On the evening of 31 July (Washington time), U.S. President Donald Trump signed an executive order that locks in a 10% benchmark “reciprocal tariff” and sets a 15% starting rate for any country running a goods-trade surplus with the United States. The new tariffs take effect in seven days, covering 92 trade partners with a ceiling rate of 41%.

Key Provisions: Three-Tier Rates, Rapid Roll-Out

According to the White House briefing, the plan keeps the two-tier structure introduced in April but raises the “surplus bracket”:

10% benchmark rate for countries with a U.S. trade deficit or roughly balanced trade;

≥15% surplus rate for any economy posting a surplus with the U.S.;

Special high rates of 19%–41% on selected nations, tied to negotiations and “national-security” factors.

Canada will face a 35% tariff after recognizing the State of Palestine. India remains at 25%, Switzerland 39%, South Africa 30%, while Thailand and Cambodia are set at 19%. U.S. Customs must update its systems within a week and begin collection, aiming to push unresolved partners back to the negotiating table during this “window.”

Context: Electoral Economics and Deficit Politics

At the signing, Trump again labeled the “long-standing massive trade deficit” a “national emergency,” invoking the 1977 International Emergency Economic Powers Act (IEEPA). The statute allows the executive branch to impose tariffs without congressional approval. Republicans hail the move as central to “revitalizing manufacturing,” while Democrats condemn it as an “abuse of executive power” likely to face more court challenges.

With the election year deficit widening, the administration’s latest tax-cut pledge needs fresh tariff revenue to plug the gap. White House economists say the 10% benchmark introduced in April already lifted annualized tariff receipts above US$100 billion; the August hike is expected to add another US$10 billion-plus.

Immediate Market and Supply-Chain Reaction

Currency markets were muted: the Canadian dollar and South African rand moved narrowly, the Thai baht eased slightly, and the Swiss franc dipped—signalling traders had largely priced in the hikes.

On the supply-chain side, “front-loading” has surfaced. South Korea’s exports jumped 5.9% year-on-year in July, with officials attributing part of the increase to firms rushing shipments of semiconductors, auto parts and other tariff-sensitive goods before 1 August.

Analysts expect slimmed margins for labor-intensive sectors such as home appliances, furniture and textiles. U.S. domestic inflation, however, is unlikely to surge, as a 10%–15% tariff passes through only partially to consumer prices—and the dollar remains strong.