World of Worries: Political Risks in 2026

By Phyllis KONRAD

According to Cedric Chehab, Chief Economist at BMI, in particular, European security will be at the forefront, as the continent looks beyond the Russia-Ukraine war, while the Middle East will transition to the post-Gaza War era with many questions unresolved. Meanwhile, the Indo-Pacific region looks set for greater tensions, as Trump focuses more attention on China.

President Donald Trump has announced a significant escalation in US trade measures, introducing new import tariffs on goods from 14 countries. The tariffs, ranging from 25% to 40%, will take effect on August 1 unless the countries reach revised trade agreements with the United States.

The announcement was delivered through official letters to world leaders and posts on Trump’s Truth Social platform. It comes alongside an executive order extending the earlier July 9 negotiation deadline to allow more time for potential talks.

Countries affected and tariff breakdown

The newly announced tariff rates are as follows:

• 40%: Laos, Myanmar

• 36%: Cambodia, Thailand

• 35%: Bangladesh, Serbia

• 32%: Indonesia

• 30%: South Africa, Bosnia and Herzegovina

• 25%: Japan, South Korea, Malaysia, Kazakhstan, Tunisia

Several of these countries previously enjoyed low or preferential duty rates, typically in the 5% to 10% range. The new rates will apply broadly across product categories, raising costs for a wide range of goods entering the US market.

India, Vietnam, and the United Kingdom were not included in the list. Trump stated these countries are either in active discussions or have made trade concessions to avoid being penalised.

Shift from targeted to country-level trade enforcement

Unlike past measures that focused on specific sectors such as steel or technology, this new tariff strategy applies blanket rates to entire countries. Trump said the intent is to address what he described as longstanding trade imbalances and to pressure countries into opening their markets to American products.

“This is not about punishing anyone,” Trump said in a written statement. “It is about restoring balance. We are offering clear terms—fair access for US goods in return for continued access to the US market.” However, the tone in the official letters reportedly included phrases such as “non-negotiable” and “take it or leave it,” indicating a more stringent approach to trade talks.

In a new policy clause, Trump warned that any country aligning with the BRICS bloc could face an additional 10% tariff on top of the new base rates. This clause was described as a response to what Trump called “anti-American trade policies” promoted by BRICS countries.

BRICS, which includes Brazil, Russia, India, China, and South Africa, has been expanding its global economic influence. The clause reflects growing strategic tension between Washington and emerging trade alliances. Several governments expressed concern and signalled their intent to negotiate.

Japan called the US move “regrettable” and said it would seek clarification and engage in dialogue. South Korea and Malaysia also said they would pursue diplomatic options to avoid tariff increases. Thailand and Indonesia, both heavily reliant on US-bound exports, are reviewing the implications and preparing formal responses.

Smaller nations such as Laos and Myanmar, which depend heavily on apparel and garment exports to the US, are expected to face the sharpest economic impact. Several African nations, including South Africa and Tunisia, also raised early concerns through diplomatic channels.

Economic and market impact

Major US indices fell, with the S&P 500 and Dow Jones Industrial Average showing declines amid fears of rising import costs and supply chain disruption. Reports also suggest that the new tariffs could drive up prices for US consumers and businesses, especially those reliant on imports from Southeast Asia and Africa. Sectors such as apparel, electronics, and automotive parts may be particularly affected.

Despite the bold tone, Trump left the door open for last-minute deals. He stated that the August 1 deadline is firm but could be adjusted if countries show a willingness to revise trade terms.

The policy shift is part of a broader move toward bilateral deal-making and away from multilateral trade frameworks. The emphasis on country-level tariffs reflects a more transactional model of engagement, where access to the US market is tied directly to favourable terms for American producers.

In the coming weeks, countries affected by the tariffs are expected to step up diplomatic engagement with the US. Some may file formal objections through the World Trade Organisation, while others may look to strike bilateral arrangements before the new rates take effect.

US agencies are expected to release further guidance on how the tariffs will be implemented, including any product-specific exclusions or enforcement mechanisms.

Source: ET INSIGHTS 

Disclaimer: The views expressed in this article are those of the author/authors and do not necessarily reflect the views of ET Edge Insights, its management, or its members