As mentioned in my earlier posts, July 9 will determine the "final outcome" as the 90-day pause ends. My prediction as I have mentioned in Apr, is that after deals/pause, most countries will still be hit with reciprocal tariffs on top of the 10% baseline. There's not much reason to extend the deadline for most countries since the admin has no resources to negotiate with that many countries. They have said they had sent out "take it or leave it" offers to most countries but it will be tough for those countries to just accept without any negotiations. Nevermind about the smaller trading partners, the key is to watch whether there will be any extension for the top 10-15 trading partners.
Just today, there is a news article saying he's not intending to extend the deadline for countries with no deal.
No deals yet?
So far we only have a "deal" with UK (one of the smallest trading partners). As predicted before, the economy has shown signs of cracks before any real deal.
The tariff situation can only get worse from here. The level currently we have, is likely the best case scenario in the near-term.
I think he is likely to bring back some of the tariffs otherwise countries will think he is "TACO" and won't take it seriously. On the flip side, he may change his mind. There might also be last-minute deals. So nobody really knows what will happen. Countries that are highly dependent on exporting to US may feel the pressure to accept a deal even if it is not in their favor.
I will just do some hedging.
There's also a tax cut bill that is intended to boost the economy by resorting to debt-fuelled growth again, the intention is to outgrow the debt and counter the impact of tariffs. Whether that can be done remains to be seen. Again, with the tariffs and the bill, how the market would react is stil an unknown.
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