Bessent Signals Possible Extension for July 9 Tariff Deadline, Is The "Art of the Deal" Now The "Art of Retreat"?

Under the shadow of a global trade war looming for over two months, the United States has finally signaled its first substantive concession.

On Wednesday, during a hearing held by the House Ways and Means Committee, U.S. Treasury Secretary Bessent explicitly stated in response to questioning from Democratic lawmakers: "For those countries and trading blocs, like the European Union, who are negotiating in good faith, the U.S. would roll the date forward to continue good faith negotiations."

This marks the first time the Trump administration has publicly acknowledged flexibility in its tariff timeline, with just four weeks left until the July 8 deadline. So far, the White House has only reached a preliminary agreement with the UK.

Trump himself also expressed willingness on Wednesday to extend the July 8 deadline but deemed it would not be "necessary". He revealed that negotiations are ongoing with about 15 countries, including South Korea, Japan, and the EU, and that letters outlining trade agreement terms will be sent to dozens of other countries within one to two weeks.

Separate reports indicate that the EU similarly expects negotiations to extend beyond the July 9 deadline. EU insiders disclosed that, in the best-case scenario, an agreement in principle could be reached before the deadline, with detailed negotiations to follow.

"TACO" Trade Reignited?

Bessent's remarks represent the Trump administration's first public concession on its tariff policy, reigniting hope for investors on Wall Street who have been betting on the "TACO trade" (Trump Always Caves On).

This strategy originated during the market turbulence in early April: the scale and scope of the tariffs announced by Trump on April 2 exceeded expectations, pushing global financial markets to the brink of panic.

The S&P 500 plummeted over 12% in just four days, marking its steepest drop since the onset of the COVID-19 pandemic in early 2020. Investors even offloaded safe-haven U.S. Treasuries, driving bond yields higher and weakening the dollar.

The market began rebounding on April 9 after Trump unexpectedly announced a pause, and the recovery accelerated in early May when his team reached a preliminary agreement with China and lowered triple-digit tariff rates.

As Virginia Democratic Representative Don Beyer remarked to Bessent during the hearing: "The only time the market reacted positively was when the administration retreated from key policy areas."

EU's Proactive Moves: Preparing for Extended Negotiations

According to media reports, the EU believes trade negotiations with the U.S. will extend beyond Trump's July 9 deadline, despite some acceleration in talks over the past week. The EU views reaching an agreement in principle by July 9 as the best-case scenario, which would allow room for subsequent detailed negotiations.

EU Trade Commissioner Maros Sefcovic has maintained regular calls and in-person meetings over the past two weeks with U.S. Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer. The two sides are currently engaged in in-depth discussions on key sectors such as steel and aluminum, automobiles, pharmaceuticals, semiconductors, and civil aircraft.

However, media sources citing insiders warn that while negotiations are taking place in a positive atmosphere, significant challenges remain. The EU perceives the U.S. as seeking unilateral concessions, with any potential agreement likely tilted in Washington's favor.

The current U.S.-EU trade truce involves substantial stakes. According to EU estimates, the tariffs imposed by Trump now cover €380 billion ($434 billion) of exports to the U.S., accounting for roughly 70% of total EU exports to America. If no agreement or extension is reached by the July deadline, Washington will impose 50% tariffs on nearly all EU exports.