The tariffs that United States trading partners could permanently face are starting to become apparent as President Donald Trump lets his four-month “Liberation Day” pause expire on Friday.
Tariffs are baked into a string of deals Trump has reached with countries including the United Kingdom, Japan, and the European Union. Meanwhile, Trump is setting new baseline rates for the dozens of countries that have not negotiated an agreement.
On Wednesday, he slapped a 25% tariff on India despite signaling a deal could be at hand earlier in the year, while Trump raised Brazil’s rate from 50% to 90%.
The announcements cap off a flurry of activity leading to Trump’s Friday deadline. He had pushed the date back twice, first with a 90-day pause and then an extension to Aug. 1, but Trump insisted on Wednesday that he would “stand strong” on letting the rates go into effect.
The tariffs mark a new phase in what has been a complicated and at times chaotic push to reset the terms of global trade. Treasury Secretary Scott Bessent suggested on Tuesday that more deals could come together in the coming weeks, meaning the rates are still subject to change.
“I would think that it’s not the end of the world if these snapback tariffs are on for anywhere from a few days to a few weeks, as long as the countries are moving forward and trying to negotiate in good faith,” Bessent told CNBC.
But the trade announcements have made it clear that some tariffs will remain in place indefinitely. Trump also announced a deal with South Korea on Wednesday that sets its tariff rate at 15%, the same level negotiated for the EU and Japan.
At the same time, major U.S. trading partners will be slapped with much higher rates in the absence of a deal, with Trump threatening a 35% duty for Canada and 30% for Mexico.
Trump sent at least 17 letters to mostly smaller countries earlier this month threatening tariff rates between 20% and 30%.
Meanwhile, a tariff truce between the United States and China is operating on a different timeline but is slated to expire in mid-August.
“I think countries are taking this deadline seriously,” said Paul Sracic, an adjunct fellow at the Hudson Institute, noting that South Korea sent representatives to meet with Trump in Scotland last week as they hoped to strike a deal ahead of Friday.
Trump, arguably the most trade-obsessed president in decades, has managed to strike deals in which the other country agrees to a top-line level of investment in the United States: $350 billion for South Korea and $550 billion for Japan.
“When he makes enough of these deals, there won’t be much left to negotiate,” University of Massachusetts Amherst economics professor Gerald Friedman said.
Still, Friedman said that U.S. consumers will not benefit from the deals, as products from other nations will become more expensive.
“If we’re going from a 2% average tariff to a 20% average tariff across all of the different countries, and 20% of our economy is imports, then that’s a 5% of GDP tax increase,” he said. “That’s huge.”
Trump concedes goods could cost more, but tends to focus on how much revenue the tariffs mean for the government’s coffers. Earlier in July, he said that the Treasury Department had taken in $120 billion this year in duties.
On the other hand, Ian Fletcher, co-author of Industrial Policy for the United States, argues that the tariffs could have been even higher.
“Everybody’s so surprised that the European Union has agreed to a 15% tariff,” he said. “Well, given that the Euro is probably 15% undervalued, this is a wash for them, which is why they’ve accepted it so meekly.”
Fletcher argues that the U.S. dollar is significantly overvalued, whereas most other world currencies are undervalued, offsetting much of the tariffs. However, he also says the U.S. shouldn’t necessarily maximize its leverage in trade deals, as it doesn’t want to anger its allies or induce them to try and renegotiate the minute they get the chance.
“[The smaller nations] are easy for China to manipulate and to bribe and to use as a transshipment point to launder Chinese exports,” Fletcher said. “That’s been the big issue with them.”
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“Liberation Day” may finally arrive Friday with less uncertainty than in April, as major countries avoid the elevated rates Trump initially threatened. However, another development could upend his trade progress.
The U.S. Court of Appeals for the Federal Circuit in Washington will hear arguments Thursday in a case in which plaintiffs argue that Trump has overstepped his authority under the International Emergency Economic Powers Act of 1977, or IEEPA.
If Trump ultimately loses that case, he could find much of his trade negotiations undermined, though the White House could try to find other executive authorities to impose tariffs.
“It’s really going to throw a monkey wrench into everything [if Trump loses],” Sracic said. “If the court says he can’t do this, which I think most observers think is going to be the outcome, then he has to go back to the drawing board and find some other area of the U.S. Code where he has permission to apply these tariffs. There are other code sections available, but they’re more limited.”