Today’s trade news includes more updates on US tariffs, with the EU and South Africa among those navigating ongoing volatility.

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EU suspends US retaliation

The EU has said it will suspend planned retaliatory tariffs on US goods, with President Donald Trump set to sign the trade deal he agreed with the bloc last week.

A senior EU official told the FT yesterday (4 August) that the suspension of tariffs “is a reflection of the fact that a political agreement has been reached”. They added, however, that while the plans are being “put back into the freezer”, the EU “can always it take [them] out if needed”.

Trump signed an executive order last week limiting the general tariff on EU goods entering the US to 15% - an increase on the temporary 10% rate from recent months, but substantially less than a threatened 30% rate.

The official that spoke to the FT added that there is negotiation left to be done on non-EU content in EU car exports to the US, noting that “there might be further ways to restrict content from certain non-market economies”, in reference to China.

There is also a push, they noted, for an increase to the list of goods exempted from tariffs, including wine and spirits – a theme we’ll be exploring later this week in the Daily Update.

For more information on US tariffs and access to support resources, you can visit our Tariff Hub.

South Africa struggle

The fallout from the US’ tariff programme in Africa continues this week, as a 30% rate on South African goods enters force from tomorrow.

It is the highest rate faced by an African nation, and follows several pronouncements against its government by Trump, who promised to cut off US funding for the country earlier this year over land confiscations.

The country’s government said in a statement on Monday that it had put forward a “comprehensive and ambitious Framework Deal” in May that eliminated non-tariff barriers, promoted digital trade and addressed the US’ trade deficit with the country. It continued:

“The calculation of US-South Africa ‘trade deficit’ ignores the substantial US trade surplus in services, as well as the complementary nature of the bilateral trade and investment relations between the two countries.”

The South African government said it would continue negotiations, and that it is establishing an ‘Export Support Desk’ for those affected. As many as 30,000 jobs in the country are threatened by the 30% rate, it said.

France 24 reports that President Cyril Ramaphosa has said the country will look to “diversification of our export markets”, particularly in the form of “deepening intra-African trade”. South Africa is currently the continent’s largest economy.

Some have voiced concern that the tariffs could drive South Africa and other major African economies towards China, which has announced it will drop all tariffs on imports from 33 African nations, including South Africa.

We recently explored how Trump’s tariff programme is affecting Africa in a discussion with experts from across the continent. You can watch that conversation here.

Africa shifting to China

“Africa-China trade has surpassed Africa-US trade by a big margin. China imports three times as many African products as the US, and exports six times as much to Africa.

“It is a much more important player in terms of trade than the US. Very soon, we will get to a point where China’s international trade with Africa is five times greater than the US.”

Members can access exclusive insights from our African lead, Eugene Waluvengo, on how Trump’s tariffs are affecting African trade here.

US trade deficit falls

US government data on the country’s trade deficit showed a narrowing in June, as consumer goods imports took a major hit.

The country’s goods and services trade deficit narrowed by 16.0% over the month, falling to US$60.2bn, according to the US’ Bureau of Economic Analysis. It wasn’t only imports that fell, however; exports also dipped by half a percentage point.

While the subject of US tariffs is hardly out of the spotlight, the numbers place it in renewed context. So too does a new working paper from the Peterson Institute for International Economics, which has suggested that the US’ tariff policy could be cutting the trade deficit not by increasing US exports but by reducing the international attractiveness of the country’s financial assets and devaluing the dollar.

Yale University’s Budget Lab estimated in a report published last week, meanwhile, that the overall GDP effect of Trump’s tariff programme has boosted prices by 1.8% in the short run, an equivalent of US$2,400 per household. It adds that the US economy is persistently 0.4% smaller than it would otherwise be, and that US unemployment is likely to rise 0.4% by the end of 2025 and 0.7% by the end of 2026.

With the effective average US tariff rate of 18.2% is the highest since 1934, June 2025 tariff revenue also hit US$28bn – triple the monthly rate for June 2024. Significantly, the US’ trade deficit with China hit its lowest level in over 20 years, with a fifth consecutive month of decline bringing it to $22.2bn - a 70% reduction from before it began the fall. The US tariff rate on Chinese goods currently sits at 30%.

What else is in the news

·       German finance minister Lars Klingbeil criticised Trump’s firing of a high-ranking statistician following weak labour data in the US, defending the “independence and strength of institutions” ahead of a visit to Washington

·       Trump has promised tailored tariffs on pharmaceuticals and semiconductors “in the next week or so”, with the former eventually set to rise as high as 250% over time “because we want pharmaceuticals made in our country”

Yesterday in trade

·       India hit back at Trump’s latest tariff threats; he had called out the country over its complicity in Putin’s war in Ukraine, owing to its purchase of huge volumes of Russian oil

·       A reminder that the International Trade Awards are open for nominations here

·       The OECD warned of weaker global growth because of US tariff policy and a worsening international business environment