US Tariffs Set to "Boomerang" Back Up as Trump Administration Ends 90-Day Pause

The Trump administration's 90-day pause on higher tariffs on imports from some countries is set to end, with Secretary of the Treasury Scott Bessent warning that unless countries make concessions, tariffs will "boomerang" back to the steep levels set in April. This comes as President Trump has only struck three trade pacts during the pause period, leaving the rest of the global economy in limbo. Bessent stated that countries that failed to reach agreements with the US would receive letters from Trump informing them that higher levies on their imports would take effect on August 1. Meanwhile, economic data has been relatively benign, with the labor market holding up and inflation not showing signs of accelerating rapidly due to the tariffs.

Key Takeaways:

• US Secretary of the Treasury Scott Bessent warned that tariffs on imports from some countries will "boomerang" back to the steep levels set in April unless countries make concessions and strike deals with Washington.
• The 90-day pause on higher tariffs on imports from some countries is set to end, with Bessent stating that President Trump will send letters to countries that failed to reach agreements with the US, informing them of higher tariffs on August 1.
• Only three trade pacts have been struck during the pause period, with the UK, China, and Vietnam being the only countries to reach agreements with the US.
• Secretary Bessent stated that about 100 letters would be sent to smaller countries with little US trade, setting their tariffs at 10 per cent.
• White House Council of Economic Advisers Chair Stephen Miran reported "good things" about negotiations with Europe and India, but emphasized that the president will decide later this week whether countries are doing what it takes to gain access to the American market.
• The Trump administration's pause on higher tariffs three months prior was met with a strongly negative reaction from investors, but the market appears to have adjusted to the Trump trade regime.

Statistics:

• 90 days: duration of the pause on higher tariffs on imports from some countries
• 100: number of letters Secretary Bessent stated would be sent to smaller countries with little US trade
• 10 per cent: tariff rate set for smaller countries with little US trade
• 3: number of trade pacts struck during the pause period
• 24 million: number of jobs created in the United States since President Trump took office
• 2.3 per cent: annual inflation rate in the United States as of June 2023
• 150: billions of dollars of trade deficit in the United States as of June 2023

Sources:

• CNN, Bessent interview
• ABC, Miran interview
• White House press release, June 2023