Tariffs…What We Know and What We Don’t Know

Throughout the “90 Day Pause,” there was some sense of calm for many in DC without regular updates provided publicly around day-to-day negotiations.  Now that the “pause” is coming to an end (at least the end of the initial deadline), activity is dramatically increasing, and some in the trade space are scrambling.  

There is a lot to unpack here, although there are still some unknowns we will need to monitor as the summer progresses.  Here is a brief breakdown: 

What We Know

We will reach the end of the “90 Day Pause” tomorrow, and the President has extended that pause until August 1st based on staff recommendation and “information on the status of discussions with trading partners.”

At the same time, the President is rapidly sending out letters to nations informing them of their tariff rates for products imported into the United States.  Not all of those tariff rates have been disclosed yet, but those that have been often closely align with the reciprocal tariff rates that were announced three months ago and then paused soon thereafter.  

Of course, there is some flexibility built in, as there has been with other trade policies from the White House.  When asked if there might be room to negotiate on these rates, the President said, “I would say firm, but not 100% firm. If they call up and they say they would like to do something a different way, we’re going to be open to that.”

What We Don’t Know

It’s not yet clear what every tariff rate will be for every country.  That will emerge over the next day or so.  It is unclear how many of these new tariff announcements were based on direct discussions - given the volume of countries it is assumed did not have robust conversations with the Administration, especially those that are not considered major trading partners. 

While it is clear there may be some interest in making adjustments before the August 1 implementation date (as noted above), there is no indication of just how much flexibility there is and what bandwidth the Administration has to address all of the outreach they are likely to receive over the next three weeks.  

At the same time, there are still details yet to be released on some of the larger frameworks that have been announced, including China, Vietnam, and the UK.  

What To Watch Going Forward

The “90 Day Pause” did not produce the number of deals some expected (understandably given the number of countries and complexity of trade conversations).  The President might position himself and his team as deal-makers in chief should countries come with concessions on the trade front.  With limited time, that would need to happen quickly.  

Republicans' reaction will also be a factor to watch, given their influence with the White House.  Many Republicans are very uneasy around tariffs - some even on the record that they violate the intent of the emergency designation (IEEPA) being used to justify them.  They are also worried about the potential election and economic impact.  Their response will be informative, especially given the significant response during the last round of announcements.  

The Democratic response will also be worth watching.  Senator Kaine (D-VA) has been leading an effort to legislatively undermine authorities being used to justify tariffs - now an issue for the courts.  Senate Finance Ranking Member Wyden (R-OR) is raising questions about the legitimacy of “trade deals” that are not approved by Congress.