Business Daily Media

Men's Weekly

.

‘I’m going to send letters’: the deadline for Trump’s ‘reciprocal’ trade tariffs is looming

  • Written by Peter Draper, Professor, and Executive Director: Institute for International Trade, and Director of the Jean Monnet Centre of Trade and Environment, University of Adelaide
‘I’m going to send letters’: the deadline for Trump’s ‘reciprocal’ trade tariffs is looming

US President Donald Trump’s 90-day pause on implementing so-called “reciprocal” tariffs on some 180 trading partners ends on July 8.

How are countries responding to the threat, and will the tariffs be re-applied from July 9?

What the US thinks ‘reciprocal’ means

The United States is demanding four things from all trading partners, while offering little in return. So these negotiations are anything but “reciprocal”.

The main demand is to rebalance bilateral goods trade between the US and other countries. Nations with trade surpluses – meaning they export a greater value of goods than they import from the US – will be encouraged to import more from the US and/or export less to it.

The US is also pushing countries to eliminate a range of “non-tariff barriers” that may affect US export competitiveness. These barriers are drawn from the United States Trade Representative’s (USTR) March 2025 report[1] and include a variety of perceived “unfair” practices, from value-added taxes (such as the Goods and Services Tax) to biosecurity standards such as those Australia applies to agricultural imports.

In a nod to the “tech bros[2]”, (alleged) restrictions on digital trade services, such as Australia’s media bargaining code, and digital service taxes must be removed, along with taxes on the tech giants. On Monday, Canada dropped a new digital service tax[3] on firms such as Google and Meta after Trump suspended trade talks.

Amazon founder Jeff Bezos, Google CEO Sundar Pichai and Tesla and SpaceX CEO Elon Musk attend the inauguration ceremony before Donald Trump is sworn in as the 47th US Presiden
Amazon founder Jeff Bezos, Google CEO Sundar Pichai and Tesla CEO Elon Musk at President Trump’s inauguration ceremony. Saul Loeb/Pool/AFP via Getty Image[4]

Countries must also agree to reduce reliance on inputs from China in any exports to the United States. That means companies that moved manufacturing from China[5] to countries such as Vietnam during President Trump’s first term trade wars will face challenges in sourcing input components from China.

Put together, this is a difficult package for any government to accept without securing something in return.

Who holds the cards?

Trump has been fond of saying the United States holds “all the cards”[6] in trade negotiations.

It’s not known precisely how many countries are negotiating bilateral deals with Washington. Between 10 and 18 countries are priority “targets”, or to use an early, colourful phrase, were targeted as the “Dirty 15[7]”.

Category 1 likely comprises many more countries than those in the US’s naughty corner. These countries were saddled with large reciprocal tariffs despite the tariff formula’s evident shortcomings[8]. To paraphrase Trump, these countries don’t hold the cards and have limited negotiating power.

They have no choice but to make concessions. The smarter ones will take the opportunity to make reforms and blame the bully in Washington. Mostly these are developing countries, some with high dependency on the US market, including the poorest[9] such as Bangladesh, Cambodia, and Lesotho.

To make matters worse, they must keep one eye on China for fear of retribution in case Beijing perceives any promises to reduce dependence on Chinese inputs would compromise Chinese interests.

Category 2 consists of countries that “hold cards”, or have some degree of leverage. Some, such as Canada, Japan, India and the EU, will secure limited US concessions although they may resort to retaliation[10] to force this outcome. From discussions with our government and academic sources, Japan and India likely won’t retaliate, but Canada has previously[11] and the EU likely will.

Canada's Prime Minister Mark Carney is seen during the closing news conference at the G7 Summit
Canada’s Prime Minister Mark Carney at a recent summit. Adrian Wyld/The Canadian Press via AP

Australia’s Prime Minister Anthony Albanese initially said he would not negotiate and has repeated US reciprocal tariffs “are not the act of a friend[12]”.

However, the Australian government is wisely looking to bolster its negotiation cards, such as creating a critical minerals strategic reserve.

Read more: Plans to stockpile critical minerals will help Australia weather global uncertainty – and encourage smaller miners[13]

No doubt policy makers are also reminding the US of their favourable access to Australia’s military infrastructure which could be essential to any US-China military confrontation.

China is category 3.

The Chinese government is determined not to kowtow to Washington as they did in Trump’s first term. The so-called “Phase 1 deal” was signed but instantly forgotten in Beijing.

Beijing has several cards[14], notably dominance of processed critical minerals and their derivative products, particularly magnets, and the US’s lack of short-term alternative supply options.

After China expanded export controls on rare earths and critical minerals, shortages hit the auto industry[15] around the world and Ford was forced to idle plants.

What happens next?

Kevin Hassett, director of the National Economic Council, suggested[16] on Friday more deals may be signed before July 8. But Trump is likely to undermine and/or negate them as his transactional whims change.

The British, after announcing their US deal that included relatively favourable automotive and steel export market access, watched in horror as Trump doubled tariffs on steel imports[17] to 50%, and reimposed the 25% tariff on the UK.

The UK government was reminded this US administration cannot be trusted. That is why countries negotiate binding trade treaties governed by domestic and international laws.

Many countries are waiting on the outcomes from various US court battles testing whether the president or Congress should have the power to impose unilateral tariffs. After all, if there is a chance the Supreme Court[18] rules Trump cannot change tariffs by decree, then why negotiate with a serially untrustworthy partner?

The Japanese government, for example, recently announced it is pausing negotiations[19] after the US demanded increased defence spending.

‘I’m going to send letters’

Trump on Sunday suggested[20] he would simply send letters to foreign nations setting a tariff rate. “I’m going to send letters, that’s the end of the trade deal,” he said.

That does not bode well for countries negotiating in good faith. It’s likely tariffs will be reimposed and bilateral negotiations will drag on to September or beyond as Treasury Secretary Scott Bessent[21] has said.

After all, even the US government has limited bandwidth to process so many simultaneous negotiations. Category 2 trading partners will increasingly test their own political limits. And the rest of the world is hoping for a favourable Supreme Court ruling that may, like the character Godot[22] in the play Waiting for Godot, never come.

References

  1. ^ March 2025 report (ustr.gov)
  2. ^ tech bros (www.iwm.at)
  3. ^ Canada dropped a new digital service tax (www.abc.net.au)
  4. ^ Saul Loeb/Pool/AFP via Getty Image (www.gettyimages.com.au)
  5. ^ moved manufacturing from China (www.imf.org)
  6. ^ holds “all the cards” (www.bbc.com)
  7. ^ Dirty 15 (www.reuters.com)
  8. ^ tariff formula’s evident shortcomings (theconversation.com)
  9. ^ including the poorest (theconversation.com)
  10. ^ resort to retaliation (www.atlanticcouncil.org)
  11. ^ previously (www.canada.ca)
  12. ^ are not the act of a friend (www.theguardian.com)
  13. ^ Plans to stockpile critical minerals will help Australia weather global uncertainty – and encourage smaller miners (theconversation.com)
  14. ^ Beijing has several cards (www.fxempire.com)
  15. ^ shortages hit the auto industry (www.reuters.com)
  16. ^ suggested (www.thevibes.com)
  17. ^ doubled tariffs on steel imports (www.cfr.org)
  18. ^ Supreme Court (www.piie.com)
  19. ^ pausing negotiations (www.reuters.com)
  20. ^ suggested (www.independent.co.uk)
  21. ^ Treasury Secretary Scott Bessent (www.japantimes.co.jp)
  22. ^ the character Godot (study.com)

Authors: Peter Draper, Professor, and Executive Director: Institute for International Trade, and Director of the Jean Monnet Centre of Trade and Environment, University of Adelaide

Read more https://theconversation.com/im-going-to-send-letters-the-deadline-for-trumps-reciprocal-trade-tariffs-is-looming-259983

Demand for Home Batteries surges as Federal Rebate Kicks In

A leading provider of energy solutions VoltX Energy has seen a 400% increase in demand for home batteries in the past three weeks as people put d...

Why Sport Remains the Safest Bet in an Uncertain World

When Rome was in crisis, its leaders did not retreat to the Senate. They went to the circus. To the chariot races. To the gladiators. Sport was no...

THE FINE LINE WITHIN HILARIOUS SIGNAGE DESIGN FAILS

It seems like design failures still occur in today’s modern branding era, despite rigorous rounds of approvals behind the scenes. One signage show...

Deputy Announces Exclusive Global Partnership with Predelo to Bring AI to Shift-Based Businesses

Deputy, the global people platform for shift-based businesses, has announced an exclusive partnership with Predelo, an AI Decision Agent-as-a-Serv...

Leftover Budget? The Last-Minute EOFY Tip to Drive Business Success in FY25/26

The countdown is on. With just days left until EOFY, now’s the time to make your remaining 2024–2025 budget work harder and smarter. After workin...

pay.com.au appoints new CEO and Managing Director

The former COO will lead the company’s next growth phase, with ex-CEO Edward Alder transitioning into the role of Managing Director AUSTRALIA, 25...

Sell by LayBy