Tariff Deadlines to Be Extended, per President

The US announced a massive new tariff scheme in early April, and allowed 90 days for negotiation of trade deals that would allow trade partner countries to achieve relief from high tariffs.  Few deals have been announced in that 90 days, which is set to expire this week.  The administration signaled on Sunday that the deadline will be extended by a few further weeks, as the US and EU reportedly close in on a deal.  The UK and Vietnam have already agreed to framework trade deals with the US, and the president has said that others are coming this week.  He has also said that terms of those deals, as well as new unilateral tariff rates, will take effect on August 1st.  

WHY IT MATTERS

The deals announced so far are short on details, but include 10% baseline tariffs on all imports as well as varying additional tariffs tied to industry or to country of origin.  The EU is reported to be readying retaliatory tariffs on certain US goods if no trade deal is reached and the US imposes new unilateral tariffs on EU goods.  

The sweeping tariff announcements in the spring triggered deep drops in the financial markets, much of which have been recovered in the ensuing 90 days.  Companies have raised prices and shifted production and sourcing, stockpiled inventory or parts, and taken other measures to mitigate their risks.  Without detailed guidance on specifics, however, it is difficult to plan for the effect of tariffs.  For that reason, many industries have been eyeing the end of the 90-day waiting period with some trepidation.  The recent announcement that tariff deadlines will be put off for a further few weeks may help smooth over market fears of a shift this week. If, in those three weeks, the government can provide more specifics of how tariffs will work – which goods, which countries, specific rates – companies can adjust accordingly.  Meantime, it is prudent to continue to pursue contractual and other means of allocating supply chain risks.