Trump shared updates on trade tariffs, highlighting some challenges ahead. He noted that reaching a trade deal with Canada would be tough. He also criticized India’s high tariffs and mentioned the possibility of imposing 25% tariffs, indicating that trade talks with India may be stalled. Additionally, Trump announced that 50% tariffs on copper pipes and wiring will start on Friday. However, he relaxed tariffs on Brazil by excluding certain sectors, such as energy, aircraft, and orange juice, from the higher levies. For South Korea, the US will introduce 15% tariffs following an agreement focused on shipbuilding.

Suspending The De Minimis Exemption

The White House confirmed that they will suspend the ‘de minimis’ exemption, which previously allowed duty-free entry for low-value shipments into the US. Starting August 29, packages valued at $800 or less will now face all applicable duties. This suspension is a significant change. Logistics companies and e-commerce platforms, particularly those relying on low-value Chinese imports, will be affected. Before tensions escalated in 2023, over two billion packages entered the US under this rule, meaning many will now experience tariffs and added costs.

Implications Of Copper Tariffs

With the 50% tariffs on copper pipes and wiring set to take effect tomorrow, we expect global copper prices to fall immediately, while costs for US construction and manufacturing will rise. In similar situations during the 2018 trade disputes, copper futures dropped nearly 20% in six months, and we might see a similar trend now. After-hours trading already shows a decline in September COMEX copper futures, reflecting market worries. The negative comments toward India hint at a weaker rupee and lower sentiment on the Nifty 50 index. The potential for a 25% tariff marks a significant escalation from earlier discussions. One-month forward contracts for the USD/INR currency pair are already showing increased hedging costs due to this uncertainty. Uncertainty about the Canadian trade deal is likely to raise volatility in the USD/CAD exchange rate. Since Canada is one of our largest trading partners, with monthly bilateral trade exceeding $70 billion, any disruptions could pose risks. It may be wise to consider options strategies that benefit from larger price fluctuations rather than predicting a specific direction. On the brighter side, the softer approach toward Brazil and the new agreement with South Korea provide some relief. The exemptions for Brazilian energy and aircraft sectors could create specific buying opportunities for stocks related to those industries. The resolution of the shipbuilding dispute with South Korea could also help stabilize the Korean won. Create your live VT Markets account and start trading now.

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