Trump's tariff date arrives after a 90-day rollercoaster
That is when the 90-day reprieve from Trump's so-called 'reciprocal' levies ends, clearing the way for the protectionism he thinks will narrow US trade deficits and spark a manufacturing revival. The wielding of unilateral tariffs is upending a system that for decades encouraged lower barriers to commerce under rules enforced by the World Trade Organization.
The US president is not just ripping up the old playbook for trade alliances. Trump's tariffs will also help fill Treasury coffers at a time when investors are worried about the sustainability of the nation's debt – particularly after Congress sealed much of the president's economic agenda in a US$3.4 trillion tax cut and spending package.
'The money will start to come into the US on Aug 1,' Trump said, referring to the date he's declared for the start of some new tariffs.
Heading into the final days before the Jul 9 deadline, negotiators are scrambling to come up with trade pacts.
Treasury Secretary Scott Bessent has called trade one of three pillars of Trump's agenda, which along with tax cuts and deregulation is aimed at unleashing investment, job growth and innovation.
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So far, the US economy is holding up, hiring is healthy, and inflation has remained tame. But the Federal Reserve is wary about tariffs despite pressure from Trump to lower rates, and wants to see how they feed through to output in the next few months.
Trump's second-term rush to overhaul US trade policy has also fuelled uncertainty for markets and corporate supply-chain managers trying to game out the effects on production, inventories, hiring, inflation and consumer demand. That sort of routine planning is hard enough without factors like tariffs that are moving forward one day, and potentially gone the next.
Trump is famous for saying that 'tariffs' is his favourite word. Yet the economic fallout may blindside a president who incorrectly asserts that trading partners directly pay the customs duties he imposes. In fact, the burden most often falls on American importers, who must contend with tighter profit margins and weigh up whether to raise prices on consumers, seek discounts from their foreign suppliers, or a combination of both.
Bloomberg Economics estimates that if reciprocal tariffs are raised to their threatened levels on Jul 9, the average duties on all US imports could climb to about 20 per cent from near three per cent before Trump's inauguration in January. That would add to multiple risks to the US outlook. BLOOMBERG
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