With the U.S. trade policy significantly shifting following Trump’s inauguration, the new tariff strategy has brought global markets to a standstill. A 90-day tariff freeze was put into place merely a week after the new tariff rules were announced. Now they are set to expire on July 9, leaving businesses and investors uncertain about what comes next. Tariffs have long been utilized as a tool to balance global trade, but if Trump’s expected tariff measures are implemented, they could significantly disrupt markets.
The 90-day tariff freeze and its context
The 90-day tariff freeze was part of President Trump’s strategy to renegotiate international trade terms and assert the U.S.’s position in the global economy. Initially, the U.S. was the one who paid most tariffs while other countries had free access to the U.S. market. In his second term, Trump set out to change that. During an announcement on “Liberation Day,” he announced the introduction of tariffs based on their current trade deficit, something which economists have said was incorrect.
Some tariffs were as high as 49% on imports from specific countries, while others faced a universal 10% tariff. China, a key trade partner, was subject to tariffs that reached up to 145%, following a back-and-forth exchange between the two powers. Meanwhile, U.S. goods from Canada and Mexico have seen exemptions under the U.S.-Mexico-Canada Agreement, which is also expected to end sooner rather than later.
The 90-day freeze was meant to allow countries to negotiate new trade deals. But as economists and experts note, these trade deals take longer than 90 days in most cases. Countries like the U.K. and Vietnam were able to strike a deal before the July 9 deadline, while negotiations with major players such as the European Union remain unresolved.
The potential impacts on markets and businesses
There are two possible outcomes after July 9th. Either President Trump postpones tariffs and gives countries more time to negotiate a trade deal – which, according to his interviews, is less likely. Or tariffs will go into effect, and countries that fail to negotiate and “bend the knee” will have to pay heavy tariffs.
Regardless of the outcome, investors are preparing for financial markets to react sharply to uncertainty. The “Liberation Day” announcement wiped $5 trillion in market value from top stocks. Similarly, the S&P 500 registered its worst day since 2022. If tariffs do come into effect, it’s expected that companies will face higher transaction costs, which could discourage investments and trigger another potential crash in the market.
For many businesses, the initial tariff plan was a wake-up call. Companies like Amazon and Walmart increased their inventory. Stories also surfaced about Apple flying in planes of iPhones to avoid increasing costs.
The anticipated tariff changes leave industries, financial markets, and consumers uniquely vulnerable. Understanding where and how these impacts may arise is vital for preparation. If tariffs do come into effect, these costs will most likely be passed onto the consumer. Industries in retail or large stores like Amazon that depend heavily on imports will have to increase their prices.
A JPMorgan Chase analyst revealed that small to medium-sized businesses under the current tariff format, with revenues between $10 million and $1 billion, already face $82.3 billion in annual costs. He also noted that if previously unnegotiated terms are applied, companies would face almost triple that – $187.6 billion.
Direct impact on customers
Rising import costs, uncertainty, and distribution of tariffs unevenly across countries could directly lead to higher inflationary pressure. The worst part is that consumers are likely to experience higher prices on goods that are imported from different countries. Economists predict companies are less likely to take the hit and, instead of chipping at their bottom line, they are more likely to pass on the financial burden to consumers with a 50-60% increase in costs to the end-user..
Trade negotiation status
Countries have already made efforts to secure a deal before the July 9th deadline. While there is already a universal tariff of 10% on most products and up to 50% tariffs on steel and aluminum, countries are still looking for better deals. Negotiations with Canada reached a standstill until they agreed to revoke the tax on Digital Services. Similarly, the EU is working towards a trade agreement with the U.S. to avoid Trump’s proposed 50% tariffs.
Negotiations with China have made little headway, with existing tariffs remaining a significant obstacle. Currently, all products from China come with a 30% tariff, which is lower than the initially imposed 145%. Most recently, Vietnam secured a trade deal with the U.S., agreeing to pay a 20% tariff on goods while receiving full U.S. market access for its exports with zero tariffs. Additionally, the U.S. added a 40% tariff on any transshipped products.
What’s next for businesses and investors
The situation is evolving rapidly, making it difficult to predict the precise outcome of Trump’s tariff strategy, especially given his unpredictable nature. In response, investors have been reallocating their capital, shifting investments away from the U.S. and into European stocks. And this is just the beginning..
Experts anticipate continued uncertainty in the U.S. market, as it appears unlikely that most trade deals will be finalized by the looming deadline. While President Trump has ruled out an extension, both investors and the U.S. economy are bracing for the possibility of new tariffs being imposed on several countries, including some key trading partners, starting next week.
Whether the deadline leads to broad tariffs or further delays, businesses and investors must stay ready to adapt. The financial markets’ reaction will be closely watched, as will the response of the 27 EU member states—whether they concede to U.S. demands or push back with heightened tariffs of up to 50% on imports. The coming days will be critical in shaping the direction of global trade.
