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Podcast — Jul 12, 2025 The Decisive | Season 3 Ep.28 -Takeaways on Tariffs Following July 9 Developments By Kristen Hallam, Chris Rogers, and John Raines In this episode of The Decisive Podcast, host Kristen Hallam is joined by S&P Global Market Intelligence experts Chris Rogers and John Raines to unpack the latest developments in U.S. tariffs and trade policy as of July 9. With the U.S. administration's approach to leveraging tariffs as a negotiation tool, the experts assess recent agreements with countries like Vietnam, the U.K., and China, and the complexities surrounding ongoing negotiations. The team also examines the implications of transshipment practices, particularly in Southeast Asia, and the legal challenges currently facing tariff implementations. As the administration aims to revitalize U.S. manufacturing while navigating intricate international relationships, this episode provides critical insights into the future of trade relations and the potential economic impacts on both domestic and global markets. Listen now to an engaging discussion of the evolving landscape of tariffs and trade. More S&P Global Market Intelligence Content: Tariff Uncertainty Is Likely to Continue Through Late 2025 Implications of the India-UK Free-Trade Agreement Trade and tariffs insights and news Credits: Host: Kristen Hallam Guests: Chris Rogers, John Raines Produced By: Kristen Hallam Edited By: Kristen Hallam Published With Assistance From: Sophie Carr, Feranmi Adeoshun Explore our library of S&P Global Market Intelligence podcasts Listen Now View Full Transcript Kristen Hallam Hello, and welcome to The Decisive podcast. I'm your host, Kristen Hallam. Before we jump into today's episode, we want to let you know that we'll be taking a short summer break after our July 19 episode. We'll be back with fresh insights and engaging discussions on August 9. We hope you get to enjoy a summer break as well. And now back to our episode. I'm joined by my S&P Global Market Intelligence colleagues, Chris Rogers, Head of Supply Chain Research; and John Raines, Head of North American Country Risk. And we're going to talk about what happened with U.S. tariffs and trade policy on July 9 and what to watch in the weeks and months to come. Chris and John, always great to have you on The Decisive, and thanks for making the time to do this so soon after the developments on July 9. John Raines Good to be here. Chris Rogers Yes. Thanks very much. Kristen Hallam So John, kick us off, what's been announced this week? And did anything surprise you? John Raines Well, it has been a busy week. The first thing we saw was a deal with Vietnam. And then after that, now we've seen over 20 letters that have been produced. while Donald Trump has listed out what the new emergency tariffs are likely to be on August 1 if countries don't get a deal. Now originally, we thought that tariffs might hit on July 9, but the President has pushed that back to August 1, which allows for a little bit of time for countries to go ahead and complete negotiations. Now as far as the letters that are out there, most of those have been Southeast Asian countries, some of the Middle East. We've also seen Brazil get threatened with 50% tariffs, and that's partly due to the current prosecution of former President Bolsonaro. And then most recently, we saw the threats against Canada, 35% tariff. -- for their lack of the prevention of fentanyl from crossing the borders. But thinking of surprises, I would say the big surprise for me has been really the lack of deals. We've only had 3 deals so far, with the U.K., which is a very unique trading relationship with the U.S. We have China, which needs to get renegotiated by August, and we have Vietnam. And we really haven't seen any clear language regarding Vietnam either. So it kind of leaves us questioning. This is an administration that said they were going to have 90 deals in 90 days. And I think what this proves is that getting deals are really, really tough. Now remember, most of these trade deals can take years to reach. And it was kind of a bit understandable that it would take longer than 90 days to get things down on the dotted line. I think second, what we're seeing here is that it does mean the administration doesn't want to just sign a piece of paper. They really do want to see substantial changes in these trading relationships, and that means that these negotiations can sometimes be really, really difficult. And then finally, I think it really proves that these other nations really just aren't bending over backwards to the United States despite the size of the market. I think this could be for domestic political reasons such as in the case of Japan with elections that are coming up. And it can also be because these countries aren't exactly sure whether these tariffs are actually going to get enacted or not. We've seen several instances where Donald Trump has listed out new tariffs or threatened new tariffs and then backtracked on those almost immediately. And then we also have the legal question as one federal court said these tariffs are no longer legally valid. That has been stayed for this time being. So I think a lot of countries out there are kind of checking things out before they actually sign on the dotted line. Kristen Hallam All right. Thanks for that, John. Lots of moving parts there. Chris, I want to bring you in. There's been a lot of mentions of transshipments. What is that? And what does it mean for the impact of the tariffs? Chris Rogers I mean we mentioned what was surprising about the announcements. I think what was interesting in the letters that the President sent was there were wide generalities, but the very specific element that was referred to as transshipment. I think there's clearly a concern here that countries or more specifically companies because let's not forget, it's not the Vietnamese government that's sending things to America. It's American firms buying things from Vietnamese firms. There's a concern that American-based firms will find alternative ways of importing products at a lower tariff rate. And so you have this concern about, as is the case with tax, evasion versus avoidance. And that's how to think about transshipment as well. Now we see 3 potential models here. One is kind of the evasion equivalent. This is just flat out lying on your bill of lading, saying that the value of the product is 100 when it's 1,000, saying it's sheets of cotton when it's a T-shirt, all of those kind of areas. Clearly, you're not going to apply a tariff to that because you don't know it's happening. And Customs and Border Protection, part of Homeland Security, already do a great job of detecting that of punishing those actions. The second area is pass-through. This is legal. So this is, for example, you are assembling a laptop computer in Vietnam. It needs a power supply to go with it. So you import a power supply and you stick it in the box with the computer and you ship it on to the United States. Now we can detect what's going on there by looking at imports from one country and then the exports of the same products to another country. So you can see what has kind of transhipped through. The important point there, though, is that it's easy to detect, but difficult to prove. And in any event, it's a legitimate business use. So what are your alternatives? Are you going to instead make the power supply in Vietnam? Or are you going to box everything up in America? It's also a relatively limited scope of products. We see a lot in electronics, but only around 1/4 of firms who are importing to Vietnam are also exporting. The third area, and this is where it gets a lot more complicated, is whether the President is referring, in fact, to firms setting up business in Vietnam, manufacturing there using components from another country and then exporting assembled products. In most trade deals, those are handled with something called rules of origin. So in other words, it will only count as being Vietnamese if it is 70% Vietnamese, say. The direct analogy here is the USMCA trade deal where those ratios are set very precisely. But to John's point, nailing those deals down takes years. And I don't imagine that the President is necessarily in this letter referring to something that complex. But again, we have a great deal of uncertainty at the moment, both in terms of the Vietnam deal and in terms of what transshipment means in all of these letters that have been sent out. Kristen Hallam Thanks, Chris. Uncertainty and complexity, those seem to be the key themes here. John, I want to follow up on that Vietnamese deal that you mentioned. Is that a potential model for other countries deals, would you say? John Raines Yes. I think Chris has covered quite a bit of this. But I do think, yes, for some of those Southeast Asian countries out there are currently facing 30% to 40% tariffs, I think they have to try to come to a deal and see some kind of segmenting when it comes to tariffs, where they agree to one rate for domestically produced items and others that have significant inputs from other countries. But I think Chris raises a really good point there is how do you police these, right? How do you determine what the rules of origin are going to be? Who's going to maintain these records, how are you going to scrutinize them. These can be very, very difficult. And I think part of the reason why we haven't seen any language regarding Vietnam could be based on that reason. And the second thing is that I think Vietnam could be a little bit unique in that Trump has a history with Vietnam. He has investments in Vietnam. He knows who the playmakers are there. Maybe not so much in other regions of the world or other countries in the world. So I think in some ways, that could make things a little bit more difficult as well. And then finally, as Chris mentioned, there's other countries out there that are not going to be areas where there's heavy transshipment of goods into the U.S. for components. I think what you're likely to see there is that if you're an African country selling raw materials to the United States or you're a European country selling to the United States, those don't necessarily apply. You're not transshipping goods. And so therefore, the idea of copying and pasting doesn't really apply to you. Chris Rogers John, I think that copy and paste thing is important because when you look at the U.K. deal, like that was highly tailored to a few things that mattered to the British government at the time, protecting the car industry that had already been pretty beaten up, the steel industry where there was a closure of a couple of plants, a big Chinese investment coming in that didn't work out and the government taking over the steel mills there. So it was pretty clear kind of very specifically what the U.K. wanted, and it could be a very kind of focused and isolated deal. For Vietnam, it was always going to have to be more complex because Vietnam has got a lot more going on in terms of manufacturing that goes into the U.S. And that goes in spades for some of the other big manufacturing centers, particularly ones that are more about components and materials and manufactured elements like Japan, South Korea, even the European Union, where these are much more tightly integrated regional supply chains that are more difficult to track to work out where the interest areas are. And I guess also, John, there's probably some hot topic, hot button industries that the President cares about more than others. Obviously, we've got a whole bunch of product level reviews going on. We've already had autos and steel. We just had an announcement of sorts on copper. So I guess the industries that preoccupy the President probably also will get a bit more scrutiny as well. Kristen Hallam All right. Well, Chris, I want to touch on the topic that you and I have discussed many, many times, reshoring. Does the Vietnamese deal change anything about companies' reshoring strategies? Chris Rogers Yes, I get very kind of militant about what words we use in relation to these strategies. And we use reshoring rather than friend shoring or tariff shoring or whatever the consultants have come out with lately to precisely make the point that there are a lot of different inputs into the decision about where you carry out your sourcing from. I think the first point to make is that companies have been altering their manufacturing and sourcing patterns for decades. But again, tariffs is only a part of that. Labor cost is a part of that. The attractions and operational risk for businesses of working in those countries, infrastructure investments, having the port capacity, the educational levels, these all feed into that. And so the Vietnam trade deal such that it is the letters that have been written, they don't change everything. They just change one very limited aspect. When you're thinking about sourcing, you're making 2 timeframe decisions. One is where do I source from in the next few months. This is: I've got a portfolio of sources, where do I go to? And actually, if Vietnam is going to get a 20% tariff over the next year or 2, whereas some of the other ASEAN countries have got much higher levels, then you'll turn the dial up on Vietnam for U.S. and maybe if you're sourcing somewhere else, that might be Indonesia or Thailand, then you might send that stuff somewhere else. So that rebalancing. But when it comes to making long-term strategic investments, so not dealing with what you already have, but adding new suppliers, adding new factories, what's just been announced isn't really going to move the needle on that because, again, yes, there's tariffs under President Trump. They might not be there in the future. They might be a lower or higher level in the future. So actually, you have to revert back to what are the inherent attractions or otherwise of a specific country. And this doesn't change that. It doesn't change labor costs being lower in Laos or Myanmar or Cambodia than they are in Vietnam. It doesn't change the more integrated electronic supply chain that you have in Malaysia versus Vietnam. All of these kind of areas remain very constant. And so it's very tempting to be focused on tariffs being everything, but we are trying to encourage our customers to think kind of longer term and bigger picture as well. Kristen Hallam Yes. Good advice to think long term and big picture, for sure. So speaking of thinking long term, let's look into the future here to August 1. John, what else can we expect to be announced? And do you think August 1, we'll see a final resolution to the tariffs? John Raines Will there ever be a resolution? That is a question. But I think that when it comes to this administration, I think what's key is to really look at the aims. What are they trying to achieve? Well, I think number one is to revitalize U.S. manufacturing. And how you're going to do that is by utilizing tariffs as leverage in these negotiations. And then following that, you want to do so in a manner that ensures that the U.S. economy doesn't fall off a cliff in the process. But in order to be able to achieve the first part of that equation, it can only occur if the people that you're negotiating with believe that you're actually willing to utilize tariffs as a weapon. So I think over the next 3 weeks, we're going to continue to see numerable threats in different countries and promises that the tariffs are likely to get enacted on August 1. And I think we're likely to see deals with several countries before we get to that end date. I think that's likely to occur. However, for those countries out there where a deal is not achieved, I think we're likely to see tariffs go up on August 1. I think we're likely to see this administration if only for reasons of credibility, actually enact these tariffs and then again, try to utilize those as negotiations go forward. And I think probably what's even more interesting after that is how do markets respond. If it's just a few countries out there and they're not really a huge component of the overall trade that the United States has with other countries, it's likely they just kind of look away and kind of accept these as they are. However, if we do start to see major hit on the U.S. economy, much like we saw in April in the bond markets and also in equities, I think we begin to see Donald Trump buckle a little bit, much like we saw before. However, right now, with equities at all-time highs, I think it gives them a little bit of wiggle room. So if the hit is not too bad for markets, I think you see how it plays out and these could continue for at least a few weeks, maybe a few months until things kind of peter out from there. And we actually end up getting some additional deals. Kristen Hallam Now Chris, has enough been announced this week for supply chain decision-makers to press ahead of investments? Chris Rogers No. Kristen Hallam My bad for asking you a yes or no question, right? Chris Rogers Always ask open-ended questions. So in all seriousness, I think the answer is no. John talked a lot about the country negotiations and the country tariffs. And there's this increasing kind of saying I've been hearing certainly around our colleagues and externally as well is that the country tariffs are performance, but it's the product level tariffs that are policy. And I think that's where we've got a lot of doubts at the moment and where companies maybe are just hanging back from talking about what they might do because of tariffs and making investment decisions. We had the increase in steel and aluminum tariffs to 50% from 25% almost numbed to those kind of levels. We used to get excited about antidumping cases on some specific type of cardboard where there'd be a 20% tariff, 20% it's transformative. And then we wake up one morning and it's 50% on all steel, all aluminum and could go higher. No exceptions, nobody escapes. We've just had the announcement on copper, copper at 50%. Pharmaceuticals, 200%, but potentially phased in over 12 to 18 months. The magnitudes here are huge. We also have electronics. Electronics, there's a review going on. It might just cover semiconductors. It might just cover power semiconductors, which are important for a number of strategic industries. It could cover everything. It could also cover assembled goods. This kind of ongoing quest the President has in terms of trying to onshore manufacturing that John referred to could extend into consumer devices like smartphones, computers, televisions and so on. And so without being able to see the details of these, what we call Section 232 reviews, it's very difficult for companies to say, this is what our supply chain looks like. The country tariffs, yes, I know how much of my imports of toys or fireworks or finished goods. We know where that is. That's great for the retailers. They can build a model around that. But if you're -- let's say, you're building a data center, right, another preoccupation of the President, getting built out AI data centers. You've got to buy obviously, a ton of electronics, you've got to buy a ton of copper, whether directly for wiring or indirectly for generator sets, air conditioning units, the steel frames that go in there. You just don't know what your cost base is going to be at the moment. And in fact, one of the hyperscalers said at their last earnings, the cost of our capital expenditure are going to go up because of tariffs. So it's not just the country side of tariffs that we're going to need to get clarity on, it's that product side. And we don't have a defined time line. We know what the deadlines are. It's roughly between December and January for the different reviews where the U.S. trade representative makes a recommendation to the President. But we could see stuff a lot sooner, just as we've seen in the past week with rough announcements around copper and pharmaceuticals. Kristen Hallam That gets back to what you said earlier about long term and big picture, lots more to come. Before we wrap, John talked about the situation with Brazil. Is my coffee going to get more expensive, Chris? Chris Rogers Yes. Sorry, your coffee is going to get more expensive. There's a wider point here about -- we were talking about the impact on inflation of tariffs, particularly in terms of food. Obviously, food price inflation was a big issue for the Biden administration. The fact is the harvests and weather conditions can have a much bigger impact on the flow of goods of food, in particular, than just outright tariffs. Yes, you can't necessarily transform coffee into T-shirts and import it under a different tariff. If I find myself having a coffee soaked sheet in the morning, I know the tariffs have finally gotten crazy. But yes, sadly, your coffee will and the fact of life is chocolate will as well. When it's time to start talking about Christmas candy, I'm sure we'll be touching on this topic again. Kristen Hallam Yes. We will definitely come back to the subject of chocolate. And you mentioned inflation there. So I just want to flag that we've gotten a great episode coming up with our global economist, Ken Wattret, in a few weeks on that very topic. Any final thoughts before we wrap, Chris? Chris Rogers So 2 pieces of advice. First, as I said earlier, think long term, what's your position going to be like this time next year and in 3 years' time? Second, let's not forget tariffs aren't the only game in town. There is an awful lot going on that's not tariffs. As we've discussed before as well, U.S. imports are only 15%, 15% of global trade. The other 85% is still going on. So if you're working in global supply chains, there's plenty of other opportunities and plenty of other issues to work through than just U.S. tariffs. Kristen Hallam Thanks, Chris. And final thoughts, John? John Raines I think what you had talked about earlier, I think, is key, which is like looking at the issue of resolution. One thing that we've seen from the Trump administration over the last few weeks is that this is going to be finalized. Now we're going to have some clar don't necessarily completely encapsulate what Donald Trump views in tariffs. And I think Donald Trump has been talking about tariffs really since the 1980s. I think he really envisions them as a useful implement and tool that he can employ for various different foreign policy goals. So I think these are going to be around for a while. I think we're going to be talking about these not only in August and September and the holiday season, but I think probably really for the next 3.5 years. And I think it will be interesting to see this dance between his advisers who are kind of trying to give the market a sense of security that things are moving forward versus a President who has at least shown a tendency to also want to be able to utilize these for greater goals, whether it be U.S. manufacturing or immigration or other policy goals that he has in mind. Kristen Hallam All right. Well, all that's left for me to do then is to thank you, Chris and John. That concludes this episode of The Decisive podcast. Until next time. Thank you for listening.