President Donald Trump extended the deadline for his tariff plan to August 1, after missing the initial 90-day goal. Photo / Getty Images
After United States President Donald Trump paused his “Liberation Day” tariffs in April, his trade adviser Peter Navarro promised that the Administration would deliver “90 deals in 90 days”.
But that deadline came and went today with the White House 88 trade deals short.
Trump has now given his Administration 113 days to implement a worldwide tariff plan that he says will reverse decades of globalisation and usher in a new era of domestic manufacturing.
But company chief executives, investors and foreign leaders appear sceptical that Trump will stick to that August 1 deadline after watching him punt the issue again and again.
The episode has reanimated the ‘Taco’ debate - the Wall Street accusation that “Trump Always Chickens Out”.
The term, coined by Financial Times columnist Robert Armstrong, describes a prevailing view in the financial sector that the President talks tough about tariffs and then ultimately backs down.
Trump has made it clear he doesn’t like the acronym. He falsely claimed that the deadline for tariff payments “has always been” August 1 - after signing an executive order on Tuesday that extended the deadline from July 9.
“I didn’t make a change, a clarification, maybe?” Trump said during a wide-ranging Cabinet meeting. “August 1, they pay.”
Yet his repeated slow-walk towards actual implementation seems to reflect his understanding of the political and economic peril of his tariff strategy, which could impose steep levies on imports from dozens of countries.
Economists have warned it could send the planet tumbling into a recession.
The action on Wall Street yesterday laid bare the stakes. The deadline delay was initially positive for Wall Street, but stocks began to slide as Trump said there would be no extensions on the tariffs.
The Dow Jones Industrial Average dropped 166 points, or 0.37%. The S&P 500 fell 0.07%, while the Nasdaq composite index closed up 0.03%.
Trump has justified the new import taxes by saying they would correct years of US trade deficits, but he has also used them for other purposes.
Today, for example, he sent a letter to Brazil saying the country would face tariffs of 50%, a steep increase from the 10% tariffs he had announced in March.
Trump cited the country’s “Censorship Orders to US Social Media platforms”, after Brazil’s Supreme Court in June ordered that tech giants monitor and remove hate speech and other problematic content from their platforms.
Trump also objected to Brazil’s effort to prosecute former President Jair Bolsonaro for allegedly plotting a coup. In his letter, he called the prosecution “an international disgrace”.
Major retailers have warned that the tariffs will push prices higher, and other countries have threatened to retaliate with levies of their own on imports from the US.
Trump initially backed off his most sweeping tariffs in April after a sell-off in the bond market prompted investors, corporate leaders and even some Trump allies to warn of an economic recession.
Trump has loved tariffs and hated global trade for decades, arguing since at least the late 1980s that nations that “abuse the US” should pay a large tax on products they sell within US borders.
But his lifelong ambition to implement a 19th-century-style trade policy is at odds with an American public that is deeply sceptical of this zero-sum view of the global economy.
Consumers are feeling hesitant and spending less, despite stock market rallies, a steady inflation rate, and low unemployment.
A Fox News survey in June found that 57% of Americans think tariffs hurt the economy, double the number of Americans who say the levies help the economy.
Inflation is among voters’ top concerns, as 84% report that they are extremely or very concerned about higher prices.
Trump and his top advisers claimed that the pause would give the US sweeping leverage to negotiate trade deals that would lower other countries’ trade barriers on US exports.
“A lot of times it’s not a negotiation until it is,” Trump said. “And that happens.”
But 90 days later, there are few signs that Trump’s “Art of the Deal” strategy has produced results.
The Administration has announced only two deals - with Vietnam and Britain. The deals are short on details and significantly shorter than typical trade accords, which are traditionally hundreds of pages long.
Trump said over the weekend that he preferred to send countries letters dictating new tariff rates rather than striking deals.
He sent letters to 14 countries on Tuesday detailing the higher tariffs their goods will face, but the letters indicated he would be open to further negotiation.
Today, he sent at least eight additional letters including the one to Brazil.
The letters said that if the countries remove their tariffs on US goods and other trade barriers, Trump would “consider an adjustment” to the rates.
“If [countries] call up and say, ‘We’d like to do something a different way,’ we’re going to be open to that,” Trump told reporters at the White House.
White House spokesman Kush Desai said other countries remain interested in negotiating.
“The Administration continues to receive overwhelming interest from other countries who are eager to reduce their tariff and non-monetary trade barriers to maintain access to the American economy,” Desai said in a statement.
“President Trump, however, has been clear: the US, the world’s biggest and best consumer market, holds the cards and leverage in negotiations to unilaterally set deals with appropriate tariff rates for our trading partners.”
Trump also said he will probably send a trade letter to the European Union in the coming days, remarking that he has been in touch with European Commission President Ursula von der Leyen, who has “been very nice”.
“They treated us very badly until recently. Now they’re treating us very nicely, like a different world, actually,” Trump said to reporters during yesterday’s Cabinet meeting.
Trump complained about the European Union’s treatment of “our companies”, noting lawsuits against Apple and Google that have resulted in the American companies being ordered by European courts to pay billions of dollars in fines.
The tariff plans also continue to face legal uncertainty.
A federal judge struck down the tariffs in May, saying that Trump had overstepped his legal authority. But the US Court of Appeals in June ruled that the Administration could continue to collect tariffs as the case proceeds, and that it would hear arguments on July 31.
US trading partners don’t necessarily see the new deadline as a stabilising development.
“This move actually extends the period of uncertainty, undermining long-term investment and business contracts, and creating further uncertainty and instability,” Pamela Coke-Hamilton, executive director of the International Trade Centre, told reporters in Geneva.