Average US tariffs are expected to rise if a series of letters sent by President Donald Trump to various trading partners this week actually lead to the implementation of new tariffs, according to estimates from Deutsche Bank.
The letters, sent to 14 countries including major suppliers such as Japan and South Korea, detail higher tariffs that would be imposed if the countries fail to reach a trade deal with the United States.
Trump also extended the deadline for the new tariffs to August 1st, after previously being scheduled to begin today following a 90-day delay. However, Trump insisted at a cabinet meeting on Tuesday that the new deadline was final and would not be postponed again, although he had previously said it was “not 100% certain”.
So far, the White House has announced preliminary agreements with the United Kingdom and Vietnam, and reached a fragile trade settlement with China. In a research note, Deutsche Bank analysts estimate that average tariffs would rise by 1.7 percentage points to 18.7% if the new tariffs are implemented, and that they are expected to add up to 15 basis points to the inflation rate. If the “Liberation Day” tariffs are imposed on other countries as well, the tariff rate could jump to 22.4% and inflation could potentially rise by another 30 basis points.
