On 7 August 2025, US President Trump’s new tariffs on goods from a host of countries around the world, ranging from 10% to 41%, officially took effect. The new trade regime introduces a complex mix of duties that will have diverse impacts across countries, industries and consumers. While some uncertainty remains, the higher tariff levels signal a further major shift in global trade dynamics, requiring companies to recalibrate their pricing strategies, supply chains and risk management frameworks to stay competitive and resilient.
Uneven outcomes across economies and industries
Trump’s new tariffs will result in a mixed bag of winners and losers among countries and industries. Most countries that have a trade deficit in goods with the US will continue to be charged with a 10% tariff rate. Meanwhile, countries that run a trade surplus with the US and negotiated deals with the US before the deadline generally fared better than those that did not:
- The European Union (EU), the US’ largest trading partner, reached a trade deal with the US that included a 15% all-inclusive tariff cap on EU goods, including autos and auto parts. This still represents an increase from the previous 10% rate, affecting the region’s key exports to the US including machinery and industrial equipment, pharmaceuticals, chemicals, and food and beverages.
- Japan and South Korea also secured a 15% tariff rate on their exports to the US, down from the previously threatened 25% but higher than the 10% previously in place. US consumers may face higher prices on cars, consumer electronics, and toys and games being imported from Japan and South Korea.
- The United Kingdom (UK) fares better than the EU, Japan and South Korea, as it reached a 10% tariff deal with the US. Despite the relatively moderate rate, UK exporters of various products to the US, from spirits to machinery, will still face headwinds.
- Smaller economies with significant trade surpluses with the US, particularly those in export-dependent Southeast Asia, eg Vietnam, Indonesia and the Philippines are charged with relatively high import duties of 19-20%. The high tariffs will affect a range of key Southeast Asian exports to the US such as apparel and footwear, mobile phones, furniture, electronics and agricultural products.
Several countries without a trade deal will face considerably higher tariff rates of 30-41%. Switzerland, for example, is now tariffed at 39%, potentially impacting exports of categories such as luxury watches and chocolate to the US. Other major US trading partners, including India, Mexico and Canada are still negotiating with the US as of August 2025. The US extended the trade truce with China for another 90 days until November, leaving Chinese exports with an average tariff rate of 51%.
Apart from the country-specific tariffs, the US implements import duties on several specific sectors. Steel, aluminium and copper face 50% import duties. This would result in higher production costs for a range of consumer industries in the US such as consumer appliances, automobiles, packaging, and canned food and beverages.
Inflation to stay elevated in the US and ease elsewhere
Despite an increase in tariffs, the surge in front-loading shipments in the first half of 2025 has helped shield US consumers from price spikes. Inflation in the US is expected to increase faster in the second half of 2025 and reach an annual average rate of 3.0%, on the back of the August 2025 tariff hikes while front-loading inventory runs its course. In fact, consumer price inflation in the US already started to increase from 2.4% in May 2025 to 2.7% in July. Following price increases by retailers such as Walmart and Target, consumer goods companies such as Procter & Gamble also announced 5% price increases in the US this year to offset the cost hit from tariffs.
Global growth to decelerate from H2 2025, while supply chain realignments to accelerate
As trade barriers increase, the global real GDP growth rate is expected to slow to 2.9% in 2025 and 2026, down from 3.3% in 2024. Growth prospects for both advanced and developing economies are projected to worsen in 2025 and 2026. In the US, economic momentum has slowed amid cooling demand, higher tariffs and an uncertain policy environment. While Asia Pacific and Europe saw a temporary boost in exports to the US in H1 2025, front-loaded shipments are expected to fade with higher US tariffs being set, potentially dampening economic performance in the coming quarters.
With new tariffs in effect, reshoring and supply chain diversification will receive a fresh push. Driven by some semiconductor megaprojects, foreign direct investments into the US already rose by 20.0% in 2024, while the trend will continue. Countries will also seek stronger bilateral trade deals with other partners to reduce their reliance on the US market. In July 2025, the UK and India signed a major trade deal, which will either eliminate or significantly reduce tariffs on the majority of goods traded between the two countries.
Although some uncertainty regarding a number of tariff rates and details remains, global companies now have more clarity on two things, namely tariffs are higher and growth will slow down. Adaptation to the new economic and trade regime via pricing strategies, supply chains, risk management, as well as regulatory compliance framework will continue to be high on the business agenda going forward.
Learn more about trade and other economic shifts on the global marketplace in our report, Market Volatility: Risks and Opportunities Ahead.