Some U.S. allies see higher duties under new tariffs, rivals see relief, trade body says

• The U.K. faces a 2.1 percentage point tariff increase and the EU sees a 0.8 point rise, while Brazil's rate drops 13.6 points and China's falls 7.1 points on a trade-weighted basis.
• Countries that negotiated early deals with the U.S., such as Japan (which committed $150 billion in investment), now receive the same treatment as those who resisted negotiations, potentially paying for no advantage.
• Uncertainty persists as Trump announced 15% tariffs but the White House fact sheet lists 10%, and the legal basis for bilateral deals and product-level carve-outs under Section 122 remains unclear.

Market Summary: U.S. Tariff Changes Create Winners and Losers Among Trading Partners

Key Developments:

Following a Supreme Court ruling that struck down tariffs imposed under the International Emergency Economic Powers Act (IEEPA), President Trump implemented a new global tariff regime under Section 122 of the 1974 Trade Act. However, confusion persists as Trump announced 15% duties while White House fact sheets reference 10% rates.

Trade-Weighted Tariff Changes:

*Increases (losers):*

• United Kingdom: +2.1 percentage points
• European Union: +0.8 points
• Singapore: +1.1 points
• Japan: +0.4 points
• South Korea: +0.6 points

*Decreases (winners):*

• Brazil: -13.6 percentage points
• China: -7.1 points
• India: significant reduction

Market Implications:

The ruling creates a paradoxical outcome where U.S. allies who negotiated early trade deals now face higher effective tariffs, while countries that resisted negotiations—particularly those hit hardest by IEEPA-linked levies—receive substantial relief. Countries like China, Mexico, Canada, Brazil, and India previously faced dedicated tariff orders for issues like opioids and border security, which were all struck down.

Legal and Practical Concerns:

Experts highlight significant uncertainty around existing bilateral agreements. Prior deals were structured around IEEPA rates as baselines, and it's unclear whether product-level carve-outs (like Portuguese cork exemptions in the EU deal) can be legally implemented under Section 122, which requires non-discriminatory application across all trading partners.

Asian nations have adopted a wait-and-see approach, with India postponing planned Washington negotiations. The situation disadvantages early negotiators like Japan, which made substantial investment commitments in exchange for preferential treatment now matched by countries that made no concessions.