Not August 7, but October 5 could be the effective date for modified Trump tariffs

The executive order signed by US President Donald Trump, introducing modified reciprocal tariffs on nations around the world, has managed to give countries a brief grace period, which can technically stretch to even October.

With the latest announcement, the Trump tariffs appear to go into effect at 12:01 am (local time) on August 7, instead of the initial August 1 deadline. Things can change if any country signs a trade deal with Washington, DC within that brief period.

Another factor that has gained attention following the announcement is that within the White House statement, it is mentioned that goods that are loaded onto ships before August 7 and that enter the American territory before October 5 will only face the pre-existing tariff rates, not the modified ones.

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So technically, exporters who have sent their vessels to the US before Trump made the announcement would not face the wrath of the recent Trump tariffs.

The hidden details in the Trump tariffs announcement

It is pertinent to note that most tariffs are now set to take effect in seven days. The only exception in this case is Canada, which will face a 35 per cent tariff on exported goods from 12:01 am on Friday. However, tariffs on Canada do not exempt all goods that trade under the US-Mexico-Canada Agreement, which Trump renegotiated in his first term.

Technically, those goods make up 94 per cent of US imports from Canada. Another key detail in Trump’s order is that it establishes a 40 per cent tariff on anything that US Customs and Border Protection determines has been “ transshipped” to avoid higher duties elsewhere.

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This happens in cases when goods made in China are shipped to another country and repackaged or otherwise superficially changed. Interestingly, the trade deal with Vietnam, which Trump announced four weeks ago, contained these provisions. However, it had been absent from subsequent agreements, and it is not clear whether other countries that came to terms with Trump knew this was coming.

Back in those days, it was the World Trade Organisation that agreed to set up the same tariff rate. However, Trump changed the system to something of his own devising, where tariffs for different countries vary widely. This marks a break in historical norms where the United States worked with other countries to lower tariffs globally and set low levies for decades.

A senior official who briefed reporters after the announcement acknowledged the same. “The president has essentially reordered global trade.” He added that Trump is in the process of accomplishing “the type of outcomes that the WTO and the multilateral trading system have failed to accomplish at scale over the last 25 years".