This week, US President Donald Trump sent out near-identical letters to 22 trading partners imposing steep tariffs on them citing a rise in merchandise deficits. A Moneycontrol analysis shows that the US' goods trade deficit had already shrunk in 2024 for eight of these countries, while with Brazil, America enjoyed a surplus.
The US' goods trade deficit with Japan, Iraq, Malaysia, Myanmar, Libya, Algeria, Bosnia and Herzegovina, and Brunei had already started narrowing in 2024 compared to 2023. Each of them will face higher tariffs from August 1.
While Trump did state that tariffs were on the menu during his 2024 campaign, the narrowing deficits with some of these nations show that they're not entirely about perceived threats (due to deficits), according to an analysis by Moneycontrol using United States Census Bureau (USCB) data.
Macroeconomists across the world have pointed out that supply-chain shifts, commodity market swings, and currency movements have a larger impact on trade deficits than tariffs.
For example, the US’s trade deficit with Algeria shrunk almost 21 percent in 2024, but it had little to do with impending tariffs since America’s key import from the nation -- oil -- has been exempted from duties.
Algeria was slapped with 30-percent tax, effective August 1.
With Iraq too, which will also face a 30 percent levy, the US posted a smaller trade deficit last year due to lower oil demand.
A 30 percent tariff was also imposed on Libya even though its goods surplus with the US narrowed by over 17 percent in 2024, according to data from the USCB.
Myanmar saw a nearly 16-percent reduction in its trade surplus with the US due to a sharp decline in imports. Despite that the southeast Asian nation was slapped with a whopping 40 percent tariff.
Japan, one of America’s closest allies and key trading partners, is facing 25-percent tariffs. Japan had reduced its trade surplus with the US by 3 percent in 2024, on-year.
The most surprising is the mammoth 50-percent tariff on Brazil, with whom America enjoys a goods trade surplus. In fact, the US’s surplus with the country increased by over 20 percent in 2024 versus 2023.
Trump has linked Brazil's egregious tariffs to the country's treatment of its former President, Jair Bolsonaro, denouncing his ongoing trial as a "witch hunt."
When Trump had first announced his country-specific reciprocal tariffs back in April, he had highlighted rising trade deficits as the primary reason for the move.
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