Trump says US will set new tariff rates for countries, skirting negotiations
Story by Giselle Ruhiyyih Ewing and Daniel Desrochers
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President Donald Trump on Friday said the U.S. would begin unilaterally informing many of its trading partners of new tariff rates, acknowledging for the first time that his administration will be unable to negotiate deals to lower tariffs with more than 50 trading partners by a self-imposed early July deadline.
After his sweeping April tariff plan sent markets spiraling and set in motion a global trade war, Trump reversed course and issued a 90-day pause on the new duties for every affected country except China, opening the door for individual countries to negotiate deals with his trade team.
But in remarks at a business roundtable in the United Arab Emirates, the final stop on a multi-day Middle East trip, Trump said that while “150 countries” were seeking to make deals with the U.S., it was “not possible to meet the number of people that want to see us.”
Instead, Trump said U.S. trading partners should expect individual letters from Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick “at a certain point over the next two to three weeks,” in which they would be “telling people what they will be paying to do business in the United States.”
The president did not specify which countries would receive letters telling them what they would pay and which countries would still have the opportunity to negotiate. Trump slapped roughly 60 trading partners with so-called reciprocal tariffs of up to 50 percent in April, while imposing a baseline 10 percent tariff on all foreign imports.
The White House did not immediately respond to a request for more details about the new strategy, though one person familiar with the negotiations, granted anonymity to share private conversations, said there were simply “too many nations to negotiate with all at once.” The person indicated that the administration plans to impose a specific tariff level after July while other deals will be negotiated “in due course.”
The comment is the first time the president has publicly acknowledged that his goal of reaching trade agreements with dozens of countries over a three-month timeline was too ambitious. Even as the administration developed a strategy of focusing on about a dozen of the country’s top trading partners, Trump continued to insist that there would be quick deals.
“We have four or five other deals coming immediately,” Trump promised last week. “We have many deals coming down the line, and ultimately we’re just signing the rest of them in.”
However, progress with important trading partners in Asia has begun to falter. While the administration indicated it was making significant progress with South Korea and Japan — two strategically important partners in countering China — negotiations with both countries have slowed.
Trump also touted a “fantastic trade deal” his administration reached with the United Kingdom earlier this month — the first of its kind since the launch of the administration’s aggressive tariff policy in April, which the president promised would usher in a string of agreements with U.S. trading partners. The U.K., however, did not face the higher reciprocal tariff, only the 10 percent baseline tariff as well as other sector-specific tariffs on autos, steel and aluminum.
But that agreement laid bare to other countries that the Trump administration intends to maintain a 10 percent baseline tariff — even on countries where it has a trade surplus. That has made major trading partners, like the European Union, more skeptical about what they may be able to get out of a trade deal with the U.S.
Trump also noted on Friday the progress his team has made in reaching a trade deal with China, which he said is “in the process of continuing to be formed,” adding that “they wanted to make that deal very badly.”
Trade tensions between the U.S. and China cooled earlier this week when the two major economies agreed to slash their triple-digit tariffs on one another, which had steadily escalated as the countries ramped up a major trade war after Trump slammed China with high tariffs in April. The truce is only temporary, however — Trump set a 90-day deadline to reach a broader trade agreement with Beijing, meaning the sky-high tariffs could snap back in August.
Megan Messerly contributed to this report.
...so the question on many minds was what happens after the 90-day deadline (sometime in July)?
...now Trump has answered that.
1. The pause was just a pause, it hasn't meant it was going away just as the markets had assumed
2. All talk about negotiating with 150 countries was just BS, clearly those countries with exception of a few, did not see the need to capitulate to his tariffs nor give him the 'deals' he was seeking
3. Now he has put those countries on notice that a unilateral tariff rate is coming (no more negotiations), which may be intended to hasten any efforts from those other countries to strike a deal before July; all Trump knows is using threats after threats to make things happen
4. If no trade deals are forthcoming by then, Trump 2.0 will determine the tariff rates specific for each country possibly on an arbitrary basis. Undoubtedly, they could set higher tariff rates on countries that are in higher relative vulnerability (that those other countries depend more on US than US does on them and with weak bargaining and economic strength position)- bully those that can be bullied.
It is likely that Trump would get frustrated with impasse with EU, Japan, S Korea as all 3 have strong interests in the auto sector.
Markets have been sleepwalking into believing the tariff threat and trade war is over, thinking Trump/Bessent has capitulated to China. Tariffs may not be as high as declared on Liberation Day but they would still be much higher than before it.
And will have an adverse effect on
1. Global trade volume
2. US consumer sentiment and spending (cost of living issue takes a notch up)
3. The Fed's delayed rate cut action
4. Demand destruction and a spillover into the commodities complex
5. Further downward pressure on the US dollar and a rising US risk premium
6. Further sell down on US Treasuries, jacking up long term US yields (raising US mortgage rates, cost of debt re-financing
US interest payments and US deficits)
7. Rising US unemployment
8. Next downward leg on global equity markets
