The Trump administration has announced it will formalise the tariff rates for countries that have not secured a deal by next week’s 9 July deadline.
Trump told reporters yesterday that duties would “range in value from maybe 60% or 70% tariffs to 10% and 20% tariffs”.
The top values are notably larger than the highest reciprocal tariff rates announced in April, which saw Lesotho and South East Asian manufacturing nations like Cambodia and Vietnam facing 46–50% duties.
Vietnam has agreed a trade pact with the US, announced Wednesday (2 July), in which it accepted a 20% US tariff, while US firms enjoy a zero duty rate on Vietnamese exports. A higher rate of 40% has been placed on goods shipped through Vietnam, a move to target Chinese firms’ attempts to circumvent higher tariff rates by transhipping through Vietnam.
Besides Vietnam, the UK has also secured a tariff deal, while China also came to an agreement to limit tariffs and export curbs on the US to end an escalating trade war last month.
Trump said that letters would be sent to trading partners yet to reach a deal informing them of their new US tariff rate, with “10 or 12” set to go out today and more to follow in the coming days.
EU deal progress
Having suggested it would seek to mimic the UK’s Economic Prosperity Deal, the EU could now be closing in on a similar high-level “framework” agreement to cut its baseline rate.
With EU trade commissioner Maroš Šefčovič in Washington for talks this week, Commission president Ursula von der Leyen said yesterday (3 July) that “what we are aiming at is an agreement in principle”, describing a more detailed agreement as “impossible” ahead of the deadline.
Like the UK, the bloc is reportedly willing to accept the 10% baseline rate, although it wants to extend talks on the 25% auto tariff in order to secure a concession.
Officials in Washington have said that talks could go down to the wire, with US senior leadership figures like treasury secretary Scott Bessent and commerce secretary Howard Lutnick in talks over the weekend.
One EU official told the Guardian they were optimistic an agreement could be reached by Wednesday, describing it as “in everybody’s interest”.
Trump has threatened to impose rates of 50% on the EU from 9 July without a deal.
Tariff haul
The FT reports that data from May shows that US tariff revenue rose to a record high of US$24.2bn, the first month after a 10% baseline tariff and 25% sector-specific rates for steel, aluminium and automobiles came into effect.
This reflects a 25% increase on April’s figures, with import volumes across the two months remaining similar.
So far, economic concerns raised by analysts have yet to materialise, with a surprise boost to the US jobs market announced yesterday. June’s figures showed a fall in the unemployment rate, from 4.2% to 4.1%, while 147,000 jobs were added to the market – 3,000 more than in May.
Inflation is also yet to rise significantly, with a rise from 2.3% to 2.4% recorded from April to May.
