- Confidence in the next phase of the “Liberation Day” tariff pause-and-hope has diminished.
- US’ trade posture has hardened.
- Trading partners recognize the importance of preparing for a more demanding environment.
- All said, the deadline could shift again.
Commentary: Second tariff deadline – reciprocity or retaliation?
Confidence in the next phase of the “Liberation Day” tariff pause-and-hope has diminished. Countries and markets did not embrace the extension of the US tariff pause to August 1 as they did the one to July 9. More nations have become less optimistic about achieving trade agreements with the Trump administration by the new deadline to lower the unilateral reciprocal US tariffs, while legally blocked, are still politically operative.
US President Donald Trump’s trade letters to countries were not personal diplomacy and signalled a hardening of the US trade posture instead. Each mass-produced unilateral tariff notice was tailored with a specific levy on August 1, delivered to put maximum pressure on trade partners to extract reciprocal concessions such as lower tariffs, fewer subsidies, and expanded market access for US goods. Every letter warned that any retaliatory tariffs would trigger additional US duties, demanding compliance with US terms without countermeasures. The explicitly transactional “deal or get punished” letters undermine the rules-based global trade environment.
The problem for US trade partners goes beyond coming to terms with the 10% universal tariff becoming the baseline for their goods to retain access into America. China has firmly objected to the containment provisions in the new letters, such as rules of origin and strict traceability provisions, for some countries. The letter’s overall approach has made US trade policy more coercive and conditional, blurring the lines between economic cooperation and geopolitical alignments.
Following the Rio Declaration at the BRICS Summit on July 6-7, Trump threatened to impose an additional 10% tariffs on nations that aligned with the group’s “anti-American” policy. Brazil rejected Trump’s 50% tariff threat as politically motivated, linking it directly to internal Brazilian politics rather than as a trade justification. Taken together, Trump’s second reciprocal tariff threats have raised concerns about US tariffs becoming tools of geopolitical coercion and interference in domestic politics.
Nonetheless, more and more countries are increasingly recognizing the importance of proactively preparing for a more demanding global trade environment for some time to come. For example, ASEAN has become more vocal in rejecting unilateralism and coercive bilateral pressure. However, ASEAN is not pursuing a path of confrontation but is instead responding strategically by strengthening multilateral ties with China, the EU, and the Gulf Cooperation Council (GCC); leveraging regional trade platforms like the Regional Comprehensive Economic Partnership (RCEP), and the ASEAN Economic Community (AEC); and collectively advocating for WTO principles and diplomacy. ASEAN has maintained its long-standing emphasis on neutrality, resilience, and autonomy in navigating US-China competition.
All said, Trump’s reciprocal tariff deadline could shift again. The US Court of International Trade’s (CIT) legal case against Trump’s tariffs under the International Emergency Economic Powers Act (IEEPA) remains unresolved, with a hearing scheduled on July 31.
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