The S&P 500 (SPX) opened in the green but has since dropped to negative territory after President Trump issued letters to 14 countries with their new tariff rates, effective as of August 1. These rates fall in a range between 25% and 40%.
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Each letter said that transshipped products would be subject to higher tariffs, likely a direct response to transshipped Chinese goods, though the rates weren’t immediately specified.
Transshipment occurs when Country A sends its goods to Country B with the intent of having Country B export the goods to Country C in order to reduce or avoid tariffs on them. China has warned other countries that they will face consequences if they sign deals with the U.S. that harm Chinese supply chains.
U.S. Excludes India, Singapore, and the Philippines
Of the 14 letters, nine were sent to countries in Asia. However, Trump has yet to send letters to India, Singapore, and the Philippines. This could possibly signal that trade deals with these three countries are making progress.
Laos and Myanmar took the hardest hit with tariff rates of 40%. At the same time, both of these rates are below their respective April 2 reciprocal tariff levels. South Korea and Japan, the first two countries that Trump notified, both received rates of 25%.
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