Why this could be the summer of economic turmoil for millions of Americans
TOI World Desk | TIMESOFINDIA.COM | Jul 01, 2025, 00:36 IST
( Image credit : TIL Creatives, TOIGLOBAL )
The U.S. economy faces a potential turning point as President Trump's tariff pause expires on July 9, threatening economic stability. Without new trade agreements, higher tariffs could significantly increase the cost of goods, impacting consumers and businesses. Economists warn of potential inflation spikes and economic slowdowns if elevated tariffs return, creating uncertainty in the U.S. economic landscape.
The U.S. economy, which has managed to stay resilient in the face of global challenges, could soon face a turning point. Despite persistent global headwinds, inflation remaining steady, low unemployment, and recent stock market highs, the expiration of President Donald Trump's 90-day tariff pause on July 9 threatens to shake the economic stability that Americans have enjoyed.
The tariff pause, initially implemented after sweeping tariffs were imposed on virtually all U.S. trading partners earlier this year, was meant to give negotiators time to finalize trade deals. Without agreements in place by July 9, many countries could face higher tariffs, making goods from electronics to appliances significantly more expensive.
Ryan Sweet, Chief U.S. Economist at Oxford Economics, highlighted that the economic consequences are already in the pipeline. "There’s a lag between changes in tariffs and when they show up in the prices you and I are paying," Sweet said.
As of now, only China and the United Kingdom have successfully reached trade agreements with the U.S. President Trump has acknowledged that it is unrealistic to expect that 200 countries negotiating with the U.S. will have deals finalized by the deadline. "At a certain point, over the next week and a half or so, or maybe before, we’re going to send out a letter. We talked to many of the countries, and we’re just going to tell them what they have to pay to do business in the United States," Trump said.
While some officials within the administration have hinted at potential extensions for countries "negotiating in good faith," the specifics are unclear. Treasury Secretary Scott Bessent mentioned that countries still in negotiations might revert to the reciprocal tariff levels imposed earlier this year unless a deal is reached. Commerce Secretary Howard Lutnick also suggested the possibility of a regional tariff strategy, categorizing countries based on their location or progress in talks.
Despite these potential solutions, many economists are worried about the broader effects of the tariff policies. Matthew Luzzetti, Chief U.S. Economist at Deutsche Bank, said that the outcome of the July 9 deadline hinges on how the Trump administration handles trade policy. Luzzetti suggested that if the tariffs return to their elevated levels, it could trigger fears of an economic slowdown similar to what was seen in April.
Olu Sonola, U.S. Head of Economic Research at Fitch Ratings, predicted that inflation could rise to around 4% by the end of the year, regardless of how the trade deadlines are handled. "If 'Liberation Day' tariffs return, we’ll likely see inflation higher than 4%," Sonola said.
As the tariff pause comes to an end, uncertainty over trade policy and rising tariffs could force a significant shift in the U.S. economic landscape, leaving consumers and businesses bracing for impact. The expiration of the tariff pause, combined with the lack of finalized trade agreements, has the potential to drive up costs for American households, adding strain to an already fragile economic environment.
The tariff pause, initially implemented after sweeping tariffs were imposed on virtually all U.S. trading partners earlier this year, was meant to give negotiators time to finalize trade deals. Without agreements in place by July 9, many countries could face higher tariffs, making goods from electronics to appliances significantly more expensive.
Ryan Sweet, Chief U.S. Economist at Oxford Economics, highlighted that the economic consequences are already in the pipeline. "There’s a lag between changes in tariffs and when they show up in the prices you and I are paying," Sweet said.
As of now, only China and the United Kingdom have successfully reached trade agreements with the U.S. President Trump has acknowledged that it is unrealistic to expect that 200 countries negotiating with the U.S. will have deals finalized by the deadline. "At a certain point, over the next week and a half or so, or maybe before, we’re going to send out a letter. We talked to many of the countries, and we’re just going to tell them what they have to pay to do business in the United States," Trump said.
While some officials within the administration have hinted at potential extensions for countries "negotiating in good faith," the specifics are unclear. Treasury Secretary Scott Bessent mentioned that countries still in negotiations might revert to the reciprocal tariff levels imposed earlier this year unless a deal is reached. Commerce Secretary Howard Lutnick also suggested the possibility of a regional tariff strategy, categorizing countries based on their location or progress in talks.
Despite these potential solutions, many economists are worried about the broader effects of the tariff policies. Matthew Luzzetti, Chief U.S. Economist at Deutsche Bank, said that the outcome of the July 9 deadline hinges on how the Trump administration handles trade policy. Luzzetti suggested that if the tariffs return to their elevated levels, it could trigger fears of an economic slowdown similar to what was seen in April.
Olu Sonola, U.S. Head of Economic Research at Fitch Ratings, predicted that inflation could rise to around 4% by the end of the year, regardless of how the trade deadlines are handled. "If 'Liberation Day' tariffs return, we’ll likely see inflation higher than 4%," Sonola said.
As the tariff pause comes to an end, uncertainty over trade policy and rising tariffs could force a significant shift in the U.S. economic landscape, leaving consumers and businesses bracing for impact. The expiration of the tariff pause, combined with the lack of finalized trade agreements, has the potential to drive up costs for American households, adding strain to an already fragile economic environment.