of his proposal to implement higher tariff rates.
 
What can be discerned from Trump’s latest move on the tariffs front is as follows: 
  1. The baseline of 10% tariff will remain in place on goods imported from all countries, except goods that are specifically exempted and those imported from China, Canada and Mexico. Although the impact of this rate may reduce the impact compared to prior measures, its uniform application across all countries introduces a structural cost increase for U.S. importers. In particular, industries that depend heavily on imported raw materials or finished goods are likely to face higher operating costs. At least a part of these increased costs are expected to be passed on to consumers in the form of higher retail prices. Although the measure is intended to protect domestic industries and encourage re-shoring of manufacturing activities to the U.S., it may instead contribute to inflation in the near term. 

  2. The rollback of the further tariff increases is only for a 90-day period, with the notable exception of China, Canada and Mexico. While this 90-days suspension may provide short-term relief to global markets and affected industries, a significant degree of uncertainty remains. Businesses, investors, and countries remain unclear as to whether the suspended tariffs will ultimately be implemented, modified, or withdrawn. Such unpredictability complicates the global economy such as commercial planning, investment decisions, and long-term supply chain strategies. 

  3. The trade dispute with China has escalated sharply, with Trump imposing a 125% tariff on Chinese imports. This represents an unprecedented increase and signals a substantial intensification of the bilateral trade dispute. Interestingly, it also invites retaliatory measures from China, which  China replied with an 84% tariff1, heightening geopolitical and commercial tensions between the world’s two largest economies. In an immediate response to China’s countermeasures, Trump has increased the tariff on Chinese imports to 145%. 

  4. The 25% tariff on imports from Canada and Mexico remain unchanged despite the existence of the United States–Mexico–Canada Agreement (“USMCA”). In response, Canada has already taken retaliatory action. Starting 9 April 2025, Canada imposed its own 25% tariffs on certain vehicles imported from the U.S., specifically those that either do not meet USMCA rules or contain parts that are not from Canada or Mexico2. 

  5. A senior adviser has indicated that these tariffs are being used as leverage to gain concessions from other countries. Reports suggest that around 70 nations have reached out to the U.S. for discussions, hoping to secure exemptions or better trade terms3. 
In light of the above, the comments in our Alert issued on 3 April 2025 are now qualified by the 90-day deferment of the 24% elevated tariff that was to be imposed on Malaysia from 10 April 2025.4
 
Comments
 
Applying tariffs to all countries is a broad and blunt approach to the global economy. Unlike trade remedies which aimed at addressing specific unfair practices, this blanket measure applies uniformly across all countries and practically all product types, disregarding the nature of trade relationships between countries or the importance of the goods. Because of this, it can create unexpected problems, especially for industries that rely on global supply chains. Car manufacturers5, for example, are worried about higher costs and lower profits, since many of their products or parts come from abroad. These added costs may be passed on to consumers through higher prices.
 
The strong rebound of the U.S. stock markets on 9 April 2025 following Trump’s announcement on the deferment of the higher tariff rates proved to be short-lived as the U.S. stock markets tanked again the next day as the euphoria of the 90-days suspension gave way to the realisation that the future of world trade and the global economy remain cloudy until  President Trump provides greater clarity on his long-term plans for the higher tariffs.
 
Will President Trump abolish or dial down on the scope of the higher tariffs after the negotiating teams from various countries have completed their negotiations with the most powerful leader in the world?
 
Alert by Mr. Manshan Singh (Partner), Ms. Ho Pui Yan (Associate) and Ms. Lim Shu Yi (Associate) of the Anti-Dumping and Trade Remedies Practice Group of Skrine.
 

This alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. For further information, kindly contact skrine@skrine.com.

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