When Donald Trump unveiled his “liberation day” tariffs in the spring, only to pull the plug days later as panic tore through global markets, his officials scrambled to present the climbdown as temporary.
Three months of frenetic talks would enable the Trump administration to strike dozens of trade agreements with countries across the world, they claimed. “We’re going to run,” the White House trade adviser Peter Navarro told Fox Business Network. “Ninety deals in 90 days is possible.”
The 90-day pause Trump ordered on his steep tariffs is almost up, and 90 deals have not materialized. The US is again on the brink of launching a trade assault against dozens of countries, with rates including 27% on Kazakhstan, 47% on Madagascar and 36% on Thailand.
“I’m not thinking about the pause,” the president claimed during a briefing with reporters earlier this week, when asked about Wednesday’s deadline. “I’ll be writing letters to a lot of countries. And I think you’re just starting to understand the process.”
Business leaders, lobbyists, economists and investors might disagree. Even officials in Trump’s own administration have at times struggled to keep up. Another cliff edge has reared into view, forcing them to return to a familiar question: will he actually go through with this?
“I would suspect he’s serious,” said Marc Busch, professor of international business diplomacy at Georgetown University. “I think he’s going to give a pass to the countries negotiating in good faith. But as of 9 July, a lot of the news will be big tariffs that the US hasn’t seen since the 1930s are in effect.”
A handful of agreements have emerged, cooling some tensions. A partial deal with the UK was first to emerge, before a delicate truce with China, and a pact with Vietnam. Officials are also said to be closing in on a “framework” arrangement with the EU.
But these breakthroughs have been significantly narrower than conventional free trade agreements, which can take years to hammer out. “These aren’t real trade deals. These are cessations of hostility,” said Busch. “These are purchasing agreements that may or may not appease Trump for maybe a little while, thrown in with some aspirational stuff.”
Even if Trump extends the 90-day pause next week, or strikes myriad deals at breakneck pace, current tariff levels are still much higher than they were before his return to office. The effects of this are still filtering through to prices for US consumers.
“The US economy is definitely, I would say, breaking more to the positive than would have been the narrative, or the expectation, kind of right after liberation day,” said John Waldron, president of Goldman Sachs. “There’s still an expectation that we’re going to see more inflation over the course of the summer.”
Mid-sized businesses in the US face an estimated $82.3bn in additional costs if the US maintains a 10% universal rate on all imports, as well as higher rates of 55% on China and 25% on Mexico and Canada, according to analysis by the JPMorganChase Institute.
Such firms “often play a crucial role in regional economies and as part of larger supply chains”, said analysts at the institute. “If they struggle, it may cause ripple effects for other businesses and their communities.”
If the “liberation day” tariffs are reimposed after the pause, costs would rise significantly. But even if they are not, the duties Trump has already introduced – and remain in force – are leaving companies with a hefty bill.
The administration’s playbook, of hiking tariffs on a country dramatically and then cutting them back as a result of an agreement, is “like a retailer that one day increases prices by 100% and another day announces a 30% sale”, said Busch. “It’s quite extraordinary that we’re still debating this issue,” he added. “American businesses are already eating and passing on parts of these tariffs to consumers.”
No senior federal official has been more vocal about this reality than Jerome Powell, chair of the Federal Reserve, who – despite Trump’s public demands and attacks – has kept US interest rates on hold while waiting to see how the administration’s trade strategy pans out.
“Someone has to pay for the tariffs,” Powell said at a recent press conference, noting how the cost filters through a supply chain, from the initial manufacturer through to the customer buying a product. “All through that chain, people will be trying not to be the ones who pick up the cost.
“But ultimately, the cost of the tariff has to be paid and some of it will fall on the end consumer. We know that. That’s what businesses say. That’s what the data says from past evidence. So we know that’s coming.”
Trump does not see it this way, insisting that tariffs are taxes on other countries, rather than US businesses and consumers.
Whatever happens over the next few days, those attempting to take a longer-term view believe the main actions he has taken in recent months – like imposing blanket 10% tariffs – could remain in place for many years to come.
“We think it’s likely that high and broad-based tariffs are here to stay because, of all the purported goals of trade policy, they’re proving most successful at raising revenue,” said Michael Pearce, deputy chief US economist at Oxford Economics. “Given the fiscal challenges that lie ahead, those revenues will be hard for future administrations to replace.”
