The end of a 90-day pause on Trump’s “reciprocal tariffs” looms on 9 July. Whilst the shock of 2 April is unlikely to be repeated, investors should be prepared for what’s to come and what implications it has on their portfolios.

Since April, a baseline 10% tariff has been effect, while so-called reciprocal tariffs have been suspended. At the same time, many goods from Mexico and Canada have been exempted temporarily from the 25% tariffs under the U.S.-Mexico-Canada Agreement. Goods from China – slapped with tariffs of 145% at one point – are currently subject to a blanket 30% levy.

If countries fail to agree a trade deal with Washington before the deadline, those country-specific reciprocal tariffs will come back into effect.

Late last week Trump said he would begin sending out letters to countries with details of higher tariffs that will begin on August 1st - import duties will range from "60% or 70% tariffs to 10 to 20%”, he said. It wasn’t clear if these were blanket rates on all goods from a particular country or targeted at specific products – for instance autos and steel are tariffed at 25% and 50% respectively. However a 70% top rate is above the 50% maximum rate outline on Liberation Day. The market seems to assume that if 70% is announced, Trump will “chicken out”.

Tariff Deals Incoming

First, it looks as though the July 9th deadline is effectively being extended to 1 August, creating a bit more room for talks to continue past the 9 July deadline – but are going to get a flurry of news and noise over the next 48-72hours it seems.

On that, front, deals are set to be announced from 12pm Eastern Time on Monday

On his Truth Social platform Trump posted: “I am pleased to announce that the UNITED STATES TARIFF Letters, and/or Deals, with various Countries from around the World, will be delivered starting 12:00 P.M. (Eastern), Monday, July 7th. Thank you for your attention to this matter! DONALD J. TRUMP, President of The United States of America.”

Furthermore, adding to the uncertainty, Trump threated any country aligning with the BRICS (Brazil, Russia, India, China and South Africa) an additional 10% tariff.

Trump posted: “Any Country aligning themselves with the Anti-American policies of BRICS, will be charged an ADDITIONAL 10% Tariff. There will be no exceptions to this policy. Thank you for your attention to this matter!”

Trump is now sending out letters to countries that have not yet signed a trade agreement with the US, informing them what their tariff will be from August 1st.

He’s mentioned a tariff rate of between 10% and 70%. The market assumes that if 70% is announced Trump will back down.

Trump said there would be a “combination of letters, and some deals” in the coming days and “most countries done by July 9th, either a letter or a deal”. Deals are said to be announced from 12pm ET today.

Treasury Secretary Scott Bessent said tariffs will “boomerang” back to April 2nd levels if deals are not done soon.

It’s not 100% clear whether July 9th is still the official deadline for a deal – Bessent said they would be “very busy over the next 72 hours”.

But the August 1st date being mentioned suggests they are buying themselves a little more time to get countries to agree deals without officially “chickening out”.

The additional 10% number for BRICS-aligned nations is a new risk factor that introduces extra geopolitical spin to the trade war – this appears to be on the margins currently, and I would consider this a ploy to speed things up.  However, Asian markets did push lower on this and we need to consider headline risk this week as the news drips out random fashion.

Who’s already struck a deal?

President Trump announced a trade deal with Vietnam last week that sets a 20% tariff on imports from the country into the US. It marks an improvement for the southeast-Asian nation from the 46% blanket tariff set under the original reciprocal regime. Nike shares rallied. Goods from other countries (mainly China) shipped via Vietnam will face a 40% tariff.

The UK notably secured a deal with the US, although it’s not a comprehensive package, covering British cars and US beef and bioethanol. The deal means UK auto manufacturers can sell up to 100,000 vehicles to the US at a tariff of 10%, below the 25% levy from other countries.

The US has also secured a framework for a trade deal with China and cut its tariff from a post-Liberation Day high of 145% to a current 30% blanket rate.

What’s going on with the EU?

The US-EU trade relationship is the biggest and most significant, and the progress on a trade deal has direct consequences for EU and US equities. Trade between the two accounts for about 30% of global goods trading, involving pharmaceuticals, luxury goods, autos and refined oil products.

On Thursday last week the European Commission President, Ursula von der Leyen, said a detailed agreement by 9 July was “impossible,” stating that the bloc was hoping for an agreement in principle to extend the pause.

EU trade commissions Maros Sefcovic said on Friday said that he had had a “productive” week of talks with US officials in Washington.

But the best the EU can probably hope for is an initial deal that wins time for further talks and includes the acceptance of a 10% baseline tariff from the US.

In that case it would be unlikely that the EU would impose retaliatory measures, but von der Leyen has that, if no agreement is reached, “all the instruments are on the table”.

Japan deal looks stuck

Negotiations with Japan look to have stalled over cars and rice. President Trump last week threatened to impose a "30% or 35%" tariff on Japan if a deal between the two countries is not achieved in time. This would be a step up from the 24% tariff imposed as part of "Liberation Day" on 2 April. Watch Japanese equities, particularly carmakers.

EU-China tensions highlight wider risks

It’s not just the US that investors need to watch on trade tensions - China announced new tariffs of up to 35% on brandy imports from the EU last week. Tariffs that took effect on Saturday range from 27.7% to 34.9% but include exemptions for major cognac makers, including Remy Cointreau, Pernod Ricard and LVMH’s Hennessy.