Trump Tariffs Pause Ends July 9 Amid Trade Talks

The deadline for the 90-day pause on the majority of President Trump’s tariffs is approaching, with July 9 being the exact date. This pause, often referred to as “Liberation Day” tariffs, has been a significant point of discussion in trade negotiations.

In a recent interview, President Trump indicated that while he does not intend to extend the pause, he could potentially do so. This statement comes as various trade deals remain in limbo, with negotiations ongoing between the US and several key trading partners.

The European Union has shown willingness to accept a trade agreement with the US, with the European Commission agreeing to a 10% tariff on several industries. However, they have requested lower levies on sectors such as pharmaceuticals, alcohol, semiconductors, and commercial aircrafts.

Trade talks between the US and Canada have also shown progress, with Canada agreeing to abandon a proposed digital services tax. This move has been welcomed by the US, and trade talks are set to resume immediately. The US and Canada plan to have a deal finalized by July 21.

Meanwhile, the US and China entered a separate agreement in June to pause certain levies until August 9. This means that the upcoming tariff deadline does not apply to Chinese imports.

While trade negotiations continue, Federal Reserve Chair Jerome Powell spoke at the European Central Bank forum in Portugal. Powell highlighted that the US economy is “healthy overall,” noting that inflation is behaving as expected when tariffs are not considered.

When asked about the impact of tariffs on the Fed’s monetary policy, Powell acknowledged that the size of the tariffs led the Fed to go on hold. He stated that all inflation forecasts for the US went up materially due to the tariffs, and as a result, the Fed did not react to the situation. Powell emphasized that the Fed is simply taking some time to assess the situation.

President Trump has repeatedly called for rate cuts, but Powell has been cautious in his approach. The Fed’s decision to hold off on rate cuts is largely due to the uncertainty caused by the tariffs, which have had a significant impact on inflation forecasts.

As the tariff deadline approaches, the outcome of these negotiations will have significant implications for both the US economy and global trade. The Fed’s decision to hold off on rate cuts highlights the delicate balance between monetary policy and trade policy, with the Fed taking a cautious approach in the face of uncertainty.