At 12:01 a.m. on July 9, the Trump Administration’s pause on very high Liberation Day tariffs is scheduled to end. To understand what comes next, it may be helpful to review some key dates in the Administration’s Liberation Day tariff timeline:
July 8, 2024: Trump’s presidential platform endorses reciprocal trade deals and the Trump Reciprocal Trade Act. Reciprocity is typically defined as U.S. tariff rates that mirror foreign tariffs.
February 10, 2025: Trump releases “Fair and Reciprocal” trade plan promising to counter non-reciprocal trade. Trump explains what he means by reciprocity: “it’s time to be reciprocal. You'll be hearing that word a lot: reciprocal. If they charge us, we charge them. If they’re at 25, we’re at 25. If they’re at 10, we’re at 10. And if they’re much higher than 25, that’s where we are too.”
April 2, 2025: Trump declares the U.S. trade deficit is a national emergency, invokes the International Emergency Economic Powers Act of 1977 (IEEPA), abandons reciprocity, and imposes very high nonreciprocal tariffs of 10% plus additional country-specific tariffs.
As NTU and others have pointed out, the trade deficit is neither unusual, extraordinary, nor a threat to the economy, national security, or foreign policy of the United States, as required by law for trade restrictions to be imposed. Trade deficits reflect the dominance of the U.S. economy, which makes us a magnet for foreign investment.
When it was first released, Trump’s order generated confusion about how each country’s individual tariff rate was calculated. It turns out that the tariffs were not based on reciprocity, but instead reflected an old proposal from former Rep. Richard Gephardt (R-MO) to charge tariffs based on bilateral trade deficits. Instead of reciprocal tariffs, Trump imposed a universal baseline tariff, with additional nonreciprocal tariffs to be levied based on bilateral U.S. trade deficits. Gephardt’s plan was part of trade legislation vetoed by President Ronald Reagan in 1987, and it remained dead and buried until the Trump Administration resurrected it nearly four decades later.
April 2–April 9, 2025: Following the announcement of Liberation Day tariffs, the U.S. total stock market index initially plunges by 12.4%, its biggest drop since the COVID-19 pandemic. A selloff of U.S. Treasury securities leads to the biggest three-day increase in the 30-year Treasury rate since 1982.
April 9, 2025: Markets rebound as the Trump Administration pauses its nonreciprocal country-specific Liberation Day tariffs until July 9. White House Senior Counselor for Trade and Manufacturing Peter Navarro promises “90 deals in 90 days.”
April 9, 2025: The House of Representatives changes its rules to prevent a vote to end Liberation Day tariffs. The National Emergencies Act includes an expedited process for Congress to consider a privileged joint resolution to terminate a national emergency. Such a resolution must be brought to the floor within 15 calendar days and voted on within 3 calendar days. To avoid such a vote, the House changed its rules to specify that each day during the period from April 9, 2025, through September 30, 2025, does not constitute a calendar day for the purpose of terminating the national emergency underlying Trump’s Liberation Day tariffs.
April 30, 2025: The Senate fails to pass a resolution to terminate the national emergency underlying Liberation Day tariffs by a 49-49 vote.The resolution would likely have passed had Sen. Sheldon Whitehouse (D-RI) or Sen. Mitch McConnell (R-KY) been available to vote.
May 8, 2025: The United States and the United Kingdom reach a limited trade deal. Under the deal, the United States maintains 10% tariffs on UK imports, in addition to additional tariffs and quotas on UK cars, steel, and aluminum, and the UK makes no commitments regarding the possible imposition of discriminatory digital services taxes on U.S. tech providers.
May 28–29, 2025: United States Court of International Trade issues a unanimous ruling against President Trump’s Liberation Day tariffs and the DC Circuit Court issues a similar verdict in a separate case challenging the legality of the tariffs. The tariffs remain in place as the courts’ decisions are being appealed.
June 4, 2025: Commerce Secretary Howard Lutnick confirms the Trump Administration’s rejection of reciprocity as a negotiating goal. When asked by Sen. John Kennedy (R-LA) whether the administration would accept a deal with Vietnam that eliminated all trade barriers, Secretary Lutnick replies: “Absolutely not. Absolutely not. That would be the silliest thing we could do.”
July 2, 2025: Announcement of a trade deal with Vietnam. The United States will reportedly impose a 20% tariff on imports from Vietnam, and U.S. goods will enter Vietnam tariff-free. High U.S. tariffs on Vietnam will reduce the ability of that country to buy U.S. exports. It is not yet clear whether Vietnam made any commitments to remove discriminatory digital services provisions affecting U.S. tech providers.
July 6, 2025: Announcement that tariff increases reportedly will be delayed until August 1.
What comes next? The Trump Administration should seek to avoid a replay of its Liberation Day tariff debacle. Even if it maintains its 10% nonreciprocal universal tariff and avoids additional country-specific tariffs, Americans will continue to pay historically high tariffs. According to the Yale Budget Lab, as of June 16, the average U.S. tariff rate was 15.8%, the highest rate since the 1930s.
High tariffs imposed by President Trump are often defended as “he is just doing what he promised.” In reality, the Administration has entirely pivoted away from its promise of tariff reciprocity. Instead, U.S. tariff rates now exceed those imposed by most of our trading partners. Although the stock market has rebounded from its Liberation Day drop, tariff uncertainty remains high. Whatever happens on July 9, that uncertainty is likely to weaken U.S. economic prospects and undermine any benefits generated by the One Big Beautiful Bill Act.