Reciprocal tariff pause extended to August 1 amid trade negotiations, raising pressure on U.S. trade partners

While there have not been material changes in United States trade policy going back to the three-month pause of the White House’s reciprocal tariffs implemented on April 9, it stands to reason that will be soon coming to an end, with the pause set to expire on July 9. But it may not be the end that was initially expected, with various reports indicating the pause has been moved back to August 1.

As previously reported, the pause followed the White House’s April 2 announcement, which President Trump labeled as “Liberation Day,” in which he rolled out new, or increased, tariffs on nearly 60 U.S. trading partners, ranging from 10%-50%. President Trump described this measure as a “Declaration of Economic Independence,” noting that for years Americans were forced to sit on the sidelines as other nations got rich and powerful, at the expense of the U.S., and stated that it is now the U.S.’s turn to prosper and use trillions of dollars to reduce taxes and pay down the country’s national debt.

In an April 9 social media message, though, President Trump said that the U.S. has changed course, in terms of the scope and timing of its tariff implementations, in which he stated that “more than 75 countries have called Representatives of the United States, including the Departments of Commerce, Treasury and the USTR, to negotiate a solution to the subjects being discussed relative to Trade, Trade Barriers, Tariffs, Currency Manipulation, and Non Monetary Tariffs, and that these countries have not, at my strong suggestion, retaliated in any way, shape, or form against the United States, I have authorized a 90 day PAUSE and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately.”

And now, just days before the end of pause, the president said in another social media message that the U.S. tariff letters and, or, deals with various  countries will be delivered on Monday, July 7, at 12:00 PM ET.

This development does not come as a complete surprise, as the White House has previously extended deadlines, for certain tariffs for kick in, before, including the aforementioned extension of the reciprocal tariffs, as well as tariffs on Canada and Mexico, which were moved from February 4 to February 5 and also delays on tariffs placed on the European Union from June 1 to July 9.

That was made clear in comments made by the administration, with press secretary Karoline Leavitt saying late last month that the July 9 deadline was no critical and more time could be provided and also Treasury Secretary Scott Bessent saying in recent days that while the pause legally ends on July 9, the new effective date for the increased tariffs is August 1, with negotiations for U.S. trade partners that have yet to make deals continuing until then.

And a July 7 White House executive order stated extended the suspension of the higher reciprocal tariffs (and continues the reduced 10% duty) until August 1, 2025, citing ongoing diplomatic discussions and recommendations from senior officials. China's separate tariff arrangement remains unchanged. The order also authorizes key government departments and agencies—including Commerce, Homeland Security, and the U.S. Trade Representative—to implement the extension and take necessary actions under existing laws such as the International Emergency Economic Powers Act (IEEPA).

In a LinkedIn post, Deborah Elms, Head of Trade Policy at the Hinrich Foundation in Singapore, observed that the first tariff letters to U.S. trading partners have been released.

“Goods from Japan and South Korea will be an extra 25% starting August 1,” wrote Elms. “Although the language is unusual, it appears that 25% is separate from sectoral tariffs, meaning that these apply to goods not otherwise covered by Section 232 like autos, steel and aluminum (which presumably remain at 25 and 50%). These replacement ‘reciprocal’ tariff rates nearly match those given to both countries by Trump on April 2. Neither letter refers to any commitments which may or may not have been discussed over the past 3 months. Trump warns that he reserves the right to change tariffs up or down at will.”

According to various reports, President Trump issued formal letters to 14 countries, including Japan, South Korea, Malaysia, Indonesia, Laos, Myanmar, South Africa, Kazakhstan, and others, with the letters highlighting reciprocal” tariffs from 25% to 40% on imports—set to take effect August 1 unless new trade agreements are reached. 

In his assessment of the trade and tariffs’ landscape, Keith Prather, Armada Corporate Intelligence Managing Director, explained the main thing he is seeing right now is a lot of pressure being applied to trading partners to hit that August deadline.

“My thoughts are that it coincides with the U.S. Appeals Court ruling on Tariffs (which could make the reciprocal tariffs illegal), and that might be why they set the August deadline and are threatening April 2-types of elevated tariffs as a risk (to push them to negotiate in earnest prior to the court ruling),” he said. “I think Vietnam came in too hot (20%), and it sounds like he just threatened Japan and South Korea with 25%. Those are worrisome levels. A blended U.S. tariff rate above 15% would really slow down economic growth—unless they can offset them with growth elsewhere. I think there's a lot of noise out there and we don't know enough yet…again. But as they announce more deals in July, we'll get a better picture and know what to expect. Again, so far, I think things are coming in hot on the tariff front.” 

This is a confusing situation, to say the least, for supply chain stakeholders. It has played out already, as was seen when tariffs on United States-bound imports from China climbed to 145%, effectively shuttering supply chains for various sectors and shippers for a period, following the early April pause through July, soon after the reciprocal tariffs were announced.

At the recent SMC3 Connections Conference in Salt Lake City, Elizabeth Lowe, a partner at Washington, D.C.-based Venable LLP, that with trade policies and tariff structures accelerating a shift, or structural re-set, in global trade, the subsequent changes are not likely to be irreversible but instead will be changes that are permitted to a certain extent.

One reason for that, she explained, was that in the case of China, section 301 tariffs placed on China have been in effect since 2018, during Trump’s first term, and were not removed by the Biden administration.

It is not difficult to see the impact of shifting trade policies, tariff levels, and uncertainty, when viewing it through the lens of U.S.-bound imports in May, which fell by around 35% annually.  And that impact was not understated by Port of Los Angeles (POLA) Executive Director Gene Seroka in the port’s recent monthly media call.

“Unless long-term, comprehensive trade agreements are reached soon, we’ll likely see higher prices and less selection during the year-end holiday season,” he said. “The uncertainty created by fast-changing tariff policies has caused hardships for consumers, businesses and labor.”

Matt Muenster, Chief Economist for Green Bay, Wisc.-based Breakthrough, an innovator in transportation management, said that in the near term, shippers are likely to maintain the strategies they had in place leading up to July 9.

“For those who were pulling freight forward to mitigate the risk of additional tariffs, this approach will likely continue,” he said. “The extension provides a temporary reprieve, but it does not eliminate the underlying uncertainty, prompting shippers to stay proactive in managing potential disruptions.

In terms of potential challenges or opportunities this could create for shippers navigating cost pressures and market uncertainty, he explained that 
the most recent tariff news, including Canada, Brazil, and reciprocal tariffs, decreases Breakthrough's confidence that the second half of 2025 will offer any significant change to year-ago freight levels, ultimately extending the freight rate trough for truckload and intermodal freight.

“The impact of tariffs on consumer prices is expected to take time to materialize, as businesses remain uncertain about the extent to which average effective tariff rates for imports and exports will change from year-ago levels and how the uncertainty is affecting the freight market,” he said.

When asked how this decision might influence the way shippers think about long-term resilience and sustainability in their transportation networks, Muenster explained that cost control and risk management are capturing more of supply chain leaders’ time in 2025.

“The policy environment and sentiment surveys show that a focus on sustainability goals is decreasing, while cost optimization is increasing,” he said. “However, these priorities are not mutually exclusive. For example, alternative energy—such as natural gas and bio-based diesel products—can serve as an effective hedge against the price volatility experienced in the conventional diesel market amid our geopolitical landscape. By focusing on cost efficiency, businesses can simultaneously enhance resilience and sustainability by mitigating energy exposure and risk.”