The new Trump-era reality: Trade war is everything
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The world is coming to terms with the new Trump-era reality: Everything is trade.
Why it matters: President Trump is threatening tariff hikes in the weeks ahead, with some of the most aggressive aimed at Canada and Brazil, over issues that have nothing to do with trade.
- A week that was supposed to end tariff uncertainty instead marked a new front in Trump's trade war, with planned escalations all around the world and on key sectors, including copper.
Driving the news: Trump said Thursday night that Canadian goods would be subject to 35% tariffs as of Aug. 1 — seemingly upending trade talks that were aimed at landing a deal by July 21.
- Trump called out Canada's "failure to stop the drugs from pouring into our Country," according to a letter addressed to Canadian Prime Minister Mark Carney posted on Truth Social.
- Trump added that "the flow of Fentanyl is hardly the only challenge we have with Canada, which has many Tariff, and Non-Tariff, Policies and Trade Barriers."
That came just one day after Trump's threat to slap 50% tariffs on Brazilian imports.
- The key reason: punishment for the country's treatment of its former president, Jair Bolsonaro, who has been supportive of Trump in the past.
- "This Trial should not be taking place. It is a Witch Hunt that should end IMMEDIATELY!" Trump wrote in the letter, a copy of which was posted to Truth Social. Bolsonaro is on trial for allegedly plotting to overturn the nation's 2022 election.
What they're saying: Economists at Bank of America called it "the game that never ends."
- "Tariffs on copper and the 50% tariffs on Brazil are worth watching, as they are not motivated by 'bilateral trade deficits' considerations," the economists wrote.
- "The next question is then how much re-escalation risky assets are willing to tolerate before correcting lower and how much pain Trump would tolerate until de-escalation occurs as it happened in April."
