On July 7, 2025, when US President Trump signed 12 tariff letters imposing tariffs ranging from 25% to 40% on 14 countries, he probably didn't anticipate that this action would completely overturn the global trade order established since World War II. This tariff storm, dubbed a "declaration of economic war" by Brazilian President Lula, not only triggered strong countermeasures from major trading partners such as Canada, the EU, and China, but also spurred the rise of the BRICS "de-dollarization" alliance, escalating a trade war that is reshaping the global power structure.
The Strategic Pressure of Tariff Bombs: The US's Precision Strike
The Trump administration's tariff action can be described as a "precision-guided missile in the trade war." Setting a 25% tariff rate against manufacturing powerhouses like Japan and South Korea, while imposing a 40% tariff on less developed countries like Myanmar and Laos, this differentiated strategy aims to dismantle global supply chains through a "divide and conquer" approach. Even more intimidating is the "retaliatory tariff escalation clause"—if a country retaliates, the US will impose additional tariffs of the same magnitude. For example, if South Korea imposes a 10% tariff on US automobiles, the US tariff rate on South Korean cars will jump from 25% to 35%.
Anti-circumvention mechanisms directly target China's entrepot trade. With entrepot tariffs in Thailand and Cambodia rising to 36%, and Myanmar reaching 40%, traditional "indirect export" routes are essentially blocked. Simultaneously, the US "Big and Beautiful Act" increases the tax credit for semiconductor, automotive, and other industries establishing factories in the US from 25% to 35%, driving the return of manufacturing through a dual-track approach of "high tariffs + high subsidies." This "combination punch" attempts to forcibly lock the global supply chain into the US.
Specific Contents of Tariff Policy
The Trump administration's tariff policy mainly includes the following aspects:
- Baseline Tariff and Differential Tariffs:
In April 2025, the US announced the implementation of a "reciprocal tariff" policy, imposing a 10% base tariff on all countries and imposing higher tariffs, up to 46%, on countries with large trade deficits. By July, this policy had been further escalated, with Trump sending tariff notification letters to more than 170 countries worldwide, imposing differentiated tariffs ranging from 10% to 70%.
- Industry-Specific Measures:
In addition to imposing tariffs on a wide range of goods, the US also implemented stricter measures targeting specific industries. For example, on July 9, the US announced a 50% tariff on all imported copper, effective August 1, citing "national security" considerations in an attempt to revitalize the domestic copper industry.
- Anti-Circumvention Mechanisms:
The US government established strict anti-circumvention mechanisms to combat trade activities involving transshipment through third countries. Particularly targeting China, the US raised tariffs on countries like Thailand and Cambodia, which could potentially serve as transshipment routes, to 36%, essentially blocking traditional "indirect" export routes.
- Subsidies and Incentives:
To complement its tariff policy, the US "Bigger & Better" Act increased the tax credit for semiconductor, automotive, and other industries establishing factories in the US from 25% to 35%, driving the return of manufacturing through a dual-track approach of "high tariffs + high subsidies."
Major Economies' Countermeasures
Canada: As the first country to retaliate strongly, facing Trump's decision to raise tariffs to 35% on the grounds of "fentanyl smuggling," Industry Minister Melanie Joly clearly stated "no compromise," and Prime Minister Mark Carney hinted at turning to "reliable economic partners" such as the UK. When the US announced a 50% tariff on copper, Canada immediately initiated retaliatory procedures, directly impacting its annual copper exports to the US, amounting to C$4.65 billion.
Brazil: Brazil's counterattack was more symbolic. When Trump demanded that Brazil stop investigating former President Bolsonaro and threatened to impose a 50% tariff, the Lula government launched a "three-pronged attack": returning the White House letter, summoning the US chargé d'affaires, and initiating the Economic Reciprocity Act. The bill allows Brazil to impose tariffs on foreign products and suspend commercial licenses and intellectual property obligations, directly targeting the core interests of American companies. Lula's declaration at the BRICS summit, "The world doesn't need an emperor!" became a rallying cry for global retaliation.
The EU: The EU adopted a "two-track strategy" to deal with the crisis. Although it postponed the €90 billion in retaliatory measures originally scheduled to take effect on July 14 to early August, it has prepared two lists: if negotiations break down, it will impose tariffs of up to 50% on US agricultural products and automobiles. Dirk Gandura, chairman of the German Exporters Association, warned: "European interests must be reflected in the agreement; we should not be the casualties."
China: China's countermeasures exhibit characteristics of a "multi-dimensional battlefield." In addition to imposing tariffs of 10%-15% on US agricultural products, it has also deployed non-tariff weapons such as rare earth export controls and adding 16 US entities to its unreliable goods list. When the US tariffs on China reached 145%, China accelerated the promotion of local currency settlement with BRICS countries. The local currency settlement rate in Sino-Russian trade has reached 70%, and the BRICS payment system is building a parallel financial system.