President Donald Trump promised that a wave of emergency tariffs on nearly every nation would restore “fair” trade and jump-start the economy. Eight months later, half of U.S. imports are avoiding those tariffs. “To all of the foreign presidents, prime ministers, kings, queens, ambassadors, and everyone else who will soon be calling to ask for exemptions from these tariffs,” Trump said in April when he rolled out global tariffs based on the United States’ trade deficits with other countries, “I say, terminate your own tariffs, drop your barriers, don’t manipulate your currencies.” But in the time since the president gave that Rose Garden speech announcing the highest tariffs in a century, enormous holes have appeared. Carveouts for specific products, trade deals with major allies and conflicting import duties have let more than half of all imports escape his sweeping emergency tariffs. Some $1.6 trillion in annual imports are subject to the tariffs, while at least $1.7 trillion are excluded, either because they are duty-free or subject to another tariff, according to a POLITICO analysis based on last year’s import data. The exemptions on thousands of goods could undercut Trump’s effort to protect American manufacturing, shrink the trade deficit and raise new revenue to fund his domestic agenda. In September, the White House exempted hundreds of goods, including critical minerals and industrial materials, totaling nearly $280 billion worth of annual imports. Then in November, the administration exempted $252 billion worth of mostly agricultural imports like beef, coffee and bananas, some of which are not widely produced in the U.S. — just after cost-of-living issues became a major talking point out of Democratic electoral victories — on top of the hundreds of other carveouts. “The administration, for most of this year, spent a lot of time saying tariffs are a way to offload taxes onto foreigners,” said Ed Gresser, a former assistant U.S. trade representative under Democratic and Republican administrations, including Trump’s first term, who now works at the Progressive Policy Institute, a D.C.-based think tank. “I think that becomes very hard to continue arguing when you then say, ‘But we are going to get rid of tariffs on coffee and beef, and that will bring prices down.’ … It’s a big retreat in principle.” The Trump administration has argued that higher tariffs would rebalance the United States’ trade deficits with many of its major trading partners, which Trump blames for the “hollowing out” of U.S. manufacturing in what he evoked as a “national emergency.” Before the Supreme Court, the administration is defending the president’s use of the 1977 International Emergency Economic Powers Act to enact the tariffs, and Trump has said that a potential court-ordered end to the emergency tariffs would be “country-threatening.” In an interview with POLITICO on Monday, Trump said he was open to adding even more exemptions to tariffs. He downplayed the existing carveouts as “very small” and “not a big deal,” and said he plans to pair them with tariff increases elsewhere. Responding to POLITICO’s analysis, White House spokesperson Kush Desai said, “The Trump administration is implementing a nuanced and nimble tariff agenda to address our historic trade deficit and safeguard our national security. This agenda has already resulted in trillions in investments to make and hire in America along with over a dozen trade deals with some of America’s most important trade partners.” To date, the majority of exemptions to the “reciprocal” tariffs — the minimum 10 percent levies on most countries — have been for reasons other than new trade deals, according to POLITICO’s analysis. The White House also pushed back against the notion that November’s cuts were made in an effort to reduce food prices, saying that the exemptions were first outlined in the September order. The U.S. granted subsequent blanket exemptions, regardless of the status of countries’ trade negotiations with the Trump administration, after announcing several trade deals. Following the exemptions on agricultural tariffs, Trump announced on Monday a $12 billion relief aid package for farmers hurt by tariffs and rising production costs. The money will come from an Agriculture Department fund, though the president said it was paid for by revenue from tariffs (by law, Congress would need to approve spending the money that tariffs bring in). In addition to the exemptions from Trump’s reciprocal tariffs, more than $300 billion of imports are also exempted as part of trade deals the administration has negotiated in recent months, including with the European Union, the United Kingdom, Japan and more recently, Malaysia, Cambodia and Brazil. The deal with Brazil removed a range of products from a cumulative tariff of 50 percent, making two-thirds of imports from the country free from emergency tariffs. For Canadian and Mexican goods, Trump imposed tariffs under a separate emergency justification over fentanyl trafficking and undocumented migrants. But about half of imports from Mexico and nearly 40 percent of those from Canada will not face tariffs because of the U.S.-Mexico-Canada free trade agreement that Trump negotiated in his first term. Last year, importers claimed USMCA exemptions on $405 billion in goods; that value is expected to increase, given that the two countries are facing high tariffs for the first time in several years. The Trump administration has also exempted several products — including autos, steel and aluminum — from the emergency reciprocal tariffs because they already face duties under Section 232 of the U.S. Trade Expansion Act of 1962. The imports covered by those tariffs could total up to $900 billion annually, some of which may also be exempt under USMCA. The White House is considering using the law to justify further tariffs on pharmaceuticals, semiconductors and several other industries. For now, the emergency tariffs remain in place as the Supreme Court weighs whether Trump exceeded his authority in imposing them. In May, the U.S. Court of International Trade ruled that Trump’s use of emergency authority was unlawful — a decision the U.S. Court of Appeals upheld in August. During oral arguments on Nov. 5, several Supreme Court justices expressed skepticism that the emergency statute authorizes a president to levy tariffs, a power constitutionally assigned to Congress. As the rates of tariffs and their subsequent exemptions are quickly added and amended, businesses are struggling to keep pace, said Sabine Altendorf, an economist with the Food and Agriculture Organization of the United Nations. “When there’s uncertainty and rapid changes, it makes operations very difficult,” Altendorf said. “Especially for agricultural products where growing times and planting times are involved, it’s very important for market actors to be able to plan ahead.” ABOUT THE DATA Trump’s trade policy is not a straightforward, one-size-fits-all approach, despite the blanket tariffs on most countries of the world. POLITICO used 2024 import data to estimate the value of goods subject to each tariff, accounting for the stacking rules outlined below. Under Trump’s current system, some tariffs can “stack” — meaning a product can face more than one tariff if multiple trade actions apply to it. Section 232 tariffs cover automobiles, automobile parts, products made of steel and aluminum, copper and lumber — and are applied in that order of priority. Section 232 tariffs as a whole then take priority over other emergency tariffs. We applied this stacking priority order to all imports to ensure no double-counting. To calculate the total exclusions, we did not count the value of products containing steel, aluminum and copper, since the tariff would apply only to the known portion of the import’s metal contentand not the total import value of all products containing them. This makes the $1.7 trillion in exclusions a minimum estimate. Goods from Canada and Mexico imported under USMCA face no tariffs. Some of these products fall under a Section 232 category and may be charged applicable tariffs for the non-USMCA portion of the import. To claim exemptions under USMCA, importers must indicate the percentage of the product made or assembled in Canada or Mexico. Because detailed commodity-level data on which imports qualify for USMCA is not available, POLITICO’s analysis estimated the amount that would be excluded from tariffs on Mexican and Canadian imports by applying each country’s USMCA-exempt share to its non-Section 232 import value. For instance, 38 percent of Canada’s total imports qualified for USMCA. The non-Section 232 imports from Canada totaled around $320 billion, so we used only $121 billion towards our calculation of total goods excluded from Trump’s emergency tariffs. Exemptions from trade deals included those with the European Union, the United Kingdom, Japan, Brazil, Cambodia and Malaysia. They do not include “frameworks” for agreements announced by the administration. Exemptions were calculated in chronological order of when the deals were announced. Imports already exempted in previous orders were not counted again, even if they appeared on subsequent exemption lists.

Ukraine’s allies are racing to reinforce Kyiv’s position ahead of talks between Donald Trump and Russian President Vladimir Putin, amid concern that the two leaders could stitch up a bad ceasefire deal that would weaken all of Europe.  European leaders aim to agree on a three-pronged package of support for Ukrainian President Volodymyr Zelenskyy to give him the strongest possible hand in negotiations over any potential truce. Their strategy includes more funding to Kyiv, more arms for Ukraine, and moves to hit Russia’s economy with new sanctions, according to diplomats and officials preparing for the Brussels summit. The renewed urgency among Kyiv’s allies comes after Trump once again flipped his position on the war, saying he’d be open to freezing the conflict along its current battle lines — less than a month after he suggested Ukraine could win back all its territory. His comments have revived concerns that he could force Zelenskyy to hand over territory to Russia. That outcome, European officials say, would be a disaster, not just for Ukraine but also for them.  “We see President Trump’s efforts to bring peace to Ukraine. Of course all these efforts are welcome, but we don’t see Russia really wanting peace,” top EU diplomat Kaja Kallas told reporters in Luxembourg on Monday. “Russia only understands strength.”  Zelenskyy said that European leaders will ask Trump to provide long-range Tomahawk cruise missiles to Ukraine, after he came away from a meeting with the U.S. president empty-handed last week. Aside from arming Ukraine, EU countries are close to agreement on two other critical planks of their support: a 19th round of economic sanctions to hit Putin’s war chest, and a raid on Russia’s frozen financial assets to unlock some €140 billion for Ukraine.  Diplomats expect Zelenskyy will address leaders at Thursday’s summit, either in person or via video call, to rally their support. Other allies including the U.K.’s Keir Starmer are planning a broader discussion among the so-called coalition of the willing later this week.  “I firmly believe that Ukraine must be in the strongest possible position before, during and after any ceasefire, and that’s why I’m convening the Coalition of the Willing call this week,” Starmer said Monday. “We must be resolute in our support for Ukraine, and I’m committed to intensifying our efforts to cripple Putin’s war machine.” THE SHADOW OF ORBÁN The European efforts come at a pivotal moment in Ukraine’s three-and-a-half-year war against invading Russian forces. Looming over Thursday’s European Council summit will be the shadow of a planned meeting in Budapest in the coming weeks between Trump and Putin to discuss the terms of a possible truce — an initiative that follows Trump’s hitherto successful efforts to broker a ceasefire in Gaza. Hungarian leader Viktor Orbán is an ally of Trump who has remained on good terms with Putin throughout the war, to the consternation of other EU leaders. He has repeatedly held up EU sanctions against Russia and called for “peace,” arguing that Ukraine’s war is not Europe’s to fight. Some EU leaders will be lobbying to attend the Trump-Putin meeting as well as to ensure Zelenskyy has a seat at any negotiations, according to one diplomat familiar with the matter, who like others quoted here was granted anonymity to speak candidly. Zelenskyy said on Monday he would be willing to go to Budapest if he’s invited.  For Europeans, the big fear is that Trump will again side with Putin in determining what peace will look like and will pressure Zelenskyy to accept Russian terms — potentially ceding swaths of territory in the east of the country. They worry that Putin’s two-hour call with Trump left the U.S. president less willing to help Zelenskyy when they met in Washington last week. Hungarian leader Viktor Orbán is an ally of Trump who has remained on good terms with Putin throughout the war, to the consternation of other EU leaders. | Thomas Traasahl/EPA There’s also widespread skepticism among EU diplomats that Putin is at all serious about engaging in peace talks. Many see his offer to meet Trump again as another stalling tactic to buy time while he continues to bombard Ukraine with intensifying missile and drone attacks.  MAKING PUTIN PAY One key initiative that leaders will discuss this week is a plan to exploit €140 billion in frozen Russian assets held in Europe, to provide what officials are calling a “reparations loan” to Ukraine. The money would only be repaid to Moscow in the unlikely event that Russia pays war damages to Ukraine in the future, under the outline proposals European officials have readied.  Belgium, where the biggest share of these assets is held, has been anxious about the potential reputational damage the country could suffer in the financial sector if the cash deposits are raided.  Other countries have voiced concerns about the potential risk to the euro’s international credibility and want the U.S. and Japan, among other countries, to adopt similar policies.  On Thursday, EU leaders are due to decide whether they should formally request that the European Commission draft the legal proposals for creating the reparations loan in full. Officials working on the summit preparations believe Belgium’s Prime Minister Bart De Wever will agree to let the Commission, the EU’s executive, go ahead and draw up the legal plan. He would still be able to block it at a later date.  “We expect the European Council to take a political decision here to use these frozen Russian assets and to mandate the Commission to submit appropriate legislative proposals,” a German government official said. But the fact that the plan was progressing would again pressure Putin and give Ukraine the hope that the EU would be able to meet its funding needs for two or three more years, diplomats said. “If we send the message that we are willing and able to support Ukraine for the next two or three years, that will enter into their calculations when they’re discussing peace,” one diplomat added.  Meanwhile, Kallas suggested that EU leaders would sign off this week on the bloc’s 19th package of sanctions, designed to hit foreign banks and cryptocurrencies that Russia uses to evade sanctions. Slovakia’s leader Robert Fico had been holding up the sanctions to protest efforts to shut off the flow of Russian gas, which his country still relies on for energy. Diplomats involved in the negotiations said a deal is now close to secure Fico’s support. LAND GRAB FEARS  The more fundamental anxiety among EU governments is that Trump might be swayed by Putin to pressure Kyiv into giving up land in eastern Ukraine. Trump suggested the war should be frozen on its current territorial lines, with what he said was “78 percent” of the Donbas region in Russian hands. “You leave it the way it is right now, they can negotiate something later on down the line,” Trump said.  The EU’s Kaja Kallas rejected the idea of any peace deal that forced Ukraine to give up Russian-occupied land. | Olivier Hoslet/EPA But the diplomat quoted earlier warned that if Putin wins land, the EU’s Baltic states of Estonia, Latvia and Lithuania, among others, will “freak out” and worry that Russia will come for them next. The result would be “a massive rearmament” in many European countries that would upend their internal politics, the diplomat said. The EU’s Kallas rejected the idea of any peace deal that forced Ukraine to give up Russian-occupied land. “Everybody says territorial integrity is an important value that we stand for,” Kallas said. “We have to keep to that, because if we just give away the territories then, this gives a message to everybody that you can just use force against your neighbors and get what you want.” Esther Webber, Koen Verhelst, Gregorio Sorgi, Gabriel Gavin, Clea Caulcutt, Jamie Dettmer and Jacopo Barigazzi contributed reporting.

Nearly two years ago, Argentina’s newly appointed punk-haired President Javier Milei stood up on a podium in front of global elites in Davos and accused them of letting their societies drift into socialism and poverty. He went on to argue that the “main leaders of the Western world have abandoned the model of freedom for different versions of what we call collectivism,” and that all market failures were by-products of state intervention. This week, however, Davos had the last laugh: U.S. Treasury Secretary Scott Bessent threw Milei a $20 billion lifeline to help Argentina defend a currency that is collapsing despite nearly two years of shock therapy programs that had had supply-side economists and investors in raptures. “Argentina faces a moment of acute illiquidity,” Bessent posted on X. “The international community — including the IMF — is unified behind Argentina and its prudent fiscal strategy, but only the United States can act swiftly. And act we will.” The rescue act, which many have described as a country-to-country bailout, is an abrupt departure from the usual playbook of international financial diplomacy, an unusually direct intervention in a sphere normally reserved for multilateral institutions. In a strong signal that this was the result of political will, rather than financial apparatchiks just trying to keep the system stable, the money will be directly extended by the Treasury, rather than by the Federal Reserve, in the form of a currency swap. It stands to entangle the fate of the U.S. economy intimately with that of resource-rich Argentina, and tie the Trump administration directly to Milei’s shock therapy programs. At the same time, it reasserts U.S. influence in a region that China has increasingly penetrated through growing trade ties. For Europe, the corollary is that access to dollar liquidity, the essential backstop of the world financial system for nearly a century, is being politicized, and may increasingly depend on how closely its policies align with those of the U.S. “Europe should be concerned about the politicization of the swaps,” one former New York Federal Reserve official told POLITICO. The episode “underscores the need for the rest of the world to prepare for dealing with a dollar crunch without the Fed[to turn to],” added the official, who was granted anonymity to speak freely. CHAINSAW ECONOMIC MASSACRE Milei was explicitly elected in 2023 on the promise that he would take a chainsaw to Argentine government excesses. Positioning himself as the defender of freedom, once in office, he initiated a bold economic agenda focused on radical deregulation, welfare cuts, and liberalization. Within months, the country’s welfare bill had been slashed by nearly half, with the government balancing the books (before interest payments) for the first time since 2008. But it was Milei’s initial move in December 2023 to devalue the official peso exchange rate by nearly 50 percent that rocked markets the most. The hope was to better align the peso with its black market (i.e., real) rate before slowly introducing a floating exchange rate, with sliding bands. Throughout, the International Monetary Fund, the world’s lender of last resort for countries, championed Milei’s policies, which allowed Argentina to return to capital markets earlier than expected. “The agreed ambitious stabilization plan is centered on the establishment of a strong fiscal anchor that ends all central bank financing of the government,” the lender cooed in January 2024. EGG ON THE IMF’S FACE? Except things didn’t go exactly as planned. Rather than stabilize, the peso just kept depreciating, especially after Trump’s tariff announcement in April destabilized global markets. The declines threatened to make imports more expensive for ordinary Argentinians just as Milei’s disinflationary successes were beginning to become entrenched. The road to that point evolved predictably enough. In the immediate aftermath of Milei’s great devaluation, inflation hit 25.5 percent, spiking to 276 percent by February 2025. But, as social welfare cuts began to bite, inflation predictably turned into disinflation. By June 2024, monthly price rises had slowed to 5 percent, and by July-August, inflation had hit single digits for the first time in years. The International Monetary Fund (IMF) and independent observers were quick to credit Milei’s strict fiscal surplus, monetary tightening, and peso stabilization. But by April, the peso’s soft float was proving increasingly challenging to defend. Trump’s “Liberation Day” tariffs, which set a baseline rate of 10 percent for all countries, had hit Argentina’s export-dependent economy hard. Capital started to flow out amid fears that a global slowdown would crush demand for its agricultural and mineral exports. The Argentinian central bank moved to defend the peso, burning through scarce dollar reserves. Markets began to doubt that Milei’s agenda would survive, fearing that a sharp, uncontrolled depreciation would rekindle inflation just as prices were calming down. To avert a currency crisis, Argentina turned to the IMF and was granted $20 billion through the agency’s Extended Fund Facility (EFF). But despite an initial positive impact on the peso, the depreciation picked up speed again. From the perspective of both the IMF and the U.S., the failure of Milei’s reforms stood not just to unravel Argentina once again, but to delegitimize the ideological foundations of the free-market system he had touted as infallible if deployed correctly. PROXY ECONOMIC WAR WITH CHINA As confidence in Milei’s program faltered, focus shifted to whether the U.S. would make dollar support conditional on the cancellation of a pre-existing $18 billion swap line with Beijing. U.S. Special Envoy for Latin America Mauricio Claver-Carone publicly dubbed the facility “extortionate.” In September, Bessent confirmed negotiations between the U.S. and Argentina for a direct dollar swap line, reinforcing speculation that the U.S. was trying to supplant Chinese influence in the region. The news had an immediate positive effect on the peso, breaking its fall. After peaking at over 1,475 pesos, the dollar was back at 1,421 by late Friday in Europe, helped by news that a dollar-support package from Washington was imminent. How long-lasting that effect will be is yet to be determined. For now, Bessent and the IMF appear resolute that it’s just a matter of time until Milei’s policies will deliver the stability they’ve been promising. Rather than framing the U.S. swapline as a bailout, Bessent is treating the intervention as a trading play. “This is not a bailout at all, there’s no money being transferred,” he told Fox News on Thursday. Under a swap line, two parties agree to exchange up to a certain amount of their currencies, on the understanding that it will be reversed at some time in the future. “The ESF has never lost money, it’s not going to lose money here,” Bessent went on, arguing that the peso is “undervalued”. He added that Milei remains a great U.S. ally who is committed to getting China out of Latin America, and said the U.S. was going “to use Argentina as an example.” Not everyone is convinced that Milei’s policies will deliver the goods. “They’ve done this over and over and over again,” said Steve Hanke, a professor at Johns Hopkins University and a veteran of various currency reform and stabilization packages. He argued that the package will provide “a little bit of a temporary band aid, but it won’t last very long.”

The Justice Department on Monday announced the seizure of hundreds of financial accounts, fraudulent websites and laptops linked to a massive scheme by North Korean operatives posing as remote workers to infiltrate top tech companies and funnel money back to Pyongyang’s weapons program. The major government crackdown follows recent findings by cybersecurity experts revealing that several Fortune 500 firms were impacted by the intricate plot, which involves North Korean operatives using stolen identities and sophisticated AI tools to sail through the interview and hiring process. The cyber operation has grown more prolific as remote work in the U.S. has exploded, particularly in response to the Covid-19 pandemic. According to the DOJ, around 100 U.S. companies have unknowingly hired workers tied to the North Korean regime, who have also used their access to company systems to steal U.S. intellectual property and virtual currency. One company targeted was an unnamed California-based defense contractor that worked on artificial intelligence-powered equipment. Some of its technical data and files were compromised and sent abroad. “Any government contracting company utilizing remote work could be a potential victim in the future,” said an FBI official, granted anonymity as a condition of speaking to reporters ahead of the announcement. These North Korean agents are often aided by individuals running so-called laptop farms across the U.S. According to the DOJ, 29 known or suspected laptop farms across 16 states were searched. Around 200 laptops were seized by the FBI, along with dozens of financial accounts and fraudulent websites used to launder money. Individuals from the U.S., China, United Arab Emirates and Taiwan, helped North Korean agents successfully embed themselves inside U.S. companies, the press release states. U.S. national Zhenxing Wang was arrested and indicted for his involvement in a multiyear plot that allowed overseas operatives to obtain remote IT work with U.S. companies, generating more than $5 million in revenue. The scheme involved stealing the identities of around 80 U.S. citizens. “North Korean IT workers defraud American companies and steal the identities of private citizens, all in support of the North Korean regime,” Assistant Director Brett Leatherman of the FBI’s Cyber Division said in a statement. “Let the actions announced today serve as a warning: if you host laptop farms for the benefit of North Korean actors, law enforcement will be waiting for you.” In addition, four North Korean nationals were separately indicted for allegedly stealing $900,000 in virtual currencies from two unnamed companies based in Georgia. The DOJ has previously taken action against these schemes, including arresting multiple U.S. nationals running the laptop farms over the past year. One American woman pleaded guilty in February to hosting a laptop farm from her home, which allowed overseas IT workers to receive more than $17.1 million for their work. The State Department continues to offer a $5 million reward for information that could disrupt North Korean financial and other illicit activities.

Law enforcement agents in four countries carried out coordinated raids on Wednesday targeting fraudulent Chinese imports to the EU, the European Public Prosecutor’s Office announced Thursday. The EPPO-led investigation alleges that criminal networks defrauded the EU of an estimated €700 million through large-scale customs and VAT fraud involving textiles, shoes, e-scooters, e-bikes and other goods imported from China, the EPPO said in a statement. The proceeds were then laundered and sent back to China, it said. Authorities conducted 101 searches on Wednesday across Bulgaria, Greece, France and Spain, the EPPO said.  Ten suspects, including two customs officers, were arrested, and law enforcement seized €5.8 million in various currencies, 27 vehicles, luxury items, 11 properties, and thousands of shipping containers and e-vehicles, according to the EPPO. The goods in the scheme were mainly brought in through the Piraeus Port in Greece, investigators said. In 2019, the EU’s anti-fraud investigators found that customs officials at the Chinese-owned Piraeus failed to stop fraudulent imports.  The imports were substantially undervalued or misclassified to evade customs duties, and their destinations were falsified to avoid paying VAT in the country of entry. EPPO alleges the goods were then transported using false documents to France, Italy, Poland, Portugal and Spain, where they were sold on the black market.