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It might seem like Trump is winning his trade war. But the US could soon be in a world of pain

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Last week, US President Donald Trump issued an executive order updating the “reciprocal” tariff rates that had been paused since April.

Nearly all US trading partners are now staring down tariffs of between 10% and 50%.

After a range of baseline and sector-specific tariffs came into effect earlier this year, many economists had predicted economic chaos. So far, the inflationary impact has been less than many predicted.

However, there are worrying signs that could all soon change, as economic pain flows through to the US consumer.

Decoding the deals

Trump’s latest adjustments weren’t random acts of economic warfare. They revealed a hierarchy, and a pattern has emerged.

Countries running goods trade deficits with the US (that is, buying more than they sell to the US), which also have security relationships with the US, get 10%. This includes Australia.

Japan and South Korea, which both have security relationships with the US, were hit with 15% tariffs, likely due to their large trade surpluses with the US.

But the rest of Asia? That’s where Trump is really turning the screws. Asian nations now face average tariffs of 22.1%.

Countries that negotiated with Trump, such as Thailand, Malaysia, Indonesia, Pakistan and the Philippines, all got 19%, the “discount rate” for Asian countries willing to make concessions.

India faces a 25% rate, plus potential penalties for trading with Russia.

South Korea received a 15% ‘reciprocal’ tariff.
YONHAP/EPA

Is Trump winning the trade war?

In the current trade war, it is unsurprising that despite threats to do so, no countries have actually imposed retaliatory tariffs on US products, with the exception of China and Canada. Doing so would drive up their consumer prices, reduce economic activity, and invite Trump to escalate, possibly limiting access to the lucrative US market.

Instead, nations that negotiated “deals” with the Trump administration have essentially accepted elevated reciprocal tariff rates to maintain a measure of access to the US market.

For many of these countries, this was despite making major concessions, such
as dropping their own tariffs on US exports, promising to reform certain domestic regulations, and purchasing various US goods.

Protests over the weekend, including in India and South Korea, suggested many of these tariff negotiations were not popular.

Even the European Union has struck a deal accepting US tariff rates that once would have seemed unthinkable – 15%. Trump’s confusing Russia-Ukraine war strategy has worried European leaders. Rather than risk US strategic withdrawal, they appear to have simply folded on tariffs.

Some deals are still pending. Notably, Taiwan, which received a higher reciprocal tariff (20%) than Japan and South Korea, claims it is still negotiating.

Through the narrow prism of deal making, it is hard not to escape the conclusion that Trump has gotten his way with everyone – except China and Canada. He has imposed elevated US tariffs on many countries, but also negotiated to secure increased export market access for US firms and promised purchases of planes, agriculture and energy.

Why economic chaos hasn’t arrived – yet

Imposing tariffs on goods coming into the US effectively creates a tax on US consumers and manufacturers. It drives up the prices of both finished goods (products) and intermediate goods (components) used in manufacturing.

Yet the Yale Budget Lab estimates the tariffs will cause consumer prices to rise by 1.8% this year.

This muted inflationary impact is likely a result of exports to the US being “front-loaded” before the tariffs took effect. Many US importers rushed to stockpile goods in the country ahead of the deadline.

It may also reflect some companies choosing to “eat the tariffs” by not passing the full cost to their customers, hoping they can ride things out until Trump “chickens out” and the tariffs are removed or reduced.

A US flag seen flying with the port of Los Angeles in the background

Earlier this year, many companies raced to bring inventory to the US before tariffs were imposed.
Robyn Beck/AFP/Getty

Who really pays

Despite Trump’s repeated claims that tariffs are a tax paid by foreign countries, research consistently shows that US companies and consumers bear the tariff burden.

Already this year, General Motors reported that tariffs cost it US$1.1 billion (about A$1.7 billion) in the second quarter of 2025.

A new 50% tariff on semi-finished copper products took effect on August 1. That announcement in July sent copper prices soaring by 13% in a single day. This affects everything from electrical wiring to plumbing, with costs ultimately passed to US consumers.

The average US tariff rate now sits at 18.3%, the highest level since 1934. This represents a staggering increase from just 2.4% when Trump took office in January.

This trade-weighted average means that, on typical imported goods, Americans will pay nearly one-fifth more in taxes.

Alarm bells

The US Federal Reserve is concerned about these potential price impacts, and last week opted to maintain interest rates at their current levels, despite Trump’s pressure on Chairman Jerome Powell.

And on August 1, economic data released in the US showed significant slowing in job creation, some worrying signs in economic growth, and early signs of business investment paralysis due to the economic uncertainty unleashed by Trump’s ever-changing tariff rates.

Trump responded to the report by firing the US Bureau of Labour Statistics commissioner, a shock move that led to widespread concerns official US data could soon become politicised.

But the worst economic impacts could still be yet to come. The domestic consequences of Trump’s tariff policies are likely to amount to a massive economic own goal.



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US Open tennis 2025: Aryna Sabalenka beats Amanda Anisimova in women’s singles final – live | US Open Tennis 2025

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Key events

It’s a fourth grand slam title overall for Sabalenka and she’s the first player to successfully defend their US Open singles title since Serena Williams in 2014. Her record in her past six hard-court majors reads W/F/W/W/F/W. It’s almost Sinner-like.





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Mexican festivals in Chicago canceled amid Trump plans to deploy troops | Chicago

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Donald Trump’s plan to deploy national guard troops and federal immigration agents to Chicago is already having an impact on the city’s Mexican community.

Organizers have canceled several local events tied to Mexican Independence Day, which occurs on 16 September.

People of Mexican descent constitute about 21% of the city’s population, according to census data, and hold annual events around the holiday that attract thousands of people.

But Trump recently inaccurately described Chicago as “the most dangerous city in the world” and said: “We’re going in.”

The administration plans to send 230 agents, most of whom work for Customs and Border Protection, to Chicago from Los Angeles as part of an increased effort to make immigration arrests, the Chicago Sun-Times reported.

At least three events connected to the holiday have been canceled or postponed. Organizers decided to cancel El Grito Chicago, an event that drew 24,000 people last year, and was scheduled for 13-14 September.

“It was a painful decision, but holding El Grito Chicago at this time puts the safety of our community at stake – and that’s a risk we are unwilling to take,” the event’s website stated. “While we’re torn by this decision, when we brought this celebration back, our aim was to create a safe, affordable, family-friendly, community festival for all.”

The anxiety in the country’s third-largest city comes after Trump deployed national guard troops to Los Angeles and Washington DC.

Contrary to the president’s assertions, Chicago is not among the country’s most dangerous cities, and the number of homicides decreased from last year to this year, the Guardian reported.

Illinois had about 550,000 unauthorized immigrants in 2023, according to the Pew Research Center. The governor,JB Pritzker, said that he was concerned about Ice agents targeting attendees at the Mexican Independence Day events.

“We have reason to believe that Stephen Miller [the White House deputy chief of staff] chose the month of September to come to Chicago because of celebrations around Mexican Independence Day that happen here every year,” Pritzker said at a news conference.

In addition to El Grito, the Mexican Independence Day parade and festival in the suburb of Waukegan was postponed until November, and the Latin Heritage Fest in Wauconda was canceled, a local Fox affiliate reported.

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“It feels like a slap in the face,” Galiela Mendez, 25, told the Associated Press of the El Grito cancellation. “I think we are all on edge because it’s the same people that describe our home this way, but they never come here and see it for themselves.”

Despite the uncertainty, on Saturday morning, people attended a parade celebrating the holiday in one of the city’s primarily Mexican neighborhoods.

“My heart is like pounding a little bit because I don’t know what to expect today,” Magdalena Alvarado, a longtime Chicago resident, told the Associated Press.

Meanwhile, Trump posted on Truth Social that Chicago was about to find out “why it’s called the Department of War”.

Trump signed an executive order Friday authorizing that title for the Department of Defense.

The post, in reference to the film Apocalypse Now, also stated: “I love the smell of deportations in the morning.”

Pritzker responded on X, “The President of the United States is threatening to go to war with an American city. This is not a joke. This is not normal.”



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Cable snapped before crash, investigators say

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Alison Roberts & Henri AstierBBC News, in Lisbon and London

Reuters Wreckage of the funicular that crashed in Lisbon on WednesdayReuters

One of the two cabins hurtled down the steep road, derailed and crashed into a building

Portuguese officials investigating Wednesday’s deadly funicular crash in Lisbon say a cable along the railway’s route snapped, but the rest of the mechanism was functioning properly.

“After examining the wreckage at the site, it was immediately determined that the cable connecting the two carriages had given way,” a statement by the national transport safety office said.

The brakeman tried to apply emergency brakes but failed to prevent the derailment, the investigators add.

Sixteen people died and about 20 were injured when the upper carriage of the iconic yellow Glória funicular railway crashed into a building.

Five of those killed were Portuguese along with three Britons, two South Koreans, two Canadians, an American, a Ukrainian, a Swiss and a French national, police said.

The 140-year-old funicular is designed to travel up and down Lisbon’s steep slopes, and is an important form of transport for the city’s residents – and a popular tourist attraction.

Although the brakeman activated the pneumatic brakes and a manual brake when the cable came loose, it is not clear whether another, automatic brake came on as it was supposed to, the report states.

It says the carriage was travelling at about 60km/h (37mph) when it hit the building.

The seven-page statement also says the cable was only 337 days into its expected 600-day operational life.

It is still unclear how many victims were travelling on the carriage – which can hold about 40 passengers – and how many were on the street, the document states.

Six of those injured were admitted to intensive care, while three sustained minor injuries.

The investigators stress they have not reached “valid conclusions” about the cause of the crash and will provide a full preliminary report within 45 days.

Portugal’s Prime Minister Luis Montenegro described the incident as “one of the biggest tragedies of our recent past”.



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