Tariffs : The Past , Present & Future

Following the second extension of the reciprocal tariffs, reactions from the financial world, along with others, were muted. In the past week, fourteen letters were signed, mentioning the new tariff applicable to the receiving countries. 

The past nine days of a base tariff of 10% and a higher rate on China, including sectoral tariffs, have raised customs duties from $8Bn to $22Bn per month. This has resulted in total excise and customs duties of $150 Bn in this fiscal compared to $106Bn in the last fiscal, for the same period.

The most important question is, who is paying for this? The consumer inflation, along with the unemployment rate, is stable for now. Even the import value growth is not moving much. The only ones left are the companies that export to the US. According to a recent report, Japanese automakers have slashed the price of the vehicles being exported to the USA. 

If this holds and proves to be impacting their and others' margins this quarter, then the downgrades would return, and this time it would impact 2026 earnings as well. This might coincide with higher consumer inflation as they are forced to hike prices, and higher unemployment as they are forced to cut costs. 

This would have a large and longer impact on the financial and real world in the coming months.