The new reciprocal tariff announced by U.S. President Donald Trump will take full effect on the 7th at 1:01 p.m. Korean time (12:01 a.m. Eastern time). This brings to a close the first round of the tariff war, which targeted traditional industries such as automotive and steel. The second round of the tariff war is expected to be fought over next-generation strategic items such as pharmaceuticals, rare earths, and semiconductors. Previously, tariff rates varied by country based on trade performance, but this time, it is anticipated that 'tariff barriers' on key items will be raised under the pretext of national security.
The U.S. Department of Commerce is currently investigating the impact of various commodities, including lumber, pharmaceuticals, semiconductors, rare earths, commercial aircraft, and drones, on national security under Section 232 of the Trade Expansion Act. If it concludes that certain imports threaten national security, the president can impose high tariffs immediately without congressional approval. President Trump stated on the 6th at an event announcing Apple's investment plans in the White House Oval Office, "We will impose approximately 100% item-by-item tariffs on all integrated circuits and semiconductors produced outside the United States."
Experts analyzed that if the focus of the first round of the tariff war was on solving the trade deficit, the second round intends to restructure advanced technology supply chains to center around the United States. The political news outlet Politico noted, "The Trump administration's tariff policy is shifting towards protecting U.S. technological hegemony by targeting high value-added products from other countries."
The multilateral trading system, which has endured for decades, is expected to be shaken from its roots following the implementation of the new reciprocal tariff. The United States-Mexico-Canada Agreement (USMCA), which replaced the North American Free Trade Agreement (NAFTA), has been rendered practically ineffective due to this tariff measure. The U.S. imposed the highest levels of punitive tariffs on its allies, Canada and Mexico. In response, Canada has strengthened cooperation in trade and energy with Mexico, bypassing the United States and forming a united front.
Movements to seek new alliances in response to U.S. pressure have also been detected. Brazilian President Luiz Inácio Lula da Silva, who has faced a 50% tariff bomb, dismissed the possibility of direct dialogue with President Trump during an interview with Reuters on the 6th, stating, "It could be humiliating, and I won't be seeking to call the White House." He added that he would first contact China and India, hinting at the possibility of a joint response with BRICS countries.
In the short term, the tariff war has triggered more expectations than anxiety among investors in the United States. The New York stock market is showing continuous gains despite the implementation of tariffs. Experts in the investment industry evaluated that the U.S. stock market has shown resilience in the face of short-term shocks such as Israel's invasion of Iran and issues in the Gaza Strip. Following Apple's announcement of plans to invest $600 billion (approximately 832 trillion won) in the U.S. over the next four years, its stock surged nearly 6% in just one day. Investors interpret Trump's pressure as "a negotiation strategy for successful transactions."
However, some warn that as the tariff war continues, it may ultimately backfire on the U.S. economy in the long run. The Wall Street Journal (WSJ) reported that the average U.S. import tariff rate has soared to about 18%, the highest level since the Great Depression in the 1930s. The International Monetary Fund (IMF) projected that if this reciprocal tariff is implemented as is, the world economic growth rate could decrease by 0.2 percentage points in 2025. The Peterson Institute for International Economics (PIIE) also estimated that U.S. gross domestic product (GDP) would decline by 0.4 percentage points, and global GDP could fall by 0.2 to 0.3 percentage points.
The Trump administration's policy direction is clearly evident in the national reciprocal tariff rates that took full effect on the 7th. The fate of allies who complied with the 'transaction' and those who did not has diverged sharply.
Traditional U.S. allies such as Korea, Japan, and the European Union (EU) received a 15% tariff rate in exchange for promises of significant investments and purchases of U.S.-made products. They prevented the initially discussed tariffs of over 25% by unrolling investment packages worth hundreds of billions of dollars. The White House characterized the negotiation results as "actions to correct unfair trade practices that have persisted for decades and to protect American workers."
On the other hand, countries that are at odds with the United States or are in strained relationships have suffered tariff bombs. Canada faced an increase in its tariff rate from 25% to 35% due to its failure to curb the distribution of illegal drugs such as fentanyl. Switzerland, which was reported to have drawn Trump's ire by lecturing him about tariffs, sent President Karin Keller-Sutter to Washington for a final intensive effort but returned empty-handed after being informed of a 39% tariff.
The situation is even more serious for Brazil and India. President Trump imposed punitive tariffs of up to 50% on the Lula government in Brazil, citing political persecution of former President Jair Bolsonaro. India also faced an additional 25% 'penalty tariff' on top of the existing reciprocal tariff of 25% due to its purchase of Russian oil. As a result, a total tariff rate of 50% is set to be applied to goods exported from India to the United States.