We’ve gone from April to July and now to August on Trump’s reciprocal tariffs deadline. But this time around, is he really going to follow through on stronger tariffs?
The 9 July deadline went by without much of a fuss as Trump chose to use that as a checkpoint to send out tariff letters instead. He is now reaffirming that those who got served will have to do strike a deal and if not, face up against higher tariffs come 1 August.
The question now is, will Trump really follow through on that? It will definitely be interesting to see how subjective that treatment will be especially on countries that are supposedly still negotiating “in good faith”.
With the trade war against China now taking a backseat, the negotiations with the EU is one of the more critical ones to watch out for. And that’s still on a knife’s edge at the moment with no compromise in the offing. As things stand, the EU themselves are standing ready to retaliate and so this will be an important point to keep an eye out for.
Then, you have the closer allies to the US such as India and Japan. The latest news is that India is not likely to agree to a limited deal while negotiations continue. However, they have not been served a tariff letter by Trump. So, will it be the case that they will be slapped with the initial 26% tariffs from April?
As for Japan, we’ve seen countless negotiations already between Akazawa, Lutnick, and Bessent over the last few months. And yet, both sides still have nothing to show for it even up until today. And when you throw in the political uncertainty in Tokyo into the mix, any compromise by 1 August is extremely unlikely at this stage.
So, will Trump really follow through to hit Japan with 25% tariffs even as negotiations are continuing?
Bessent said yesterday that they don’t want to rush into any deals and that the 1 August deadline is just a stated timeline. It’s not a hard rule for a deal to be struck as the US wants to work on “quality” deals instead. So, what exactly does that mean?
Well, we will have ten more days to find out. For now, it’s all a waiting game to see if there will be another TACO scenario playing out at the end of it all.
Head on over to investingLive (formerly ForexLive) to get in on the know!
This article was written by Justin Low at investinglive.com.