tariff

WASHINGTON — Canadian Prime Minister Mark Carney will meet with President Trump in the Oval Office on Tuesday at a time when one of the world’s most durable and amicable alliances has been fractured by Trump’s trade war and annexation threats.

Carney’s second visit to the White House comes ahead of a review next year of the free trade agreement, which is critical to Canada’s economy. More than 77% of Canada’s exports go to the U.S.

Trump’s talk of making Canada the 51st state and his tariffs have Canadians feeling an undeniable sense of betrayal. Relations with Canada’s southern neighbor and longtime ally haven’t been worse.

“We’ve had ups and downs, but this is the lowest point in relations that I can recall,” said Frank McKenna, a former Canadian ambassador to the United States and current deputy chairman of TD Bank.

“Canadians aren’t being instructed what to do. They are simply voting with their feet,” he said. “I talk every day to ordinary citizens who are changing their vacation plans, and I talk to large business owners who are moving reward trips away or executive business trips. There is an outright rebellion.”

There is fear in Canada over what will happen to the U.S.-Mexico-Canada Agreement. Carney is looking to get some relief on some sector-specific tariffs, but expectations are low.

“Improving relations with the White House ahead of the USMCA review is certainly an objective of the trip, but opposition parties and part of the Canadian public will criticize Prime Minister Carney if he doesn’t achieve some progress on the tariff front at this stage,” said Daniel Béland, a political science professor at McGill University in Montreal.

Trump said Monday that he anticipated Carney wanted to use the meeting to discuss trade.

“I guess he’s going to ask about tariffs, because a lot of companies from Canada are moving into the United States,” Trump, a Republican, told reporters after signing an executive order related to Alaska. “He’s losing a lot of companies in Canada.”

Carney has said the USMCA, which is up for review in 2026, is an advantage for Canada at a time when it is clear that the U.S. is charging for access to its market. Carney has said the commitment of the U.S. to the core of USMCA means that more than 85% of Canada-U.S. trade continues to be free of tariffs. He said the U.S. average tariff rate on Canadian goods is 5.6% and remains the lowest among all its trading partners.

But Trump has some sector-specific tariffs on Canada, known as Section 232 tariffs, that are having an impact. There are 50% tariffs on steel and aluminum imports, for example.

McKenna said he is hearing Canada might get some relief in steel and aluminum. “It could be 50% to 25% or agreeing on tariff-free quotas to allow the steel and aluminum to go through at last year’s levels,” he said.

The ties between the two countries are without parallel. About $2.5 billion (nearly $3.6 billion Canadian) worth of goods and services cross the border each day. Canada is the top export destination for 36 U.S. states. There is close cooperation on defense, border security and law enforcement, and a vast overlap in culture, traditions and pastimes.

About 60% of U.S. crude oil imports are from Canada, and 85% of U.S. electricity imports are from Canada.

Canada is also the largest foreign supplier of steel, aluminum and uranium to the U.S. and has 34 critical minerals and metals that the Pentagon is eager for and investing in for national security.

“The bigger prize would be getting a mutual agreement to negotiate as quickly as possible the free trade relationship,” McKenna said. “If the United States were to threaten us with the six months’ notice of termination, I think it would represent a deep chill all across North America.”

Gillies writes for the Associated Press.

Trump had imposed a 40 percent US tariff on Brazilian goods in July on top of a 10 percent one earlier even though the United States has a trade surplus with Brazil.

Brazilian President Luiz Inacio Lula da Silva has asked United States President Donald Trump to lift the 40 percent tariff imposed by the US government on Brazilian imports.

The leaders spoke for 30 minutes by phone on Monday. During the call, they exchanged phone numbers in order to maintain a direct line of contact, and President Lula reiterated his invitation for Trump to attend the upcoming climate summit in Belem, according to a statement from Lula’s office.

Shortly after, Trump posted on his Truth Social platform that he had had a good conversation with Lula.

“We discussed many things, but it was mostly focused on the Economy, and Trade, between our two Countries,” Trump said.

He added that the leaders “will be having further discussions, and will get together in the not too distant future, both in Brazil and the United States”.

The Trump administration had imposed a 40 percent tariff on Brazilian products in July on top of a 10 percent tariff imposed earlier. Lula reminded Trump that Brazil was one of three Group of 20 (G20) countries with which the US maintains a trade surplus, according to the Brazilian leader’s office.

The Trump administration has justified the tariffs by saying that Brazil’s policies and criminal prosecution of former President Jair Bolsonaro constitute an economic emergency.

Earlier this month, Bolsonaro was convicted of attempting a coup after losing his bid for re-election in 2022, and a panel of the Supreme Court sentenced him to 27 years and three months in prison.

In September, Trump and Lula had a brief encounter at the sidelines of the UN General Assembly in New York, with Trump hailing their “excellent chemistry”.

During Monday’s call, Lula also offered to travel to Washington to meet with Trump, his office said.

WASHINGTON — Supreme Court justices like to talk about the Constitution’s separation of powers and how it limits the exercise of official authority.

But Chief Justice John G. Roberts and his conservative colleagues have given no sign so far they will check President Trump’s one-man governance by executive order.

To the contrary, the conservative justices have repeatedly ruled for Trump on fast-track appeals and overturned federal judges who said the president had exceeded his authority.

The court’s new term opens on Monday, and the justices will begin hearing arguments.

But those regularly scheduled cases have been overshadowed by Trump’s relentless drive to remake the government, to punish his political enemies, including universities, law firms, TV networks and prominent Democrats, and to send troops to patrol U.S. cities.

The overriding question has become: Are there any legal limits on the president’s power? The Supreme Court itself has raised the doubts.

A year ago, as Trump ran to reclaim the White House, the justices blocked a felony criminal indictment against him related to his role in the Jan. 6, 2021, mob attack on the Capitol as Congress met to certify Trump’s defeat in the 2020 election, for which Trump was impeached.

Led by Roberts, the court ruled for Trump and declared for the first time that presidents were immune from being prosecuted for their official actions in the White House.

Not surprisingly, Trump saw this as a “BIG WIN” and proof there is no legal check on his power.

This year, Trump’s lawyers have confidently gone to Supreme Court with emergency appeals when lower-court judges have stood in their way. With few exceptions, they have won, often over dissents from the court’s three liberal Democrats.

Many court scholars say they are disappointed but not surprised by the court’s response so far to Trump’s aggressive use of executive power.

The Supreme Court “has been a rubber stamp approving Trump’s actions,” said UC Berkeley law Dean Erwin Chemerinsky. “I hope very much that the court will be a check on Trump. There isn’t any other. But so far, it has not played that role.”

Roberts “had been seen as a Republican but not a Trump Republican. But he doesn’t seem interested or willing to put any limits on him,” said UCLA law professor Adam Winkler. “Maybe they think they’re saving their credibility for when it really counts.”

Acting on his own, Trump moved quickly to reshape the federal government. He ordered cuts in spending and staffing at federal agencies and fired inspectors general and officials of independent agencies who had fixed terms set by Congress. He stepped up arrests and deportations of immigrants who are here illegally.

But the court’s decisions on those fronts are in keeping with the long-standing views of the conservatives on the bench.

Long before Trump ran for office, Roberts had argued that the Constitution gives the president broad executive authority to control federal agencies, including the power to fire officials who disagree with him.

The court’s conservatives also think the president has the authority to enforce — or not enforce — immigration laws.

That’s also why many legal experts think the year ahead will provide a better test of the Supreme Court and Trump’s challenge to the constitutional order.

“Overall, my reaction is that it’s too soon to tell,” said William Baude, a University of Chicago law professor and a former clerk for Roberts. “In the next year, we will likely see decisions about tariffs, birthright citizenship, alien enemies and perhaps more, and we’ll know a lot more.”

In early September, Trump administration lawyers rushed the tariffs case to the Supreme Court because they believed it was better to lose sooner rather than later.

Treasury Secretary Scott Bessent said the government could face up to a $1-trillion problem if the court delayed a decision until next summer and then ruled the tariffs were illegal.

“Unwinding them could cause significant disruption,” he told the court.

The Constitution says tariffs, taxes and raising revenue are matters for Congress to decide. Through most of American history, tariffs funded much of the federal government. That began to change after 1913 when the 16th Amendment was adopted to authorize “taxes on incomes.”

Trump has said he would like to return to an earlier era when import taxes funded the government.

“I always say ‘tariffs’ is the most beautiful word to me in the dictionary,” he said at a rally after his inauguration in January. “Because tariffs are going to make us rich as hell. It’s going to bring our country’s businesses back that left us.”

While he could have gone to the Republican-controlled Congress to get approval, he imposed several rounds of large and worldwide tariffs acting on his own.

Several small businesses sued and described the tariffs as “the largest peacetime tax increase in American history.”

As for legal justification, the president’s lawyers pointed to the International Emergency Economic Powers Act of 1977. It authorizes the president to “deal with any unusual or extraordinary threat … to the national security, foreign policy or economy of the United States.”

The law did not mention tariffs, taxes or duties but said the president could “regulate” the “importation” of products.

Trump administration lawyers argue that the “power to ‘regulate importation’ plainly encompasses the power to impose tariffs.” They also say the court should defer to the president because tariffs involve foreign affairs and national security.

They said the president invoked the tariffs not to raise revenue but to “rectify America’s country-killing trade deficits and to stem the flood of fentanyl and other lethal drugs across our borders.”

In response to lawsuits from small businesses and several states, judges who handle international trade cases ruled the tariffs were illegal. However, they agreed to keep them in place to allow for appeals.

Their opinion relied in part on recent Supreme Court’s decisions which struck down potentially far-reaching regulations from Democratic presidents on climate change, student loan debt and COVID-19 vaccine requirements. In each of the decisions, Roberts said Congress had not clearly authorized the disputed regulations.

Citing that principle, the federal circuit court said it “seems unlikely that Congress intended to … grant the president unlimited authority to impose tariffs.”

Trump said that decision, if allowed to stand, “could literally destroy the United States of America.” The court agreed to hear arguments in the tariffs case on Nov. 5.

A victory for Trump would be “viewed as a dramatic expansion of presidential power,” said Washington attorney Stephanie Connor, who works on tariff cases. Trump and future presidents could sidestep Congress to impose tariffs simply by citing an emergency, she said.

But the decision itself may have a limited impact because the administration has announced new tariffs last week that were based on other national security laws.

Last month, Trump administration lawyers asked the Supreme Court to rule during the upcoming term on the birthright citizenship promised by the 14th Amendment of 1868.

They did not seek a fast-track ruling, however. Instead, they said the court should grant review and hear arguments on the regular schedule early next year. If so, a decision would be handed down by late June.

The amendment says: “All persons born or naturalized in the United States and subject to the jurisdiction thereof are citizens of the United States.”

And in the past, both Congress and the Supreme Court have agreed that rule applies broadly to all children who are born here, except if their parents are foreign ambassadors or diplomats who are not subject to U.S. laws.

But Trump Solicitor Gen. D. John Sauer said that interpretation is mistaken. He said the post-Civil War amendment was “adopted to grant citizenship to freed slaves and their children, not to the children of illegal aliens, birth tourists and temporary visitors.”

Judges in three regions of the country have rejected Trump’s limits on the citizenship rule and blocked it from taking effect nationwide while the litigation continues.

The U.S. economy will be hampered by the Trump administration’s tariffs in the coming months, which along with interest rate cuts could lead to a “stagflation-lite” scenario of modestly elevated inflation and unemployment, according to the UCLA Anderson Forecast released Wednesday.

The fourth-quarter estimate also predicts that rising layoffs could lead to a recession, and if President Trump is successful in exerting more control over the Federal Reserve, a “full blown stagflation scenario becomes a more significant risk.”

“This forecast is being produced at a time when more extreme scenarios have become increasingly plausible, even though they do not yet represent our baseline outlook,” states the report by Clement Bohr, senior economist at the forecast.

UCLA’s report notes that the labor market “deteriorated notably” in June while inflation pivoted away from a path of “gradual normalization” onto a rising trajectory.

The quarterly forecast does not take into account the government shutdown that began Wednesday that could results in thousands of layoffs, but predicts third-quarter GDP growth will come in at just 1% on a seasonably adjusted basis, and it will weaken further as the full cost of the tariffs takes hold.

It expects growth to recover in the middle of next year and reach 2% by the fourth quarter, remaining there throughout 2027.

Driving the stagflation prediction is an effective tariff rate of about 11%, with the risk of future levies on pharmaceuticals and the potential lack of a resolution of the China trade dispute. The report notes the political pressure on Federal Reserve Chairman Jerome Powell and the decision by the bank to cut the federal funds rate by a quarter point in September. UCLA predicts a similar rate cut this month.

Trump’s “big beautiful” budget reconciliation bill passed in July, which included $703 billion in temporary tax cuts over the next four years starting in 2026, also will provide substantial stimulus. The Consumer Price Index is expected to peak at 3.6% in the first quarter of next year before easing.

However, the economy will be held back by a tightening labor supply caused by retiring baby boomers and restrictive immigration policies. The unemployment rate has crept up to 4.3% and is expected to peak at 4.6% early next year.

Also Wednesday, closely watched ADP Research released figures showed private-sector payrolls decreased by 32,000 in September with job growth slowing across many industries.

The billions of dollars being invested in artificial intelligence by large technology firms has helped prop up the economy, the forecast noted, which should result in productivity gains — but the capital expenditures should tail off as a “trough of disillusionment” sets in when revenue gains don’t meet expectations.

The report also expects consumer consumption to weaken following a surge in electric-vehicle purchases in the third quarter due to the expiration of federal tax credits last month.

Mark Zandi, chief economist at Moody’s Analytics, said if the government shutdown lasts a week or two it won’t have a “meaningful economic impact.” However, if it lasts for a month or more and is accompanied by mass federal layoffs, it would have a profound effect on the economy, Zandi said.

“It would wreak havoc on the financial markets as global markets and investors begin to wonder if we can govern ourselves,” he said. “That would mean higher interest rates and lower stock prices.”

President Trump again suggested that films made outside the U.S. should be subject to a 100% tariff, a move he said would help rejuvenate film production in America but that has been greeted with skepticism by many in Hollywood.

“Our movie making business has been stolen from the United States of America, by other Countries, just like stealing ‘candy from a baby,’” Trump wrote in a post Monday morning on his Truth Social platform. “California, with its weak and incompetent Governor, has been particularly hard hit! Therefore, in order to solve this long time, never ending problem, I will be imposing a 100% Tariff on any and all movies that are made outside of the United States.”

The post did not include details on how such a tariff would work or how it would be levied. The White House did not immediately respond to a request for comment.

This is not the first time Trump has floated a tariff on films made overseas to combat so-called runaway production.

In May, Trump said he was authorizing the Commerce Department and U.S. Trade Representative to begin the process of instituting a 100% tariff on “on any and all Movies coming into our Country that are produced in Foreign Lands.”

That announcement surprised studio executives, who said at the time that they had no advance notice of the move. Shortly after, California Gov. Gavin Newsom reached out to the White House, offering to work together to create a federal film tax incentive, which many in the industry have said they would prefer over a tariff.

Newsom responded to Trump’s dig by sharing on X a screenshot of a news headline detailing the recent increase in applications for California’s revamped film and TV tax credit program next to a headline about Hollywood studios’ stock performance after Trump’s initial call in May for a 100% tariff on films made outside the U.S. “Almost like we know what we’re doing,” Newsom wrote in his post. “Almost like Donald Trump absolutely does not.”

Countries including Canada, the U.K. and New Zealand have developed generous film tax credit programs, which, along with lower costs, have increasingly lured productions out of the U.S. California has been particularly hard hit by the production exodus.

In response, states have also upped their individual tax credit programs, including California, which has now more than doubled the annual amount allocated to its film and TV tax credit program and expanded its eligibility criteria.

The Motion Picture Assn., the lobbying arm of Hollywood’s major studios, was not immediately available for comment.

On Monday, California congressional representatives reiterated their support for a federal film tax incentive program to support the U.S. film business.

Noting that a tariff could have “unintended and damaging consequences,” Sen. Adam Schiff (D-Burbank) said he was “ready to work with this administration” and colleagues “on both sides of the aisle” to pass a major federal film tax credit.

The California senator is currently working on a proposal for a federal film incentive, a Schiff spokesperson said.

Rep. Laura Friedman (D-Glendale), a former film producer, also called for movement on a federal tax incentive, saying that a 100% tariff on films made overseas would only increase costs for consumers.

“I’m relieved President Trump recognizes that we are losing a signature American product: the domestic film and TV industry,” she said in a statement. “I hope the President will join us in pioneering a real solution that levels the playing field with international competition.”

MAGNOLIA, Ky. — The leafy soybean plants reach Caleb Ragland’s thighs and are ripe for harvest, but the Kentucky farmer is deeply worried. He doesn’t know where he and others like him will sell their crop because China has stopped buying.

Beijing, which traditionally has snapped up at least a quarter of all soybeans grown in the U.S., is in effect boycotting them in retaliation for the high tariffs President Trump has imposed on Chinese goods and to strengthen its hand in negotiations over a new overall trade deal.

It has left American soybean farmers fretting over not only this year’s crop but the long-term viability of their businesses, built in part on China’s once-insatiable appetite for U.S. beans.

“This is a five-alarm fire for our industry,” said Ragland, who leads the American Soybean Assn. trade group.

The situation might even be enough to test farmers’ loyalty to Trump, although the president still enjoys strong support throughout rural America. If no deal is reached soon, farmers hope the government will come through with aid as it did during Trump’s first term, but they see that as only a temporary solution. Trump said Thursday he was considering an aid package.

U.S. and Chinese officials have held four rounds of trade talks between May and September, with another likely in the coming weeks. No progress on soybeans has been reported.

Getting closer to harvest, “I’m honestly getting worried that the time is running out,” said Jim Sutter, chief executive of the U.S. Soybean Export Council.

Political pressure is growing

After Trump imposed tariffs on Chinese goods, China responded with tariffs of its own, which now total up to 34% on U.S. soybeans. That makes soybeans from other countries cheaper.

China’s retaliatory tariffs also hit U.S. growers of sorghum, corn and cotton; and even geoduck divers have been affected. But soybeans stand out because of the crop’s outsize importance to U.S. agricultural exports. Soybeans are the top U.S. food export, accounting for about 14% of all farm goods sent overseas.

And China has been by far the largest foreign buyer. Last year, the U.S. exported nearly $24.5 billion worth of soybeans, and China accounted for more than $12.5 billion. That compared with $2.45 billion by the European Union, the second-largest buyer. This year, China hasn’t bought beans since May.

With U.S. farmers hurting, the Trump administration is under growing pressure to reach a deal with China. As talks drag on, Trump appears ready to help.

“We’re going to take some of the tariff money — relatively small amount, but a lot for the farmers — and we’re going to help the farmers out a little bit,” Trump said, during what he called a transition period.

The only way most farmers survived Trump’s trade war in his first term was with tens of billions of dollars in government payments. But that’s not what most farmers want.

What farmers expect from Trump

“The American farmer, especially myself included, we don’t want aid payments,” said Brian Warpup, 52, a fourth-generation farmer from Warren, Ind. “We want to work. We work the land, we harvest the land, the crop off the land. And the worst thing that we could ever want is a handout.”

Farmers are looking to Trump for a long-term solution.

“Overwhelmingly, farmers have been in President Trump’s corner,” said Ragland, the president of the soybean association. “And I think the message that our soybean farmers as a whole want to deliver is: ‘President Trump, we’ve had your back. We need you to have ours now.’”

He said farmers appreciate the willingness to provide some short-term relief, but what they ultimately need are strong, reliable markets. “Our priority remains seeing the United States secure lasting trade agreements — particularly with China — that allow farmers to sell their crops and build a sustainable future with long-term customers,” he said.

Ragland, 39, hopes his three sons will become the 10th generation to till his 4,500 acres in Magnolia, Ky. Unless something changes soon, he worries that thousands of farmers may not survive.

Coming into this year, many farmers were just hoping to break even because crop prices were weak while their costs had only increased. Trump’s tariffs, which helped make their crops uncompetitive around the world, drove prices down further. And tariffs on steel and fertilizer sent costs up even more.

Darin Johnson, president of the Minnesota Soybean Growers Assn., said he still has faith in the Trump administration to reach a good trade deal with China.

“I think where the patience is probably wearing thin is the time,” said Johnson, a fourth-generation farmer. “I don’t think anybody thought that we were going to take this much time, because we were told 90 deals — 90 deals in 90 days.”

China’s negotiating strategy

The U.S. soybean industry grew in response to Chinese demand starting back in the 1990s, when China began its rapid economic rise and turned to foreign producers to help feed its people. Protein-rich soybeans are an essential part of the diet.

While China relies on domestic crops for steamed beans and tofu, it needs far more soybeans for oil extraction and animal feed. In 2024, China produced 20 million metric tons of soybeans, while importing more than 105 million metric tons.

American farmers have come to count on China as their biggest customer, and this has “given the Chinese a point of leverage,” Sutter said. By holding off on buying U.S. soybeans, China is seen as trying to leverage that purchasing power in the trade talks.

“I think that’s the strategy,” said Sutter of the U.S. Soybean Export Council. “I think that’s why China is targeting soybeans and other agricultural products, because they know that farmers have a strong lobby and farmers are important to the U.S. government.”

Liu Pengyu, spokesperson for the Chinese Embassy in Washington, didn’t answer specific questions on soybean purchases but urged the U.S. to work with Beijing.

“The essence of China-U.S. economic and trade cooperation is mutual benefit and win-win,” Liu said.

China turned to Brazil when Trump launched his first trade war in 2018. Last year, Brazilian beans accounted for more than 70% of China’s imports, while the U.S. share was down to 21%, World Bank data show. Argentina and other South American countries also are selling more to China, which has diversified to boost food security.

What American farmers are doing in response

U.S. farmers also are broadening their customer base, said Sutter, who recently traveled to Japan and Indonesia in search of new markets. Taiwan pledged to purchase $10 billion worth of soybeans, corn, wheat and beef in the next four years.

“There’s strong diversification efforts underway,” Sutter said. But “China is so big, it’s hard to replace them overnight.”

Farmers are working to boost consumption at home, too. Growth in biodiesel production has taken in some of the soybeans that were once exported. Other beans are crushed to produce soybean oil and soybean meal. The United Soybean Board is investing in research into the benefits of using soybeans to feed dairy cows and hogs.

But Iowa farmer Robb Ewoldt, a director with the Soybean Board, knows that such domestic uses are growing only gradually.

“We cannot replace a China in one shot,” Ewoldt said. “It’s not going to happen. We need to be realistic in that.”

Tang and Funk write for the Associated Press. Tang reported from Washington and Funk from Omaha. AP journalists Dylan Lovan in Magnolia, Obed Lamy in Warren and Steve Karnowski in Minneapolis contributed to this report.

US President Donald Trump has called on the European Union to hit China and India with tariffs of up to 100% as part of his efforts to force Russian President Vladimir Putin to end the war in Ukraine, a source familiar with the discussions has told the BBC.

He made the demand, first reported by the Financial Times, during a meeting between US and EU officials on Tuesday discussing options to increase economic pressure on Russia.

The proposal comes as Trump struggles to broker a peace deal between Moscow and Kyiv and as Russia’s strikes on Ukraine intensify.

Separately, Trump told reporters on Tuesday that he plans to talk to Putin on a call this week or early next week.

Ukraine’s main government building in Kyiv was struck by a Russian missile over the weekend – in an attack that was seen as both symbolic and a major increase of aggression by the Kremlin.

Over the weekend, attacks across the country marked the heaviest aerial bombardment on Ukraine since the war began. Ukraine said Russian forces used at least 810 drones and 13 missiles.

On Tuesday, more than 20 civilians were killed by a Russian glide bomb in the eastern Donbas region, as they queued to collect their pensions.

Speaking to reporters after the weekend bombardment, Trump said he was “not happy with the whole situation” and threatened harsher sanctions on the Kremlin.

The US president has previously threatened harsher measures against Russia, but not taken any action despite Putin ignoring his deadlines and threats of sanctions.

A highly anticipated summit between the leaders in Alaska last month ended without a peace deal.

Trump’s request to the European Union follows remarks from US Treasury Secretary Scott Bessent, who said Washington was prepared to escalate economic pressure but needed stronger European backing.

Trump also said on Tuesday that the US and India were “continuing negotiations to address the Trade Barriers” between the two countries.

He planned to speak to Indian Prime Minister Narendra Modi in the coming weeks and expects a “successful conclusion” to their trade talks, he wrote on his Truth Social platform.

China and India are major purchasers of Russian oil, which helps to keep the Russian economy afloat.

Last month, the US imposed a 50% tariff on goods from India, which included a 25% penalty for its transactions with Russia.

Although the EU has said it would end its dependency on Russian energy, around 19% of its natural gas imports still come from Russia.

If the EU does impose the tariffs on China and India it would mark a change to its approach of attempting to isolate Russia with sanctions rather than trade levies.

WASHINGTON — President Trump has asked the Supreme Court for a fast-tracking ruling that he has broad power acting on his own to impose tariffs on products coming from countries around the world.

Despite losing in the lower courts, Trump and his lawyers have reason to believe they can win in the Supreme Court. The six conservative justices believe in strong presidential power, particularly in the area of foreign policy and national security.

In a three-page appeal filed Wednesday evening, they proposed the court decide by Wednesday to grant review and to hear arguments in early November.

They said the lower court setbacks, unless quickly reversed, “gravely undermine the President’s ability to conduct real-world diplomacy and his ability to protect the national security and economy of the United States.”

They cited Treasury Secretary Scott Bessent’s warning about the potential for economic disruption if the court does not act soon.

“Delaying a ruling until June 26 could result in a scenario in which $750 billion-$1 trillion have already been collected and unwinding them could cause significant disruption.” he wrote.

Trump and his tariffs ran into three strong arguments in the lower courts.

First, the Constitution says Congress, not the president, has the power “to lay and collect Taxes, Duties, Imposts and Excises” and a tariff is an import tax.

Second, the 1977 emergency powers law that Trump relies on does not mention tariffs, taxes or duties, and no previous president has used it to impose tariffs.

And third, the Supreme Court has frowned on recent presidents who relied on old laws to justify bold new costly regulations.

So far, however, the so-called “major questions” doctrine has been used to restrict Democratic presidents, not Republicans.

Three years ago, the court’s conservative majority struck down a major climate change regulation proposed by Presidents Obama and Biden that could have transformed the electric power industry on the grounds it was not clearly based on the Clean Air Acts of the 1970s.

Two years ago, the court by the same 6-3 vote struck down Biden’s plan to forgive hundreds of millions of dollars in student loans. Congress had said the Education Department may “waive or modify” monthly loan payments during a national emergency like the Covid 19 pandemic, but it did not say the loans may be forgiven, the court said. Its opinion noted the “staggering” cost could be more than $500 billion.

The impact of Trump’s tariffs figure to be at least five times greater, a federal appeals court said last week in ruling them illegal.

By a 7-4 vote, the federal circuit court cited all three arguments in ruling Trump had exceeded his legal authority.

“We conclude Congress, in enacting the International Emergency Economic Powers Act, did not give the president wide-ranging authority to impose tariffs,” they said.

But the outcome was not a total loss for Trump. The appellate judges put their decision on hold until the Supreme Court rules. That means Trump’s tariffs are likely to remain in effect for many months.

Trump’s lawyers were heartened by the dissent written by Judge Richard Taranto and joined by other others.

He argued that presidents are understood to have extra power when confronted with foreign threats to the nation’s security.

He called the 1977 law “an eyes-open congressional grant of broad emergency authority in this foreign-affairs realm” that said the president may “regulate” the “importation” of dangerous products including drugs coming into this country.

Citing other laws from that era, he said Congress understood that tariffs and duties are a “common tool of import regulation.”

Analysts say the cuts in the Goods and Services Tax is aimed at boosting demand in the wake of 50 percent tariffs on Indian goods.

India has announced tax cuts on hundreds of consumer items ranging from soaps to small cars to spur domestic demand in the face of economic headwinds from punishing tariffs imposed by US President Donald Trump.

The measures come as the 50 percent US tariffs took effect last month, raising fears of an economic slowdown.

The Goods and Services Tax (GST) has been overhauled to simplify India’s complex four-tier system into two slabs and cut levies across sectors, in some cases by more than half, announced Finance Minister Nirmala Sitharaman.

Sitharaman said a panel, which looked into the GST reforms, approved cuts in consumer items such as toothpaste and shampoo to 5 percent from 18 percent, and on small cars, air conditioners, and televisions to 18 percent from 28 percent.

The panel, which is headed by Sitharaman, approved the two-rate structure of 5 percent and 18 percent, instead of the four rates currently.

The new tax regime makes insurance premiums, including life and health coverage, tax-free.

The finance minister insisted the GST cuts were not linked to the “tariff turmoil”, saying they were part of long-planned reforms.

Federal and state governments are estimated to lose 480 billion Indian rupees ($5.49bn) due to the cuts that will be implemented from September 22, the first day of the Hindu festival of Navratri.

40 percent tax on ‘super luxury and ‘sin’ goods

Coupled with cuts in personal tax unveiled in February, the GST reductions are expected to boost consumption in the South Asian nation, whose economy grew at an unexpectedly higher pace of 7.8 percent in the quarter to June.

“The consumption boost in lieu of the GST rate rationalisation will more than neutralise any possible revenue impact,” said Soumya Kanti Ghosh, chief economist at SBI.

“The impact on fiscal deficit will be almost insignificant or even positive.”

The panel approved a tax of 40 percent on “super luxury” and “sin” goods such as cigarettes, cars with engine capacity exceeding 1,500 cubic centimetres (91.5cu inches), and carbonated beverages, the minister said.

The move is expected to boost sales of fast-moving consumer goods firms such as Hindustan Unilever and Godrej Industries, and consumer electronics companies such as Samsung Electronics, LG Electronics, and Sony.

Carmakers such as Maruti, Toyota Motor, and Suzuki Motor are expected to be big winners. The rush to cut the tax was triggered by Prime Minister Narendra Modi’s call for greater self-reliance in India, pledging last month to lower the GST by October to counter the US tariffs of up to 50 percent.

After the tax cuts announced on Wednesday, Modi said, “The wide-ranging reforms will improve lives of our citizens and ensure ease of doing business for all, especially small traders and businesses.”

MEXICO CITY — Security, sovereignty, tariffs, trade, drugs and migration — all hot-button issues for the Trump administration and its neighbors in the Western Hemisphere — will top Secretary of State Marco Rubio’s agenda this week on his third trip to Latin America since becoming the chief U.S. diplomat.

In talks with leaders in Mexico and Ecuador on Wednesday and Thursday, Rubio will make the case that broader, deeper cooperation with the U.S. on those issues is vitally important to improving health, safety and security in the Americas and the Caribbean.

Yet, President Trump has alienated many in the region — far beyond the usual array of U.S. antagonists like Cuba, Nicaragua and Venezuela — with persistent demands, coupled with threats of sweeping tariffs and massive sanctions for not complying with his desires.

Mexico has been a focus for Trump

Mexico, the only country apart from Canada to share a border with the U.S., has been a particular target for Trump. He has demanded, and so far won, some concessions from Mexican President Claudia Sheinbaum’s government, which is eager to defuse the tariff threats.

Just a few hours before Rubio’s arrival Tuesday, Sheinbaum was set to lead a meeting of the country’s most important security forum, which brings together all 32 governors, the army, navy, federal prosecutor’s office and security commanders to coordinate actions across Mexico.

Sheinbaum had been talking for weeks about how Mexico was finalizing a comprehensive security agreement with the State Department that, among other things, was supposed to include plans for a “joint investigation group” to combat the flow of fentanyl and the drug’s precursors into the U.S. and weapons from north to south.

“Under no circumstance will we accept interventions, interference or any other act from abroad that is detrimental to the integrity, independence and sovereignty of the country,” she said Monday in her State of the Nation address marking her first year in office.

Last week, however, a senior State Department official downplayed suggestions that a formal agreement — at least one that includes protections for Mexican sovereignty — was in the works.

The official, who spoke on condition of anonymity to preview Rubio’s meetings, said sovereignty protections were “understood” by both countries without having to be formalized in a document.

Sheinbaum lowered her expectations Tuesday, saying during her morning news briefing that it would not be a formal agreement but rather a kind of memorandum of understanding to share information and intelligence on drug trafficking or money laundering obtained “by them in their territory, by us in our territory unless commonly agreed upon.”

Mexico’s president touts keeping close ties with the U.S.

Of her meeting with Rubio on Wednesday, she said it was always important to maintain good relations with the United States.

“There will be moments of greater tension, of less tension, of issues that we do not agree on, but we have to try to have a good relationship, and I believe tomorrow’s meeting will show that,” Sheinbaum said. “It is a relationship of respect and at the same time collaboration.”

To appease Trump, Sheinbaum has gone after Mexican cartels and their fentanyl production more aggressively than her predecessor. The government has sent the National Guard to the northern border and delivered 55 cartel figures long wanted by U.S. authorities to the Trump administration.

The Trump-Sheinbaum relationship also has been marked by tension, including the U.S. Drug Enforcement Administration announcing a new initiative with Mexico to combat cartels along the border that prompted an angry denial from Sheinbaum.

Despite American officials singing her praises, and constantly highlighting collaboration between the two countries, Trump glibly said last month: “Mexico does what we tell them to do.”

Migration and cartels are a focus of Rubio’s trip

In announcing the trip, the State Department said Rubio, who has already traveled twice to Latin America and the Caribbean and twice to Canada this year, would focus on stemming illegal migration, combating organized crime and drug cartels, and countering what the U.S. believes is malign Chinese behavior in its backyard.

He will show “unwavering commitment to protect [U.S.] borders, neutralize narco-terrorist threats to our homeland, and ensure a level playing field for American businesses,” the department said.

Rubio’s first foreign trip as secretary of state was to Panama, El Salvador, Guatemala and the Dominican Republic, during which he assailed Chinese influence over the Panama Canal and sealed deals with the others to accept immigrant deportees from the United States. Rubio later traveled to Jamaica, Guyana and Suriname.

The senior State Department official said virtually every country in Latin America is now accepting the return of their nationals being deported from the U.S. and, with the exception of Nicaragua, most have stepped up their actions against drug cartels, many of which have been designated foreign terrorist organizations by the U.S.

The official also said progress has been made in countering China in the Western Hemisphere.

Lee and Janetsky write for the Associated Press. AP writer María Verza in Mexico City contributed to this report.

Since President Donald Trump stared enacting tariffs earlier this year, everyone from Federal Reserve Chairman Jerome Powell to the average retail investor has been trying to figure out how they will affect the economy and whether they will reignite inflation.

So far, the economy and inflation seem to be OK. However, it’s still early, and the tariffs are constantly changing, which makes understanding the longer-term impact even more difficult.

The Trump administration and many in support of tariffs have said that they will not lead to higher inflation and have been lobbying Powell to lower interest rates. But make no mistake: President Trump has a tariff problem that could be a roadblock for a stock market hovering around all-time highs.

Somebody is going to have to bear the cost

Tariffs are a tax on imported goods, intended to make foreign goods more expensive, therefore aiding the competitive position of domestically made goods. So far, Trump’s tariffs have brought in significant revenue, including more than $29 billion in customs and excise taxes in July. In prior years, the monthly customs and excise taxes have amounted to less than $10 billion.

Official White House Photo by Tia Dufour.

However, most economists and other experts point out that someone has to foot the bill, which is why they are concerned about an eventual rebound in inflation. Up until now, inflation has remained subdued, or at least not risen like some expected, although core inflation rose in both June and July.

But the biggest indicator that higher inflation could be cooking came after a recent Producer Price Index (PPI) report. Although the PPI is not as widely followed as the Consumer Price Index (CPI), the July PPI certainly moved markets this month.

That index looks at the change in producer prices across industries and essentially serves as a gauge of wholesale inflation. What investors should think about is that if manufacturers are seeing price increases, how long until those funnel down and eventually hit consumers?

The July PPI increased 0.9% from the prior month, significantly higher than the consensus estimate of 0.2%. It was the biggest monthly increase since June of 2022, a period of extremely high inflation in the U.S.

CalBay Investments Chief Market Strategist Clark Geranen recently told CNBC: “The fact that PPI was stronger than expected and CPI has been relatively soft suggests that businesses are eating much of the tariff costs instead of passing them on to the consumer. Businesses may soon start to reverse course and start passing these costs to consumers.”

Prior to the PPI report, traders betting on changes in the federal funds rate had placed a nearly 99% chance that the Fed would cut interest rates at its September meeting. As of this writing on Aug. 19, that percentage had dropped to about 85%, according to CME Group‘s FedWatch tool.

The stock market is pricing in significant rate cuts

President Trump’s problem, in my view, is that the market is pricing in significant interest rate cuts. Between now and the end of 2026, the forward curve indicates there will be five cuts. While the market doesn’t necessarily want the Fed to have to make cuts due to some kind of severe recession or economic downturn, incremental cuts to support the economy and keep it on sound footing are expected to bolster the market, which seems to be a contributor in driving it to new all-time highs on numerous occasions this year.

Powell won’t cut rates five times if the Fed sees inflation moving higher, because that could put the economy in a stagflation scenario, where unemployment and inflation are both moving higher, making it more difficult for the Fed to achieve its dual mandate of stable prices and maximum employment.

I think the tariffs at the very least will keep the market and the Fed in a period of uncertainty, making it potentially difficult for the Fed to cut rates as much as the market hopes. With the stock market hovering near all-time highs and with a stretched valuation, I believe this dynamic could create a roadblock for the market.

WASHINGTON — President Trump has audaciously claimed virtually unlimited power to bypass Congress and impose sweeping taxes on foreign products.

Now a federal appeals court has thrown a roadblock in his path, ruling that he is violating the law.

The U.S. Court of Appeals for the Federal Circuit ruled Friday that Trump went too far when he declared national emergencies to justify imposing sweeping import taxes on almost every country.

The ruling largely upheld a May decision by a specialized federal trade court in New York. But the 7-4 appeals court decision tossed out a part of that ruling that would have overturned the tariffs immediately, allowing the Trump administration time to appeal to the U.S. Supreme Court.

The ruling was a big setback for Trump, whose trade policies have rocked financial markets, paralyzed businesses with uncertainty and raised fears of higher prices and slower economic growth.

Which tariffs did the court knock down?

The court’s decision centers on the tariffs — export taxes — Trump imposed in April on almost all U.S. trading partners and levies he imposed before that on China, Mexico and Canada.

Trump on April 2 — “Liberation Day,” he called it — imposed so-called reciprocal tariffs of up to 50% on countries with which the United States runs a trade deficit and 10% baseline tariffs on almost everybody else.

The president later suspended the reciprocal tariffs for 90 days to give countries time to negotiate trade agreements with the United States — and reduce their barriers to American exports. Some of them did — including the United Kingdom, Japan and the European Union — and agreed to lopsided deals with Trump to avoid even bigger tariffs.

Those that didn’t knuckle under — or otherwise incurred Trump’s wrath — got hit harder this month. Laos got rocked with a 40% tariff, for instance, and Algeria with a 30% levy. Trump also kept the baseline tariffs in place.

Claiming extraordinary power to act without congressional approval, Trump justified the taxes under the 1977 International Emergency Economic Powers Act, or IEEPA, by declaring the United States’ long-standing trade deficits “a national emergency.”

In February, he’d invoked the law to impose tariffs on Canada, Mexico and China, saying that the illegal flow of immigrants and drugs into the U.S. amounted to a national emergency and that the three countries needed to do more to stop it.

The U.S. Constitution gives Congress the power to set taxes, including tariffs. But lawmakers have gradually let presidents assume more power over tariffs — and Trump has made the most of it.

The court challenge does not cover other Trump tariffs, including levies on foreign steel, aluminum and autos that the president imposed after Commerce Department investigations concluded that those imports were threats to U.S. national security.

Nor does it include tariffs that Trump imposed on China in his first term — and President Biden kept — after a government investigation concluded that Beijing used unfair practices to give its technology firms an edge over rivals from the United States and other Western countries.

Why did the court rule against the president?

The administration had argued that courts had approved President Nixon’s emergency use of tariffs in the economic chaos that followed his decision to end a policy that linked the U.S. dollar to the price of gold. The Nixon administration successfully cited its authority under the 1917 Trading With the Enemy Act, which preceded and supplied some of the legal language used in the IEEPA.

In May, the U.S. Court of International Trade in New York rejected the argument, ruling that Trump’s April 2 tariffs “exceed any authority granted to the President’’ under the emergency powers law. In reaching its decision, the trade court combined two challenges — one by five businesses and one by 12 U.S. states — into a single case.

On Friday, the federal appeals court wrote in its 7-4 ruling that “it seems unlikely that Congress intended to … grant the President unlimited authority to impose tariffs.”

A dissent from the judges who disagreed with Friday’s ruling clears a possible legal path for Trump, concluding that the 1977 law allowing for emergency actions “is not an unconstitutional delegation of legislative authority under the Supreme Court’s decisions,” which have allowed Congress to grant some tariff authorities to the president.

So where does this leave Trump’s trade agenda?

The government has argued that if Trump’s tariffs are struck down, it might have to refund some of the import taxes that it’s collected, delivering a financial blow to the U.S. Treasury. Revenue from tariffs totaled $159 billion by July, more than double what it was at the same point the year before. Indeed, the Justice Department warned in a legal filing this month that revoking the tariffs could mean “financial ruin” for the United States.

It could also put Trump on shaky ground in trying to impose tariffs going forward.

“While existing trade deals may not automatically unravel, the administration could lose a pillar of its negotiating strategy, which may embolden foreign governments to resist future demands, delay implementation of prior commitments, or even seek to renegotiate terms,” Ashley Akers, senior counsel at the Holland & Knight law firm and a former Justice Department trial lawyer, said before the appeals court decision.

The president promptly said he would appeal the ruling to the Supreme Court. “If allowed to stand, this Decision would literally destroy the United States of America,” he wrote on his social media platform.

Trump does have alternative laws for imposing import taxes, but they would limit the speed and severity with which he could act.

For instance, in its decision in May, the trade court noted that Trump retains more limited power to impose tariffs to address trade deficits under another statute, the Trade Act of 1974. But that law restricts tariffs to 15% and to just 150 days on countries with which the United States runs big trade deficits.

The administration could also invoke levies under a different legal authority — Section 232 of the Trade Expansion Act of 1962 — as it did with tariffs on foreign steel, aluminum and autos. But that requires a Commerce Department investigation and cannot be imposed merely at the president’s own discretion.

Wiseman and Whitehurst write for the Associated Press.

A United States appeals court has declared President Donald Trump’s blanket tariff policy illegal, but it stopped short of pausing the wide-ranging import taxes altogether.

On Friday, the Court of Appeals for the Federal Circuit in Washington, DC, largely upheld a decision in May that found Trump had overstepped his authority in imposing universal tariffs on all US trading partners.

Trump had invoked the International Emergency Economic Powers Act (IEEPA) to justify the move, claiming that trade deficits with other countries constituted a “national emergency”.

But the appeals court questioned that logic in Friday’s ruling, ruling seven to four against the blanket tariffs.

“The statute bestows significant authority on the President to undertake a number of actions in response to a declared national emergency,” the court wrote.

“But none of these actions explicitly include the power to impose tariffs, duties, or the like, or the power to tax.”

The Trump administration is expected to appeal to the Supreme Court, and the appeals court therefore said his tariff policy could remain in place until October 14.

That was a departure from the May ruling, which included an injunction to immediately halt the tariffs from taking effect.

What is this case about?

The initial May decision was rendered by the New York-based US Court of International Trade, a specialised court that looks exclusively at civil actions pertaining to cross-border trade.

That case was one of at least eight challenges against Trump’s sweeping tariff policies.

Trump has long maintained that the US’s trading partners have taken advantage of the world’s largest economy, and he has depicted trade deficits – when the US imports more than it exports – as an existential threat to the economy.

But experts have warned that trade deficits are not necessarily a bad thing: They could be a sign of a strong consumer base, or the result of differences in currency values.

Still, on April 2, Trump invoked the IEEPA to impose 10-percent tariffs on all countries, plus individualised “reciprocal” tariffs on specific trading partners.

He called the occasion “Liberation Day“, but critics noted that the global markets responded to the tariff announcements by stumbling downward.

A few days later, as the “reciprocal” tariffs were slated to take effect, the Trump administration announced a pause for nearly every country, save China. In the meantime, Trump and his officials said they would seek to negotiate trade deals with global partners.

A new slate of individualised, country-specific tariffs was unveiled in July in the form of letters Trump posted to his social media account. Many of them took effect on August 1, including a 50-percent tariff on Brazil for its prosecution of a Trump ally, former President Jair Bolsonaro.

Just this week, on August 27, India was also slapped with a 50-percent tariff as a result of its purchase of oil from Russia.

Mexico, Canada and China, meanwhile, have faced Trump’s tariff threats since February, with Trump leveraging the import taxes to ensure compliance with his policies on border security and the drug fentanyl.

What are the arguments?

US presidents do have limited power to issue tariffs in order to protect specific domestic industries, and Trump has exercised that power in the case of imported steel, aluminium and automobile products.

But in general, the US Constitution places the power to issue taxes, including tariffs, under Congress, not the presidency.

Lawsuits like Friday’s have therefore argued that Trump has exceeded his presidential authority in levying blanket tariffs.

The appeals court decision also pointed out that the IEEPA does not give the presidency unchecked power.

“It seems unlikely that Congress intended, in enacting IEEPA, to depart from its past practice and grant the President unlimited authority to impose tariffs,” the ruling said.

The decision came in response to two lawsuits: one filed by the nonpartisan Liberty Justice Center, on behalf of five US small businesses, and the other by 12 US states.

Still, on his social media platform Truth Social, Trump appeared defiant, emphasising that his tariffs would remain in place despite the appeals court’s decision.

“ALL TARIFFS ARE STILL IN EFFECT! Today a Highly Partisan Appeals Court incorrectly said that our Tariffs should be removed, but they know the United States of America will win in the end,” he wrote.

He added that it was his view that tariffs “are the best tool to help our Workers”. He also implied he expected the Supreme Court to back him up in his appeal.

“If these Tariffs ever went away, it would be a total disaster for the Country. It would make us financially weak, and we have to be strong,” Trump said.

“Tariffs were allowed to be used against us by our uncaring and unwise Politicians. Now, with the help of the United States Supreme Court, we will use them to the benefit of our Nation.”

The ‘de minimis’ import tax exemption helped fuel home delivery and the rise of e-commerce in the US.

The US has suspended tariff exemptions for small delivery packages valued at $800 or less, ending a loophole that allowed more than one billion packages to enter the US last year without customs duties.

The loophole is due to end on Friday in the US, followed by a six-month transition period to a new tariff regime.

More than 30 countries, including Australia, Germany, Japan and Mexico, have suspended or partially suspended package shipments to the US in advance of the cost change.

Postal unions around the world say more clarity is needed about how the tariff will be calculated before they resume shipments to the US.

Global logistics giant DHL said it would not ship standard business parcels to the US until “unresolved” questions are answered regarding “how and by whom customs duties will be collected in the future”, and “how the data transmission to the US Customs and Border Protection will be carried out”.

A White House fact sheet released on July 30 stated that tariff rates on small packages will be calculated in one of two ways starting August 29.

The first option sets a flat rate of $80 to $200 per item, depending on the country of origin. The second option is based on the value of the package and the “reciprocal” tariff rate set by the White House for individual countries.

The flat rate will only be available for the next six months, after which all small packages will be subject to a tariff of 10 to 40 percent for most countries.

The White House set its “reciprocal” tariff rates in July for most trade partners, although negotiations are ongoing with key trade partners Mexico and China.

The administration of President Donald Trump says that tariffs are necessary to lower the US trade deficit, while ending the “de minimis exemption” – which lets people off on paying import tax on small items – will help slow the movement of narcotics posted across borders.

The de minimis exemption has been in place since the 1930s, but it played a critical role in the US economy after it was raised from $200 to $800 in 2015. The exemption on import tax on items valued less than $800 helped pave the way for international e-commerce by letting retailers ship directly to the customer.

Over the past decade, the number of packages crossing the US border each year rose tenfold from 129 million to 1.36 billion, according to US customs data.

The exemption also previously allowed Chinese e-commerce giants like Shein and Temu to avoid paying tariffs set on Chinese goods during Trump’s first term in office.

US tariff exemption on packages worth $800 or less due to end this week.

Mexico says it will suspend package shipments to the United States before the end of a tariff exemption for small-value packages.

The announcement on Wednesday follows similar moves by postal services from several European countries, including Germany, Denmark, Sweden, Italy, and the United Kingdom, as they await  further details from the US government.

The “de minimis” exemption has allowed packages worth less than $800 to enter the US tariff-free since 2016, but the loophole is set to expire on Friday.

The change is expected to dent the business of Chinese e-commerce platforms like Shein and Temu – which have evaded US tariffs by mailing directly to customers – but it has also created confusion for other US trade partners. Mexico said it will suspend shipments pending more details from Washington about new duties.

“Mexico continues its dialogue with US authorities and international postal organisations to define mechanisms that will allow for the orderly resumption of services, providing certainty to users and avoiding setbacks in the delivery of goods,” the government said.

Shipping giant DHL said “key questions remain unresolved, particularly regarding how and by whom customs duties will be collected in the future, what additional data will be required, and how the data transmission to the US Customs and Border Protection will be carried out.”

The White House announced plans to suspend the de minimis exemption for all countries on July 30, as part of US President Donald Trump’s wider trade war.

The exemption was previously suspended for China, Hong Kong, Mexico, and Canada due to concerns about the flow of fentanyl and other drugs over the US border.

A White House Fact Sheet released on July 30 said two schemes may be used to calculate tariffs for small packages.

The first is calculated based on the value of the package, while the second scheme sets a tariff of $80 to $200 per item.

Both rates are based on the blanket tariff set by the Trump administration for most US trade partners in August, ranging from 10 to 40 percent.

The White House has also imposed tariffs on individual sectors, such as semiconductors, steel and aluminium, vehicles and auto parts.

Mexico is still negotiating its tariff rate with the US, and has pledged to raise tariffs on Chinese goods and take tougher measures against drug cartels to secure a deal with Trump. Some goods, however, will still be covered by the 2020 free trade US-Mexico-Canada Agreement.

Washington’s move to double tariffs on many Indian goods poses a huge risk to India’s biggest export market.

The United States has doubled tariffs on many imports from India to 50 percent, as US President Donald Trump followed through on his threat to punish New Delhi for buying discounted Russian oil.

The steep tariffs, which came into force on Wednesday, risk inflicting significant damage on the Indian economy by threatening trade with its largest export market. India exported more than $87bn worth of goods to the US in 2024.

The Indian government, which has criticised the move as “unfair, unjustified and unreasonable”, estimates the tariffs will impact more than $48bn worth of exports. Indian officials warn that the new duties could make exports to the US commercially unviable, leading to job losses and slowing growth in the world’s fifth-largest economy, The Associated Press news agency reported.

The US had already slapped 25 percent tariffs on Indian goods earlier this month, as part of a wave of additional duties on goods from allies and competitors alike since Trump returned to the White House.

But the latest hike on Indian products doubles that rate, in a move to punish New Delhi for buying Russian oil, which the White House argues is indirectly funding Russia’s war on Ukraine.

More than one-third of India’s crude oil imports came from Russia last year, a trade relationship that has spurred criticism from Washington. Trump’s trade adviser, Peter Navarro, told reporters last week that “India doesn’t appear to want to recognise its role in the bloodshed” in Ukraine.

The move leaves Indian exporters facing among the highest US duties Trump has slapped on goods from overseas. Brazil is also grappling with 50 percent tariffs on many of its exports to the US.

‘Strategic shock’

Garima Kapoor, Executive Vice President and Economist at Elara Securities, told Al Jazeera that the impact would likely be felt in labour intensive industries such as textiles, garments, gems and jewellery, marine exports, some auto exports and leathers.

“All of these categories … are small and medium scale enterprise intensive. So we will see an impact being pretty severe in terms of employment.”

A New Delhi-based think tank, Global Trade Research Initiative (GTRI), says the tariffs could eliminate India’s presence in the US.

“The new tariff regime is a strategic shock that threatens to wipe out India’s long-established presence in the US, causing unemployment in export-driven hubs and weakening its role in the industrial value chain,” Ajay Srivastava, GTRI founder and former Indian trade official, told the AP.

The US has, for now, exempted some key sectors, such as pharmaceuticals and electronic goods, from additional tariffs. The Trump administration has launched investigations into these and other sectors that could yet result in further duties.

The tariffs come as the Trump administration pushes for greater access to India’s agriculture and dairy sectors, amid Indian resistance to opening the sectors to cheaper US imports.

Prime Minister Narendra Modi has said India should not yield to the pressure.

“For me, the interests of farmers, small businesses and dairy are topmost. My government will ensure they aren’t impacted,” Modi said at a rally this week in his home state of Gujarat.

India and China have agreed to step up trade flows and resume direct flights in a major diplomatic breakthrough, as the two most populous nations try to rebuild ties damaged by a 2020 deadly border clash and amid US President Donald Trump’s unpredictable foreign policy.

The two rivals also agreed to advance talks on their disputed border during Chinese Foreign Minister Wang Yi’s two-day visit to India.

The rebuilding of India-China ties coincides with friction between New Delhi and Washington, following the recent imposition of steep tariffs on India by the Trump administration.

So why did India and China decide to mend their ties, and what steps were taken to address their border dispute?

What specific points were agreed?

Discussions covered a range of issues related to withdrawing tens of thousands of troops that both countries have amassed along their Himalayan border, boosting investment and trade flows, hosting more bilateral events, and enhancing travel access.

The Asian neighbours agreed to reopen several trading routes – namely the Lipulekh Pass, Shipki La Pass and Nathu La Pass. An expert group will also be established to explore “early harvest” steps (i.e. mini-agreements that can be implemented quickly before the conclusion of a more complex deal) to improve border management, a move India had previously opposed.

In the past, India was keen to avoid a situation where China secured partial gains up front, but where its territorial integrity concerns remained unresolved. India’s opposition has accused the government of ceding territory to China.

Elsewhere, China has reportedly agreed to address India’s concerns over its export curbs on fertilisers, rare earth minerals and tunnel-boring machines, according to Indian media reports.

But Chinese Foreign Ministry Spokesperson Mao Ning, when asked about Indian media reports on the lifting of export controls, said she was not familiar with the media reports.

“As a matter of principle, China is willing to strengthen dialogue and cooperation with relevant countries and regions to jointly maintain the stability of the global production and supply chain,” she said in a media briefing on Wednesday.

New Delhi and Beijing also agreed to resume direct flights between the two countries, enhance river-sharing data and drop certain visa restrictions for tourists, businesses and journalists.

Who said what?

During his two-day trip, Wang Yi held meetings with Indian Prime Minister Narendra Modi and India’s National Security Adviser Ajit Doval, encounters that will pave the way for Modi’s first visit to China in seven years at the end of August.

“Stable, predictable, constructive ties between India and China will contribute significantly to regional as well as global peace and prosperity,” Modi posted on X after his meeting with Wang.

Meanwhile, Doval said that China and India had achieved a “new environment” of “peace and tranquillity”. He added that “the setbacks that we faced in the last few years were not in our interest”, and “delimitation and boundary affairs” had been discussed.

A readout from China’s Foreign Ministry said Wang told Doval that “the stable and healthy development of China-India relations is in the fundamental interests of the two countries’ people”.

The two sides “should enhance mutual trust through dialogues and expand cooperation”, Wang said, and should aim for consensus in areas such as border control and demarcation negotiations.

Looking ahead, Modi is scheduled to travel to China at the end of this month to take part in the summit of the Shanghai Cooperation Organisation – his first visit to the country since June 2018.

Why did relations sour in the first place?

Relations between the two countries plummeted in 2020 after security forces clashed along their Himalayan border. Four Chinese soldiers and 20 Indian soldiers were killed in the worst violence in decades, freezing high-level diplomatic relations.

The chill in relations after the deadly Ladakh clash – the first fatal confrontation between India and China since 1975 – also affected trade and air travel, as both sides deployed tens of thousands of security forces in border areas.

Following the border tensions, India imposed curbs on Chinese investments in the country. Months later, New Delhi banned dozens of Chinese apps, including TikTok, owned by China’s ByteDance, citing security concerns.

But despite the soaring tensions, the bilateral trade between the two countries did not see a drastic drop, and in fact, New Delhi’s imports from Beijing have grown to more than $100bn from $65nb in the financial year 2020-2021 as the country’s electronics and pharma industries heavily rely on raw materials from China.

On Monday, Wang said, “The setbacks we experienced in the past few years were not in the interest of the people of our two countries. We are heartened to see the stability that is now restored on the borders.”

For his part, Modi emphasised the importance of maintaining peace and tranquillity on the border and reiterated India’s commitment to a “fair, reasonable and mutually acceptable resolution of the boundary question”, his office said in a statement on Tuesday.

Why did the two sides decide to mend ties?

The geopolitical disruption caused by Donald Trump’s trade wars has helped create an opening for Asia’s leading and third-largest economies to try to mend their diplomatic and economic relations.

Indeed, the improvement in ties has accelerated since Trump increased tariffs on both countries earlier this year – particularly India, which had been pursuing a closer relationship with the United States in a joint front against China.

Moreover, India and the US have been haggling over free trade agreements for months, with Trump accusing India of denying access to American goods due to higher tariffs. China has also been locked in months-long trade negotiations with the US.

China and India increased official visits and discussed relaxing some trade restrictions and easing the movement of citizens since Modi met Chinese President Xi Jinping in Kazan, Russia last October. In June, Beijing even allowed pilgrims from India to visit holy sites in Tibet while India issued tourist visas to Chinese nationals in a sign of improving ties.

But Trump’s decision to declare a 25 percent “reciprocal” tariff on India in June over the country’s imports of Russian oil – and his move a week later to raise it again to 50 percent – have hastened dramatic diplomatic realignment. Even the US’s close allies – South Korea and Japan – have not been spared by Trump’s tariffs.

Top Trump officials have accused India of funding Russia’s war in Ukraine, with US Treasury Secretary Scott Bessent on Tuesday accusing India of “profiteering”.

But China’s imports of Russian oil are even larger than India’s. And on August 12, the US extended a tariff truce on Beijing for another 90 days – staving off triple-digit tariffs. In turn, New Delhi has accused Washington of double standards over its tariff policy.

Suhasini Haidar, an Indian journalist writing in the newspaper The Hindu, said that the rationale behind the US sanctions on India is “dubious”. “The US has itself increased its trade with Russia since Trump came to power,” she wrote.

US Treasury Secretary Bessent, however, has defended Washington’s decision not to impose secondary sanctions against China, saying Beijing “has a diversified input of their oil”. Beijing’s import of Russian oil, he said, went from 13 percent to 16 percent while India’s went from less than one percent to over 40 percent.

Trump’s claim that he secured a ceasefire between India and Pakistan has further caused anger in India, which has refused to give credit to the US president for the May 10 ceasefire that stopped the five-day war between the nuclear-armed neighbours. Trump’s hosting of the Pakistan Army’s General Asim Munir has not helped the cause, either.

US-India relations have frayed despite Modi cultivating personal ties with Trump, particularly during his first term. The Indian prime minister was Trump’s first guest in his second term in February, when he coined the slogan “Make India Great Again” (MIGA), borrowing from Trump’s “Make America Great Again” (MAGA) base. “MAGA plus MIGA becomes a mega partnership for prosperity,” Modi said.

But Trump’s repeated attacks on India have poured cold water on “the partnership”, with Indian foreign policy experts fearing the ties are headed towards uncharted territory.

“At risk is three decades of India’s economic ascent, and its careful positioning as an emerging power, shaped in the shadow of US strategic backing,” wrote Sushant Singh, a lecturer in South Asian studies at Yale University, in the Financial Times. “Trump has shredded India’s road map; it could be replaced by strategic drift, realignment or eventual rapprochement.”

The turbulence in India-US ties has forced New Delhi to repair ties with its adversary China, which supplies military equipment to Pakistan and took the side of Islamabad during the recent war.

Amid Trump’s trade war, New Delhi and Beijing have joined forces to improve trade and people-to-people contact.

The new developments may also boost relations between members of the BRICS bloc – with India and China being the group’s founding members, along with Brazil, Russia and South Africa. India and China will host the 2026 and 2027 BRICS summits, respectively. Trump has also railed against BRICS nations, warning the member nations against challenging the US dollar.