WASHINGTON, D.C. — The United States will impose a 25% tariff on goods from India, plus an additional import tax because of India’s purchasing of Russian oil, President Donald Trump said Wednesday.
India “is our friend,” Trump said on his Truth Social platform, but its tariffs on U.S. products “are far too high.”
The Republican president added India buys military equipment and oil from Russia, enabling Moscow’s war in Ukraine. As a result, he intends to charge an additional “penalty” starting on Friday as part of the launch of his administration’s revised tariffs on multiple countries.
Trump told reporters on Wednesday the two countries were still in the middle of negotiations on trade despite the tariffs slated to begin in a few days.
“We’re talking to India now,” the president said. “We’ll see what happens.”
The Indian government said Wednesday it’s studying the implications of Trump’s tariffs announcement.
India and the U.S. have been engaged in negotiations on concluding a “fair, balanced and mutually beneficial” bilateral trade agreement over the last few months, and New Delhi remains committed to that objective, India’s Trade Ministry said in a statement.
Trump’s view on tariffs
Trump’s announcement comes after a slew of negotiated trade frameworks with the European Union, Japan, the Philippines and Indonesia — all of which he said would open markets for American goods while enabling the U.S. to raise tax rates on imports. The president views tariff revenues as a way to help offset the budget deficit increases tied to his recent income tax cuts and generate more domestic factory jobs.
While Trump has effectively wielded tariffs as a cudgel to reset the terms of trade, the economic impact is uncertain as most economists expect a slowdown in U.S. growth and greater inflationary pressures as some of the costs of the taxes are passed along to domestic businesses and consumers.
There’s also the possibility of more tariffs coming on trade partners with Russia as well as on pharmaceutical drugs and computer chips.
Kevin Hassett, director of the White House National Economic Council, said Trump and U.S. Trade Representative Jamieson Greer would announce the Russia-related tariff rates on India at a later date.
Tariffs face European pushback
Trump’s approach of putting a 15% tariff on America’s long-standing allies in the EU is also generating pushback, possibly causing European partners as well as Canada to seek alternatives to U.S. leadership on the world stage.
French President Emmanuel Macron said Wednesday in the aftermath of the trade framework that Europe “does not see itself sufficiently” as a global power, saying in a cabinet meeting that negotiations with the U.S. will continue as the agreement gets formalized.
“To be free, you have to be feared,” Macron said. “We have not been feared enough. There is a greater urgency than ever to accelerate the European agenda for sovereignty and competitiveness.”
Seeking a deeper partnership with India
Washington has long sought to develop a deeper partnership with New Delhi, which is seen as a bulwark against China.
Indian Prime Minister Narendra Modi has established a good working relationship with Trump, and the two leaders are likely to further boost cooperation between their countries. When Trump in February met with Modi, the U.S. president said that India would start buying American oil and natural gas.
The new tariffs on India could complicate its goal of doubling bilateral trade with the U.S. to $500 billion by 2030. The two countries have had five rounds of negotiations for a bilateral trade agreement. While U.S. has been seeking greater market access and zero tariff on almost all its exports, India has expressed reservations on throwing open sectors such as agriculture and dairy, which employ a bulk of the country’s population for livelihood, Indian officials said.
The Census Bureau reported that the U.S. ran a $45.8 billion trade imbalance in goods with India last year, meaning it imported more than it exported.
At a population exceeding 1.4 billion people, India is the world’s largest country and a possible geopolitical counterbalance to China. India and Russia have close relations, and New Delhi has not supported Western sanctions on Moscow over its war in Ukraine.
The new tariffs could put India at a disadvantage in the U.S. market relative to Vietnam, Bangladesh and, possibly, China, said Ajay Sahai, director general of the Federation of Indian Export Organisations.
“We are back to square one as Trump hasn’t spelled out what the penalties would be in addition to the tariff,” Sahai said. “The demand for Indian goods is bound to be hit.”
While the United States’ aggressive tariff strategies continue to dominate global trade headlines, a quieter but increasingly tense economic confrontation is unfolding between China and the European Union — one that could have lasting implications for global markets, supply chains, and industrial policy.
Behind the scenes, tit-for-tat measures between Brussels and Beijing have intensified in recent months, exposing a fractured relationship marred by accusations of unfair trade practices, overcapacity, and geopolitical divergence.
The European Union recently restricted Chinese companies from participating in public tenders for medical devices, citing concerns over procurement transparency and national security. China quickly retaliated by imposing import curbs on European medical products, marking a fresh escalation in the long-simmering standoff.
Simultaneously, China made good on its long-threatened tariffs on EU-made brandy, a move widely interpreted as a retaliatory response to the EU’s 2024 imposition of anti-subsidy duties on Chinese electric vehicles (EVs).
Both sides have since ramped up their criticism and countermeasures, with diplomatic language growing sharper and economic cooperation increasingly fraught.
“EU-China trade relations are now quite poor,” said Marc Julienne, director of the Center of Asian Studies at the French Institute of International Relations (Ifri), speaking to CNBC earlier this week. “What was once a domain of great opportunity and enthusiasm has now become more about managing risk.”
This sentiment is echoed across European policy circles. Grzegorz Stec, a senior analyst at the Mercator Institute for China Studies, noted that the two economies are increasingly on a collision course, especially on issues like industrial policy, trade diversion, and market access.
“Beijing’s increasingly urgent need to export contradicts the EU’s desire to protect its own industrial base,” Stec said, referencing China’s ongoing struggle with overcapacity and sluggish domestic demand. These structural issues have compelled Chinese exporters to look outward, often at prices and volumes that European officials say distort competition and threaten homegrown industries.
Beijing’s recent tariffs on European brandy are being described by analysts as “economic weaponization” — part of a broader strategy to pressure Brussels into scaling back scrutiny and protectionist measures. The Chinese investigation into European spirits began shortly after the EU initiated its own probe into Chinese EV subsidies.
This pattern of retaliatory trade policy is not new in global geopolitics, but the stakes are growing. Europe’s trade deficit with China continues to widen, and concerns are mounting over the environment for foreign firms in China, which many say has become increasingly restrictive and opaque.
Interestingly, some experts argue that U.S. tariffs under President Donald Trump could have served as a catalyst for closer EU-China cooperation. Instead, both parties have grown more entrenched in their respective trade positions.
“If anything, the EU and China should have used the U.S. pressure as a common ground for negotiation,” Julienne said. “But instead, geopolitical divergence and mutual distrust prevailed.”
Jean-Marc Fenet, senior fellow at the ESSEC Institute for Geopolitics & Business, believes part of the reason is that China feels it has already ‘won’ its tariff standoff with Washington, reducing the urgency to compromise with Brussels.
“Beijing no longer sees the need for a unified front with the EU,” Fenet said. “In fact, there’s growing concern in Beijing that the EU may fall in line with Washington’s harder stance on China.”
The China-U.S. trade framework agreement announced in June — covering contentious areas such as rare earth exports and technology regulations — only reinforced that perception. Earlier this year, Beijing had already moved to restrict exports of critical rare earth elements and magnets, leveraging its dominance in materials vital to the automotive, energy, and defense sectors.
With an upcoming EU-China Summit scheduled for July 24 in Beijing, hopes are low for a breakthrough. Sources confirm that European Commission President Ursula von der Leyen and Chinese President Xi Jinping are expected to meet, but even senior officials are bracing for a tense and possibly unproductive dialogue.
“The significant hardening of the European Commission’s trade stance, and the bolstering of protectionist tools in recent years, suggest more frictions ahead,” Fenet said.
Indeed, trade experts warn of a long and bumpy road for EU-China relations. As the EU pursues greater economic autonomy and retools industrial policy to protect key sectors, Beijing is unlikely to ease its assertive stance, particularly as it looks to export its way out of structural economic stagnation.
“The overcapacity issues, paired with China’s use of rare earths as leverage in EV tariff talks, suggest that this trade conflict has only just begun,” said Stec.
The brewing tension between two of the world’s largest economies — the EU (GDP $19 trillion) and China (GDP $17.5 trillion) — threatens to disrupt multiple industries, from luxury goods and automobiles to healthcare and green technology.
Companies operating across both markets may face regulatory uncertainty, new tariffs, and a rising compliance burden. Investor sentiment may also sour, particularly in sectors heavily reliant on EU-China trade flows.
As of July 11, European stock markets remain volatile, with the Euro Stoxx 50 down 0.8% over the past week. Chinese markets, meanwhile, have been weighed down by weak domestic data and trade anxiety, with the Shanghai Composite dipping 1.2% this week.
Detroit, MI – Ford Motor Co. is facing a persistent supply shortage of rare-earth magnets—critical components for EV motors and various automotive systems—despite a recent U.S.–China agreement intended to ease export restrictions. The situation remains dire, forcing Ford into a “hand-to-mouth” rhythm to keep its production lines running.
Last May, Ford halted production of its Explorer SUV at the Chicago Assembly plant for several days after its magnet supplier ran dry. These powerful rare-earth magnets—made from metals like neodymium, dysprosium, and terbium—are essential not only for EV motors but also for braking, steering, and seating systems.
Lisa Drake, Ford’s VP of Industrial Planning for EVs, remarked that the company “still needs to move things around” to avert fresh shutdowns, admitting the operation remains “hand to mouth”. CEO Jim Farley echoed the concern in a recent Bloomberg interview: “It’s day-to-day… We have had to shut down factories. It’s hand-to-mouth right now.”
Since April, China—which dominates 90% of global rare-earth magnet refinement—has enforced stricter export licensing rules on these metals, requiring detailed disclosures and slowing approval processes, WSJ reported.
Although a temporary six-month agreement was struck in June to accelerate exports, affected automakers—including Ford—report little meaningful relief. Many export licenses continue to dribble in, primarily favoring larger, state-affiliated firms.
Ford’s stock slipped nearly 1% on news of the supply disruptions—though year-to-date gains remain near 7%. At the same time, domestic mining and processing firms like MP Materials (NYSE: MP) and Freeport-McMoRan (NYSE: FCX) enjoyed surging stock prices as investors bet on a long-term shift toward U.S. production of critical minerals.
Ford’s CFO recently disclosed that design improvements could cut annual rare-earth usage by up to 500,000 pounds, and the new hybrid systems already consume 50% less neodymium per vehicle. While the automaker is mapping raw-material sourcing directly back to mines, those efforts will take years to offset immediate shortages.
Analyst Michelle Krebs of AutoForecast Solutions warns, “Every OEM assumed they could scale battery production linearly. The rare-earth situation proves how quickly geopolitical factors can disrupt those plans”.
Continued supply volatility; potential further single-shift delays or plant pauses if authorization backlogs persist. Push for non-Chinese magnet sources (Canada, Australia, U.S.) and increased recycling, but industrial-scale capacity remains 2–3 years off. Deep investment in domestic mining and refining will diminish supply chain chokepoints—but remains a strategic and political challenge.
Ford remains committed to its 2 million EVs-per-year goal by 2026, but acknowledges that resolving this bottleneck is crucial for meeting that target.
The magnet logjam is more than an automotive hiccup—it’s a flashpoint in global industrial policy. “China’s dominance in rare earths is a geopolitical weapon,” says an analyst at the Center for Strategic and International Studies. “There’s no quick fix—this is a wake-up call”.
Even with diplomatic progress and asset-light design pivots, Ford remains locked in a daily scramble for magnets that may define its EV production trajectory—and automobile manufacturing’s broader global supply resilience.
Former U.S. President Donald Trump is intervening in current transatlantic trade negotiations to bolster American oil giants by pressuring the European Union to relax its landmark climate regulations—moves that threaten to weaken global environmental commitments.
In recent trade discussions ahead of the July 9 deadline, Trump officials have floated proposals aimed at diluting the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) and methane emissions mandates, both central to Brussels’ aggressive climate stance. These rules impose rigorous environmental and human rights oversight on companies and require verified methane caps for fossil fuel imports by 2030—a move the U.S. energy sector says could drive them out of the European market.
Executives from ExxonMobil, including CEO Darren Woods, explicitly lobbied Trump to use trade leverage against Brussels. Private sources confirm U.S. negotiators are now urging the EU to soften or delay these regulations in exchange for tariffs relief.
Trump has dangled a steep 50% tariff threat on EU exports if the EU doesn’t step back on its climate rules—a key tactic in forcing concessions. Meanwhile, Brussels, eager to avert a damaging tariff spike, is considering trade-off proposals such as increasing imports of U.S. LNG and adjusting methane oversight frameworks to qualify U.S. gas under equivalency schemes.
This duel underscores a broader conflict between climate ambition and trade power: Trump’s approach aims to fuse energy dominance with economic leverage, while the EU seeks to uphold its Green Deal principles.
Following reports of these contentious trade maneuvers, European carbon credit futures slipped approximately 1.2%, signaling investor anxiety over potential dilution of climate policy. Analysts caution that even talk of loosening methane or sustainability rules could erode confidence in the EU’s green market framework—while bolstering U.S. oil and gas margins temporarily.
Environmental groups have sounded the alarm, labeling the U.S. push “a direct attack on the Paris Agreement,” warning that any weakening of EU standards could unravel global climate governance.
EU Commission President Ursula von der Leyen has reaffirmed the EU’s “sovereign right” to set its own environmental rules and cautioned against ceding core Green Deal elements just to avert U.S. tariffs.
Yet internal EU divisions bite: some leaders argue for flexibility to secure broader trade benefits, while others—like France’s Stéphanie Yon-Courtin—warn that concessions risk setting a dangerous precedent on environmental sovereignty.
EU negotiators will decide whether to carve out limited flexibilities—such as pragmatic methane measurement standards or delayed rollout of the CSDDD—to soften U.S. trade pressure. If no deal is struck, Brussels is reportedly readying retaliatory tariffs worth up to €95 billion. This clash may redefine transatlantic relations—showing whether trade imperatives outweigh climate leadership at a critical geopolitical juncture.
Trump’s alignment with Big Oil in EU trade talks reveals more than one-off bargaining—it spotlights a strategic confrontation over whether commercial leverage can override environmental clarity. The outcome will signal how far Washington and Brussels are willing to bend in balancing market access against the planet’s future.
Shell rebuffed a Wall Street Journal report that said the oil giant was in early talks to take over rival company BP.
“This is further market speculation. No talks are taking place,” the company said in a statement Wednesday.
An agreement between the two rival oil corporations would be the largest oil deal in modern times, with BP valued around $80 billion, the WSJ reported. The report about a potential deal comes as geopolitical tensions threaten to jeopardize the broader oil and gas market.
“As we have said many times before we are sharply focused on capturing the value in Shell through continuing to focus on performance, discipline and simplification,” Shell said in adifferent statement. BP declined to comment.
BP stock had risen as much as 10.5% Wednesday after news of prospective talks, though the rise has tapered.
Bloomberg first reported on the speculation of a takeover in May. BP has been struggling, underperforming Shell by 17% over the past year and 84% over the past 5 years, according to a RBC research report last month. But Shell stands to benefit from BP’s liquified natural gas portfolio, and the RBC report said Shell still needs to work on its energy transition strategy as well as the longevity of its crude oil and natural gas portfolio.
BP axed thousands of jobs in January and cut its investments in clean energy a month later, aiming to grow its oil and gas production instead. The company’s stock plummeted almost 16% over 2024 as it floundered and attempted to ease investors’ concerns over its energy transition strategy.
One day after House Republicans approved an expensive package of tax cuts that rattled financial markets, President Trump pivoted back to his other signature policy priority, unveiling a battery of tariff threats that further spooked investors and raised the prospects of higher prices on American consumers.
For a president who has fashioned himself as a shrewd steward of the economy, the decision to escalate his global trade war on Friday appeared curious and costly. It capped off a week that saw Mr. Trump ignore repeated warnings that his agenda could worsen the nation’s debt, harm many of his own voters, hurt the finances of low-income families and contribute far less in growth than the White House contends.
The tepid market response to the president’s economic policy approach did little to sway Mr. Trump, who chose on Friday to revive the uncertainty that has kept businesses and consumers on edge. The president threatened 50 percent tariffs on the European Union, and a 25 percent tariff on Apple. Other tech companies, he said, could face the same rate.
Since taking office, Mr. Trump has raced to enact his economic vision, aiming to pair generous tax cuts with sweeping deregulation that he says will expand America’s economy. He has fashioned his steep, worldwide tariffs as a political cudgel that will raise money, encourage more domestic manufacturing and improve U.S. trade relationships.
But for many of his signature policies to succeed, Mr. Trump will have to prove investors wrong, particularly those who lend money to the government by buying its debt.
So far, bond markets are not buying his approach. Where Mr. Trump sees a “golden age” of growth, investors see an agenda that comes with more debt, higher borrowing costs, inflation and an economic slowdown. Investors who once viewed government debt as a relatively risk-free investment are now demanding that the United States pay much more to those who lend America money.
That is on top of businesses, including Walmart, that say they may have to raise prices as a result of the president’s global trade war. The onslaught of policy changes has also left the Federal Reserve frozen in place, unsure as to when the economy will call for lower interest rates in the face of persistent uncertainty. As a result, borrowing costs for mortgages, car loans and credit cards remain onerous for Americans.
Still, Mr. Trump continues to proclaim that his policies will bring prosperity. This week, the White House released data showing that its tax cuts could increase U.S. output as much as 5.2 percent in the short term, compared with the gains it would have achieved if the bill is not adopted. The administration has stood largely alone in offering such rosy predictions about the effects of Mr. Trump’s policies on businesses, average workers and the nation’s fiscal future.
In report after report, economists this week predicted that Mr. Trump’s signature tax package could add well over $3 trillion to the national debt. Some found that the measure is unlikely to deliver substantial economic growth, and could enrich the wealthiest Americans while harming the poorest, millions of whom could soon lose access to federal aid for food and health insurance.
The tax cuts are largely an extension of ones that Congress passed in 2017, meaning that few taxpayers will see an increase to their after-tax income. In fact, some might see their financial situation deteriorate: Many of the lowest earners may even see about $1,300 less on average under the Republican bill in 2030, according to the nonpartisan Penn Wharton Budget Model, which factored in the proposed cuts to federal safety-net programs.
Facing an onslaught of red flags and dour reports, the White House has remained bullish.
“I think folks have cried wolf a lot,” Stephen Miran, the chairman of the president’s Council of Economic Advisers, said in an interview, stressing that Mr. Trump’s agenda would “grow the economy.”
In the past, investors and businesses might have rejoiced over Mr. Trump’s grand proclamations about lowering taxes, reducing regulations and opening access to foreign markets. But the most common reaction this week was concern over Mr. Trump’s sclerotic approach, which has renewed fears that the economy could enter a prolonged period of pain.
“It’s possible that you’re going to get a big benefit to growth, but the costs are so obvious and so clear that I think it’s hard to put a lot of faith in that at the moment,” said Eric Winograd, an economist at the investment firm AllianceBernstein.
By most metrics, Mr. Trump inherited a solid economy. Layoffs were low when he took office, and have stayed that way, helping to keep the unemployment rate stable. And consumers, even amid elevated prices, continued to spend apace.
Four months into his second term, however, there are signs that the economy is beginning to come under greater strain, in what experts worry is a prelude to a more substantive slowdown. While economists do not expect the economy to tip fully into a recession, they say Mr. Trump’s tariffs in particular have raised the odds of a downturn, as both businesses and consumers begin to cut back.
Many of the president’s allies maintain that Mr. Trump is doing exactly as he promised during the 2024 presidential campaign, acting out of a belief that his vision can spur robust economic growth. In doing so, that can help to create jobs, raise wages and generate the sort of activity that can lessen the nation’s fiscal imbalance, said Stephen Moore, a conservative economist who served as one of Mr. Trump’s advisers during his first term.
“So many of these problems are the result of low growth,” Mr. Moore said of the economy. Mr. Trump is aiming to get growth back up to 3 percent, Mr. Moore added.
But the administration has at times ignored a steady stream of data suggesting its policies may not deliver those gains.
The disparity between vision and reality became apparent Thursday as House Republicans voted to advance a bill that would extend the set of tax cuts enacted in the president’s first term. The measure also included Mr. Trump’s campaign promises to eliminate taxes on tips and overtime pay.
An analysis released Thursday by the Joint Committee on Taxation, a nonpartisan advisory arm of Congress, found that the new Republican measure may raise the average rate of growth in U.S. output by only 0.03 percentage points compared with current expectations through 2034. The finding cast doubt on the administration’s long-held assertion that economic activity can help to lower the deficit. The joint committee also said the president’s tax package could add $3.7 trillion to the nation’s debt over the next decade.
Mr. Miran maintained on Friday that congressional analysts and others had underestimated the effects of Mr. Trump’s initial tax cuts, and had done the same this year.
“Better tax policy creates better economic growth, and better economic growth creates better revenue,” he said.
Focusing on the debt, Kevin Hassett, the director of the White House National Economic Council, said on Fox News on Thursday that there was “a lot of spending reduction in this bill,” adding that the Trump administration would seek additional savings as the bill moved through the Senate.
The prospect of a worsening fiscal imbalance prompted Moody’s Ratings just last week to downgrade the U.S. credit rating, citing Republican tax cuts and the proclivity of past G.O.P. administrations to spend. Party lawmakers swiftly rejected the finding, but bond markets took notice, sending yields on longer-term U.S. debt higher. Soft demand at an auction of 20-year Treasuries on Wednesday gave markets another jolt, pushing up bond yields and weighing on U.S. stocks.
Mr. Trump sent markets into another tailspin on Friday as he abruptly shifted his attention to tariffs. He attacked the European Union and threatened to raise tariffs on its exports to a flat rate of 50 percent. He signaled a mixed appetite for negotiations, telling reporters in the Oval Office: “I don’t know. We’re going to see what happens.”
The president also took aim at Apple, signaling he would impose a 25 percent import tax on iPhones, months after his administration relaxed some of its trade policies to aid tech giants. Mr. Trump later suggested his new tariffs might also apply to Samsung.
The S&P 500 fell nearly a percentage point on Friday and pushed the U.S. dollar lower against a basket of its peers. Many from Washington to Wall Street yet again scrambled to decipher Mr. Trump’s intentions — and sort out the extent to which the president is serious, bluffing or set to walk back his policies again.
Some companies, including Walmart, have said they may have to raise prices as a result of the president’s global trade war. (Karsten Moran for The New York Times)
Some businesses have forecast price increases as a result of Mr. Trump’s tariff threats. A report this week from Allianz found that many businesses are trying to push the added tariff costs onto suppliers or consumers, with roughly half of its survey respondents saying they may increase prices.
The potential for rising prices while growth is slowing poses a unique challenge for the Fed and its voting members, forcing them to reconcile with conflicting missions — a goal to pursue low, stable inflation, and a desire to sustain a healthy labor market.
“The bar for me is a little higher for action in any direction while we’re waiting to get some clarity,” Austan Goolsbee, the president of the Chicago Fed and a voting member on this year’s rate-setting committee, told CNBC on Friday.
Mr. Goolsbee recalled a recent exchange with the chief executive of a construction business, who said: “We’re now in a put-your-pencils-down moment.” Businesses, Mr. Goolsbee said, now “have to wait if every week or every month or every day there’s going to be a new major announcement.”
“They just can’t take action until some of those things are resolved,” he added.
China’s giant logistics machine was humming inside rows of metal warehouses near Ho Chi Minh City in southern Vietnam this month. Hundreds of workers packed cosmetics, clothes and shoes for Shein, the Chinese fast-fashion retailer. Recruiters needing to fill hundreds more jobs were interviewing candidates outside.
At another industrial park, owned by the supply chain arm of Alibaba, the Chinese e-commerce giant, trucks drove in and out at a steady clip.
This kind of activity, powered by Chinese money, has brought jobs to Vietnam. It is one of the forces that have made Vietnam a thriving destination for companies around the world looking for alternatives to China’s factories.
But as President Trump’s trade war is turning supply chains upside down, China’s role is emerging as the biggest obstacle for Vietnam as it tries to avoid a 46 percent tariff.
Vietnamese officials are rushing to secure a deal before a 90-day pause on the new tariffs ends in early July. They met with administration officials in Washington this week for a second round of talks. The talks will resume next month, Vietnamese officials said.
The Trump administration wants Vietnam to do more to crack down on companies that are rerouting goods from China to Vietnam to avoid tariffs, a practice known as transshipment.
But the administration is also taking a view of the issue that goes beyond the usual definition of transshipment as it tries to wean the American economy off its dependence on Chinese imports. That puts countries that rely on China to make goods they export under heavy pressure.
For Vietnam, the challenge is proving that what it sends to the United States was made in Vietnam and not in China. In a sign of the awkward position it finds itself in, Peter Navarro, a top trade adviser to Mr. Trump, recently called Vietnam “a colony of China.”
Vietnam was a big beneficiary of tariffs that Mr. Trump placed on Chinese goods during his first presidency. Its trade surplus with the United States swelled to $123.5 billion in 2024, from $38.3 billion in 2017.
The reordering of trade flows accelerated in April, when China was facing 145 percent tariffs, Vietnamese imports from China ballooned to $15 billion while its exports to the United States totaled $12 billion. Beijing and Washington have since reached a temporary deal to slash the tariffs.
“The priority for Trump is for Vietnam to fix the transshipment problem and make sure that the two countries can sign something that shows Vietnam is taking action,” said Adam Sitkoff, the executive director of the American Chamber of Commerce in Hanoi.
In response, Vietnam created a special task force this month to “aggressively crack down on smuggling, trade fraud” and “the export of goods falsely labeled as ‘Made in Vietnam,’” and its finance ministry has met with U.S. Customs and Border Protection to talk about working together and sharing information.
Despite the efforts, Trump officials have said it is not enough.
“It has become very difficult for Vietnam to justify to the U.S. government that this isn’t just rerouting Chinese goods,” said Priyanka Kishore, an economist in Singapore and the founder of Asia Decoded, a consulting firm.
“China is Vietnam’s biggest intermediate goods supplier, so if you are pushing your exports to the U.S. up, you would see an increase in imports from China,” Ms. Kishore said.
Vietnam and other Asian countries depend on China for the supplies used to make finished goods. So as production shifts from factories in China to factories elsewhere, much of the spike in exports from China to its neighbors may be raw materials used by factories.
Still, some Vietnamese imports from China are undeniably finished goods shipped through Vietnam to other countries with their origin in China disguised, which is universally considered illegal.
There is little data on exactly how much falls into the category of transshipment, Ms. Kishore said. By one estimate, rerouting activity increased to 16.5 percent of exports to the United States after Mr. Trump’s first-term tariffs on China, driven in part by Chinese-owned companies.
The prohibitively high tariffs on Chinese goods last month caused more manufacturers to seek options in Vietnam. After Mr. Trump ended a loophole that let Americans buy cheap goods from China tax free, Shein offered guidance and subsidies to factories to move operations to Vietnam. Shein did not respond to a request for comment.
Much of that activity has been the legitimate movement of the supply chain as companies shift their production out of China and into places where tariffs are lower.
But the Trump administration is taking a hard line. “China uses Vietnam to transship to evade the tariffs,” Mr. Navarro said. The goal is to put a fence around China’s exports.
“The United States seems to be arguing that anything that comes from China is by default transshipment, so you tar and feather every single product that comes from China,” said Deborah Elms, the head of trade policy at the Hinrich Foundation, an organization that focuses on trade.
Stopping illegal transshipment is one thing; disconnecting supply chains from China would be much more complicated. Most of the things that Americans buy have raw materials from China — whether it is the plastic in their children’s toys, the rubber in their shoes or the thread in their shirts.
“Asian governments are being asked to redefine supply chains to something that might be decades in the making in exchange for what? It’s a little unclear,” Ms. Elms said.
For Vietnam’s textile and garment industry, taking China out of the equation would be hugely problematic. Factories import around 60 percent of the fabrics they use from China, according to Tran Nhu Tung, the vice chairman of the Vietnam Textile and Apparel Association.
“Without China, we cannot make products,” he said. “Vietnam would have no material to produce to make the finished goods. And without the U.S., Vietnam cannot export the finished goods. So the Vietnamese government has to find a balance between China and the U.S., and it’s very difficult for them to do this.”
To try to sweeten any deal with the Trump administration, Vietnam has offered to increase its purchase of American goods like agricultural products and Boeing aircraft, and curb the shipment of Chinese goods to the United States.
But the flood of investment and hiring by Chinese companies continues to complicate things.
In the southern province of Long An, where many shoe and textile factories are based, Shein is on a hiring drive.
On a recent Friday, Huy Phong, a recruiter, hung an advertisement for jobs on the fence outside a Shein warehouse soliciting work to load goods and sort, classify and package fashion items like handbags, clothing and footwear. The pay: $385 to $578 a month. Shein needs 2,000 workers for its warehouse and has hired only half that number so far, he said.
Finding workers was hard. A lot of warehouses and logistics companies were recruiting.
Nearby, Duong Minh Giang was leaving his interview feeling dismayed. He said the job would entail handling raw materials from China like thread and chemical dye to store at the warehouse and send to nearby factories to make clothes.
“But I don’t think I will take the job,” he said. “The salary is low.”
Walmart Inc. (NYSE: WMT), the world’s largest retailer, announced on Tuesday that it will begin raising prices on a broad range of consumer goods in the coming months, citing the intensifying impact of U.S. tariffs on Chinese imports and other global supply chain disruptions. The announcement marks a pivotal shift for the retail giant, which has long absorbed tariff-related costs to protect its price-sensitive customer base.
The move comes as the Biden administration recently expanded tariffs on key Chinese goods—including electric vehicles, semiconductors, and solar components—adding $380 billion in new levies and pushing the average U.S. tariff rate to its highest level in decades. Walmart executives now say the “buffer period” is ending.
“We’ve managed to shield our customers from much of the trade war’s fallout over the last five years,” said John Furner, President and CEO of Walmart U.S., during the company’s Q1 2025 earnings call. “But with the latest round of tariffs and persistent supply chain inflation, we expect to pass through more costs to consumers.”
Walmart sources a significant portion of its merchandise—especially electronics, apparel, and home goods—from Asia, with China historically representing over 25% of its import base. While the company has diversified its supply chain in recent years, new tariffs and retaliatory measures by trading partners are making global procurement increasingly expensive.
“The global tariff environment has changed materially,” said Chief Financial Officer John David Rainey. “These are not short-term headwinds. They are structurally altering input costs, shipping dynamics, and product margins.”
Walmart indicated that categories likely to see the sharpest price increases include:
Consumer Electronics: Affected by 25% tariffs on Chinese-made components such as microchips and lithium-ion batteries.
Home Appliances: Including air conditioners and washing machines, many of which rely on Chinese steel and circuit boards.
Seasonal Goods and Apparel: Where production has been slower to move away from China or Vietnam.
Company officials declined to specify the exact price increases but confirmed that in-store and online pricing adjustments will begin rolling out by mid-summer.
Walmart’s announcement underscores what many economists have long warned: that while large corporations initially absorbed much of the tariff shock, the cumulative effect is eventually borne by consumers.
“Tariffs function like a hidden tax on the American middle class,” said Beth Ann Bovino, U.S. Chief Economist at S&P Global. “For years, retailers buffered the impact. But the dam is breaking.”
Consumer watchdog groups are now bracing for inflationary pressures to accelerate again. The Consumer Price Index (CPI) rose 0.4% in April—driven largely by food, energy, and household goods—and economists say a wave of retail price hikes could fuel another surge.
At Walmart, average basket prices are still up 7% year-over-year, even before the new tariffs fully hit shelves.
The price hikes are also expected to become a flashpoint in the 2024 presidential race, with both parties accusing the other of mismanaging trade policy.
While President Biden has defended the tariffs as “strategic economic tools” to counter unfair practices and promote U.S. manufacturing, Republicans have blasted the levies as regressive and inflationary.
“Every time Washington escalates a trade war, working families pay the price,” said Senator Josh Hawley (R-MO). “Walmart’s warning is just the beginning.”
At the same time, labor unions and domestic manufacturers have welcomed the tariffs, arguing they level the playing field and create American jobs. The CHIPS Act and Inflation Reduction Act, for example, have spurred billions in U.S. investment.
To its credit, Walmart has so far navigated geopolitical turbulence better than most. It expanded sourcing in Mexico, India, and Vietnam, invested heavily in automation, and secured long-term logistics contracts to buffer freight volatility. Analysts have praised its supply chain agility and price discipline.
But the latest wave of tariffs, especially those targeting raw materials and components used in American-assembled products, has created what executives call an “inescapable cost environment.”
“We’re not just importing finished goods anymore,” said Rainey. “Tariffs now hit upstream components that show up in U.S.-made items, too.”
Despite the challenges, Walmart reiterated its commitment to affordability, especially as U.S. consumers become more price-conscious. The retailer reported better-than-expected Q1 earnings, with revenue rising 5.1% year-over-year to $162 billion, but cautioned that margins will tighten in the coming quarters.
Walmart’s decision to raise prices marks a turning point in America’s tariff-era economy. For years, the retailer’s scale and supply chain muscle helped mute the impact of trade wars. But with tariff walls rising and inflationary pressure mounting, even the strongest players are signaling that the burden is shifting—to consumers.
Whether these hikes are short-term adjustments or a new normal remains to be seen. But for millions of Walmart shoppers, the checkout line is about to become the frontline of U.S. trade policy.
Data Snapshot:
Tariff Exposure: Over 30% of Walmart’s imports originate from countries impacted by new U.S. tariffs.
Consumer Price Impact: Walmart basket prices have increased 7% YoY; projected to rise another 3–5% by Q3 2025.
U.S. Tariff Revenue: $92 billion in 2023 (U.S. Treasury), triple 2016 levels.
Top Categories at Risk: Electronics, home goods, small appliances, and apparel.
Sourcing Shift: 12% increase in India and Mexico sourcing since 2022.
A year after the $15-billion electric vehicle project in Ontario was announced, Honda Canada is pushing the project back.
The company said Tuesday it would put the plan to build an EV supply chain — which included a proposed EV battery plant and retooled vehicle assembly facility — in Alliston, Ont., on hold for about two years.
“Due to the recent slowdown of the EV market, Honda Motor has announced an approximate two-year postponement of the comprehensive value chain investment project in Canada. The company will continue to evaluate the timing and project progression as market conditions change,” Honda Canada spokesperson Ken Chiu told CBC News in an email statement on Tuesday.
Honda also said the decision “has no impact” on current employment or production at the Alliston manufacturing facility.
Honda’s EV project in Canada includes a retooled assembly plant and an electric vehicle battery plant in close proximity, as well as two key battery parts facilities located elsewhere in Ontario.
The project was expected to see the two main plants create 1,000 jobs on top of retaining the existing 4,200 jobs at the assembly plant.
Under the original plan, the plant was set to produce up to 240,000 vehicles per year when fully operational in 2028.
The project was first announced in April 2024 at an event that included then-prime minister Justin Trudeau and Ontario Premier Doug Ford and was to receive support from the federal and Ontario governments.
Ottawa was set to give the Japanese automaker around $2.5 billion through tax credits, while Ontario committed to provide up to $2.5 billion in support directly and indirectly. However, Jennifer Cunliffe, a spokesperson for Ontario’s minister of economic development, job creation and trade, said the province hasn’t doled out any of that money to Honda yet.
Ford told reporters at a news conference that he was confident Honda would continue making cars in the province.
“When I talked to Honda, they promised us they’re going to continue on with that expansion,” Ford said of the pause. “So we’ll just see how that moves forward. But we’re very confident that we’ll continue producing Honda vehicles here in Ontario.”
The premier also said he would hold automakers that pull out of Ontario “accountable,” should that happen.
Richard Norcross, the mayor of New Tecumseth, which Alliston is part of, said he was still optimistic the project will come online, even though that day is further in the future now.
“Obviously a two-year delay, that’s not desirable, but understandable [given] what’s going on in the world today,” Norcross said. “I think the process is slowing down, but I don’t think they’ll walk away from the process. I believe [and] they believe that the EV battery is the way to go and that will be the future.”
Tariffs and smaller appetite for EVs having an impact
Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, said Tuesday’s decision shows how U.S. tariffs continue to be felt in the auto industry.
“We hope to find a solution for Canada soon that restores the confidence Honda had when it made its historic EV expansion decision here,” Volpe wrote in an email statement.
In reporting its latest financial results Tuesday, Honda Motor Co. said its profit for the financial year through March fell 24.5 per cent from the previous year and warned that U.S. President Donald Trump’s tariffs will worsen its earnings.
The Tokyo-based automaker said its annual profit totalled 835.8 billion yen (around $8 billion Cdn), down from 1.1 trillion yen in the previous year. Annual sales edged up 6.2 per cent to nearly 21.69 trillion yen (around $205 billion Cdn).
Officials stressed major uncertainties remain, but said they felt it was important to give a realistic projection, no matter how pessimistic it might be.
Chief executive Toshihiro Mibe said Honda will do its best to minimize the impact from tariffs. In the long term, Honda will transfer auto production to U.S. plants and rethink its investment plans. All decisions will be made “very carefully,” Mibe told reporters.
David Adams, president and CEO of Global Automakers of Canada, says that while tariffs were a factor in today’s announcement, the slower than expected uptake of EVs also likely played a big role.
“Is electrification moving forward? Sure, it is. Are consumers continuing to buy EVs? Yes,” Adams said. “But we’re not seeing the sort of [rapid] uptake of EVs that … environmentalists and some in government anticipated.”
Despite that, Adams says EVs are still the way of the future — he says trillions have been spent globally to transition from traditional internal combustion engines to battery electric instead, and carmakers won’t simply walk away from those commitments. “But those investments might not just come to fruition as quickly as maybe originally anticipated.”
Gal Raz, a professor of operations management and sustainability at Western University’s Ivey Business School, agrees that today’s news comes as a result of tariffs and softer-than-expected demand for electric cars.
He says while governments in Canada have made big investments in getting more EVs built — including investments in this paused Honda project — there hasn’t been as much work done to address issues with demand.
Consumers are still worried about the upfront cost of battery EVs and the lack of charging facilities to keep these cars running. Raz says the latter has been a particular barrier.
“That’s where I feel that the government has not done enough,” Raz said. He points to countries like Norway, where the network of charging infrastructure is extensive. Electric cars now outnumber gas-powered ones in Norway.
Adams says he hopes the federal government will pause its zero-emission vehicle sales target, which aims to achieve 100 per cent zero-emission vehicle sales by 2035, given the amount of flux the industry is going through with U.S. tariffs and the slower uptake of EVs by consumers.
Toyota Motor forecast a 21% profit decline for the current financial year on Thursday, as the strain from US President Donald Trump’s tariffs and an appreciating yen take some of the shine off strong demand for hybrid vehicles.
The world’s top-selling automaker expects operating income to total 3.8 trillion yen ($26 billion) in the year to March 2026, versus 4.8 trillion yen in the financial year that just ended. That was roughly in line with the 4.75 trillion yen average of 25 analysts surveyed by LSEG.
Toyota faces the risk of being hit by widespread fallout from Trump’s tariffs, not only from the impact on its US-bound exports but also because of the potential for a downturn in consumer sentiment in the US and elsewhere. Price rises can lead to a decline in consumer sentiment.
The lower profit for the coming year was due to the negative impact from a stronger yen, as well as higher material prices and the impact of tariffs, Toyota said in a presentation.
Like other global automakers doing business in the world’s top economy, Toyota could face high labor costs and be forced to spend more on investment, if it decides to expand its US production base further.
While Toyota has seen its vehicle sales in China fall less than other Japanese automakers, it has still struggled to halt a sales decline in the world’s biggest auto market amid heavy competition from Chinese brands.
Cookie Consent
We use cookies to improve your experience on our site. By using our site, you consent to cookies.
Contains information related to marketing campaigns of the user. These are shared with Google AdWords / Google Ads when the Google Ads and Google Analytics accounts are linked together.
90 days
__utma
ID used to identify users and sessions
2 years after last activity
__utmt
Used to monitor number of Google Analytics server requests
10 minutes
__utmb
Used to distinguish new sessions and visits. This cookie is set when the GA.js javascript library is loaded and there is no existing __utmb cookie. The cookie is updated every time data is sent to the Google Analytics server.
30 minutes after last activity
__utmc
Used only with old Urchin versions of Google Analytics and not with GA.js. Was used to distinguish between new sessions and visits at the end of a session.
End of session (browser)
__utmz
Contains information about the traffic source or campaign that directed user to the website. The cookie is set when the GA.js javascript is loaded and updated when data is sent to the Google Anaytics server
6 months after last activity
__utmv
Contains custom information set by the web developer via the _setCustomVar method in Google Analytics. This cookie is updated every time new data is sent to the Google Analytics server.
2 years after last activity
__utmx
Used to determine whether a user is included in an A / B or Multivariate test.
18 months
_ga
ID used to identify users
2 years
_gali
Used by Google Analytics to determine which links on a page are being clicked
30 seconds
_ga_
ID used to identify users
2 years
_gid
ID used to identify users for 24 hours after last activity
24 hours
_gat
Used to monitor number of Google Analytics server requests when using Google Tag Manager
