Trump says tariffs delayed again, as few deals made with US trade partners before deadline
US President and his administration plan to start sending letters to US trade partners on Monday dictating new tariffs
US President Donald Trump holds a chart about reciprocal tariffs at the White House in Washington. AFP
US President Donald Trump said he will start sending tariff letters to trade partners on Monday, and will delay enforcing the tariffs until August 1, after three months of negotiating, with the White House having few deals to announce.
Mr Trump shocked trading partners with his “Liberation Day” announcement on April 2, where he announced a universal 10 per cent tariff on all countries plus harsher so-called reciprocal tariffs on those with which the US has a trade deficit. Mr Trump reversed course a week later after a rout in the bond market, announcing a 90-day pause to negotiate trade deals.
The pause was meant to end on July 9, but just three days before the deadline US Treasury Secretary Scott Bessent said on Sunday that the tariffs will now go into effect August 1 for those countries that fail to reach a deal with the US.
"President Trump's going to be sending letters to some of our trading partners saying that if you don't move things along, then on August 1 you will boomerang back to your April 2 tariff level," said Mr Bessent at CNN's State of the Union address.
The August deadline is "not a new deadline' for negotiations, he added.
This yet another delay to the implementation of April's Liberation Day tariffs which experts say are adding to the confusion faced by the global economy.
“There's this sense that US policy has become erratic and inconsistent, and that's much harder for businesses to adjust to plan for hard to know what to do,” said Patrick Clawson, director for research at the Washington Institute for Near East Policy.
“And so the reputation of the United States as a trading partner is going to be quite possibly more affected by the sense that US policy is inconsistent and erratic.”
Announced deals
Mr Trump most recently announced a deal with Vietnam, which had originally faced a 46 per cent reciprocal tariff. Under the deal, Vietnam would pay a 20 per cent tariff on all goods sent into the US and a 40 per cent tariff on transshipping.
Mr Trump also said Vietnam agreed to drop all tariffs on US imports.
“In other words, they will open their market to the United States,” he wrote on his Truth Social media platform.
US goods imports from Vietnam totalled $136.6 billion last year, while goods exports to Vietnam were $13.1 billion, according to the Office of the US Trade Representative. The US goods trade deficit with Vietnam was $123.5 billion last year, up 18.1 per cent from 2023.
That followed an agreement between the US and UK, which was implemented in June. Under the agreement, UK car manufacturers can export to the US under a 10 per cent tariff, although this would apply to the first 100,000 cars each year. After that, vehicle exports fall under the full 27.5 per cent tariff. The 10 per cent tariff on aircraft engines and parts were removed.
However, a tariff on steel and aluminium could double from 25 to 50 per cent if the White House and No 10 do not reach a deal by July 9.
Largest trading partners yet to strike agreement
Two of the countries at the heart of Mr Trump's tariff policy – Mexico and Canada – are also two of America's largest trading partners.
Trade talks resumed between the US and Canada earlier this week after Canadian Prime Minister Mark Carney agreed to drop a plan to tax US technology companies that drew the anger of Mr Trump. Mr Carney said on Sunday that the announcement would help support discussions being resumed by its July 21 deadline.
Relations between the US and its northern neighbour have been rocky since Mr Trump won back the White House last year.
American relations with Mexico have also been a roller-coaster in recent months. And both Mexico and Canada face a 25 per cent tariff for what Mr Trump said was to counter fentanyl smuggling.
Mexico has begun preliminary discussions with Brazil to deepen trade ties between the two countries as they seek to look beyond China and the US, the Financial Timesreported.
“Right now, India does not accept anybody in. I think India is going to do that, and if they do that, we are going to have a deal for much less tariffs,” Mr Trump has said.
Treasury Secretary Scott Bessent also told Fox News the administration was “very close” to a trade deal with India.
The country could see its reciprocal tariff rate increase to 27 per cent once the deadline passes.
Indian Prime Minister Narendra Modi had visited Washington in February, where he and Mr trump agreed to negotiate the first phase of a bilateral trade agreement by autumn and set a new goal to double bilateral trade to $500 billion by 2030.
India agreed to a trade deal with the UK in May aimed at boosting economic ties between the two countries. The agreement aims to boost bilateral trade by an additional $34 billion a year by 2040 and lowers tariffs on advanced manufacturing parts and food products.
The EU and the US are also progressing towards the framework of a trade agreement, according to reports. The EU, subject to a 50 per cent reciprocal tariff from April 2, is willing to accept a deal in which a 10 per cent tariff would apply to exports, Bloomberg reported.
Meanwhile, Mr Trump cast doubt on a potential deal with Japan after accusing the country of being “spoiled” from what he accused the country of ripping off the US for decades.
“I’m not sure if we’re gonna make a deal, I doubt it, with Japan,” he said on Tuesday.
Japan was one of the countries hardest hit by Mr Trump's reciprocal tariffs, being charged a 24 per cent levy before he announced the 90-day pause.
Gulf Co-operation Council
Meanwhile, reciprocal tariffs are not expected to be a major source of consternations for Gulf states, with members of the Gulf Co-operation Council mostly spared from the harshest of the since-delayed duties.
“Currently it doesn't look like this deadline has much direct relevance for the GCC because none of them are subject to punitive tariffs in countries that have trade surpluses with the US,” Justin Alexander, director at Khalij Economics and a non-resident fellow at the Baker Institute, told The National.
The UAE, Saudi Arabia and Qatar have all been major players in investing in the US since Mr Trump's inauguration, highlighted by the President's visit to the region in May. Following his visit to the UAE, Mr Trump said total investments announced in the Gulf region topped $2 trillion.
“Given the importance of GCC investments and 'deals' for the Trump administration, one would think they have a fairly strong bargaining position, but we will see,” Mr Alexander said.
Economists have said that the region is more probable to feel the indirect impact of tariffs, notably through oil and gas prices.
China on separate deadline
China has a separate timeline following a 90-day pause announced on May 14.
Washington and Beijing had agreed to the framework of a trade deal in June that significantly lowered the tariff rates the two countries had announced on each other and led to concerns of a global economic slowdown.
Mr Trump also said at the time China would supply rare earth materials to the US as part of the deal.