The Tariff Times: Japan, The E.U., and 15% is the new “new”

White House: New Tariffs to go into effect August 7th

Where are we now?

• The August 1st extension deadline for the original 90 day pause on the Liberation Day tariffs is here.
• The President had been adamant that no additional extensions will be granted. …Sorta.
• Notable nations/blocs with a “deal” and their subsequent reciprocal tariff rates:
  • Japan = 15%
  • The EU = 15%
  • South Korea = 15%
  • Vietnam = 20%
  • Indonesia = 19%
• Notable nations/blocs without a “deal” and their subsequent reciprocal tariff rates (see Annex I):
  • Bangladesh = 20%
  • Cambodia = 19%
  • India = 25%
  • Sri Lanka = 20%
  • Taiwan = 20%
  • Switzerland = 39%
    • Note: This is really not good for the Swiss Watch industry (Christopher Ward, Hamilton, Tissot, etc.)
• Also, anything deemed to have been “transshipped” via a different country (in an attempt to avoid higher tariffs) will get hit with 40%.
• This all goes into effect on August 7th, to give U.S. Customs/Border Control time to implement the new rates.

Between Japan (15%) and Switzerland* (39%) …keep an eye on watch prices.
(*No deal yet. The Swiss are not in the EU.)

Isn’t this less than what they rolled out back in April?

• Mostly but not entirely. Yet…
• The new effective tariff rate (standard tariffs + new reciprocal tariffs) is now 18.4%.
• Last year, it was 2.4%, and it hasn’t been this high since the 1930s.
• 15% is also an increase over the mostly global (with a few notable exceptions) reciprocal 10% baseline “pause” we’ve been on since financial markets gagged on that big chart in the Rose Garden.
• 15% – 20% seems to be the new baseline/”floor.”
• Here’s a running list of all the tariffs and threatened tariffs.

Okay, so what about China?

• That deadline is August 12th (90 days after the 145% to 30% de-escalation.)
• The Treasury Secretary seems confident they’ll get something done.

China is one of the major exceptions to this new roll out of adjusted tariffs. 
Their deadline is August 12th.

What else?

• As none of these “deals” are codified by Congress in detailed trade laws, it’s hard to tell what any of this means. For everyone.
• There have been instances of nations with a “deal” being surprised by what the President would later say that deal actually is.
• Or to put it another way, it has sometimes gone a bit like this:
  • “We have a deal!” – both parties
  • “Here’s what the deal is.” – U.S.A.
  • “Wait what? That’s not what we agreed to.“ – the other guys
• But that axe swings both ways, as trading partners can say they’re gonna invest heavily in the U.S., but that doesn’t always materialize. See this example from the first Trump administration.

Many (but not all) trade agreements go through Congress.
Not so for the reciprocal tariffs, which are Executive Orders.

Brand/store info, chatter, and other observations:

• The De Minimis Exemption is Dead: Not just dead for Chinese imports any more. It’s dead for everyone, everything, everywhere. No longer will something sail into the U.S. duty/tariff free if it’s under $800. That’s over. Bye-bye.
• Amazon: A Wall Street Journal analysis found prices increased on Amazon for lots of stuff, despite CEO Andy Jassy saying they had not “seen prices appreciably go up”.
  • That word “appreciably” is doing a lot of work for Uncle Andy.
• Wal Mart: They’ve started to raise prices on a number of categories of goods, which they warned about back in May.
• Bespoke Post, Lorier, and Oliver Wicks are the latest brands to send out customer emails saying they have to raise prices.
• Various other Dappered-y Brands: Prices have been quietly, but noticeably going up on lots of things.
  • For example, J. Crew Factory’s Navy Wool-Blend Blazer:

• • 2024: It went on steal alert for $150.
    • (“normal” price range back then felt like  ~$175 – $199)
  • 2025: The price is now $278 (at post time)
    • To be fair, one of their occasional 20% off $150+ deals would drop it to $222.40.
  • While one of the first to reflect the new reality, J. Crew/J. Crew Factory are far from the only ones to be impacted.

What about that court case which blocked the tariffs?

• The tariffs were reinstated pending appeal and “likely will remain in effect for at least the next two months.” – WSJ
• The U.S. Court of Appeals for the Federal Circuit has started hearing oral arguments, and it doesn’t appear to be going well for the Administration.
• If the reciprocal tariffs get struck down, the case could go next to the Supreme court.
• But the Administration also has other legal avenues to pursue for implementing tariffs.

 

Worth a listen for those interested:

And worth a watch as well: