The Trump administration has already levied increased tariffs. These tariffs are designed to punish foreign countries that run massive trade surpluses with the United States. President Donald Trump floated the idea of a 25% tariff on automobiles recently. If implemented, this move would add onto the already draconian 50% tariffs on steel and aluminum, completely upending international trade as we know it. On Monday, this administration will send demand letters to China, Brazil, India, and the EU. These letters will help to alarm that higher tariffs may begin as early as August 1st.
Time is running out ahead of Wednesday’s deadline. For one, the Trump administration has accelerated the dawning onslaught against trading partners to finalize new or revised trade agreements. On the trade front, Trump signaled that he would send out 12 to 15 missives to foreign governments announcing the imposition of tariffs. He continued on the theme of urgency, as he asserted that the administration’s priority is to speed up the pace of negotiations.
Tariff Details and Economic Impact
President Trump’s recent tariff moves are simply the first steps in a much larger strategy to combat what the President describes as an economic emergency. The administration implemented a blunt 10% baseline levy on imports from every country that started in April. Such a drastic move has raised eyebrows—even panic—among economists. They worry it might start trade wars with potentially catastrophic effects on the global economy.
Even the mere threat of such increased tariffs has already shaken up world markets, eliciting immediate responses from China, Europe and others. In response to these concerns, U.S. Ambassador Pete Hoekstra made it clear that Canadians should expect letters indicating new tariffs on their goods. This decision makes Canada an outlier. Canadian Prime Minister Mark Carney has repeatedly pledged that Canada will have a new deal in place by Canada Day—July 21. Failing such agreement, the country will adopt countermeasures.
“We’ve made deals also,” – Donald Trump
This pressure to close deals has resulted in some agreements, including a recently announced deal with Vietnam. Under such a deal, U.S. agricultural products would be able to access the Vietnamese market tariff-free. Vietnamese exports to the United States will be hit with a 20% tax. That’s not the whole story since April, there’s been little to no progress made in trade negotiations with almost all of these foreign governments.
Negotiation Pressure and Potential Extensions
Now as the deadline looms, administration point people on the negotiations are making a concerted effort to stress the need for quick agreements. When reached by email, Treasury Secretary Scott Bessent noted that he remained hopeful about the prospects for speedy negotiations. He remarked, “I think we’re going to see a lot of deals very quickly,” highlighting expectations for forthcoming agreements.
Despite the urgency, Kevin Hassett, a senior economic advisor, acknowledged that there may be flexibility in the deadline for negotiations. He noted that deadlines are real. He has said that some of those tasks are reaching those deadlines, which may start to result in missed deadlines. At the end of the day, the president is the one who’s really going to be making that determination. This gives hope that while the administration is continuing to push, in light of negotiations still going on there is potential for making meaningful adjustments.
International Responses and Future Outlook
The international response to each of Trump’s tariff announcements has been equally opaque and mixed. A week after the first tariff proposals were announced, financial markets reacted with alarm. In a surprising counter-move, the Trump administration announced a 90-day delay on most of the proposed higher import taxes, hours before they were set to go into effect. This temporary halt is a sign that the administration recognizes what could happen if these trade policies were implemented.
Negotiations are still underway with other countries, including many of those now affected by the new tariffs. Consequently, the global economic landscape is rapidly changing. To us, the administration’s approach looks balanced between the immediate trade pressures and long-term, strategic goals.
“So we’ll get to have a combination of letters, and some deals have been made,” – Donald Trump
