Countdown to global trade! The White House confirmed the “ultimatum” letter, stating that the deadline for reciprocal tariffs is approaching on July 9
The White House Press Secretary confirmed on June 3 a piece of news that shook the global market: The Office of the United States Trade Representative (USTR) has sent urgent letters to major trading partner countries, asking them to submit the best final plan for trade negotiations by Wednesday of this week. This letter, interpreted by the outside world as an ultimatum, targets an imminent date, July 9th. At that time, the extensive global reciprocal tariffs announced by President Trump on April 2nd and then postponed for 90 days will be officially launched.
According to a draft letter obtained by Reuters, the USTR is exerting tremendous pressure on its negotiating partners. The letter clearly requires all countries to propose the “best and ultimate” plan in key areas, with the core focus on: How much industrial and agricultural products from the United States can be purchased? When to buy? On which products are you willing to lower tariff barriers? The specific management plan for the import volume of sensitive products from the United States.
The confirmation of the White House press Secretary has completely dispelled the outside world’s doubts about the authenticity of this letter. She emphasized that sending this letter “was only to remind these countries that the deadline was approaching”, and conveyed Trump’s core demand: “The president looks forward to reaching a good agreement.” However, at a tense moment with only five weeks left until the July 9th deadline, the intention to pressure countries to come up with the final plan within just a few days (by this Wednesday) is self-evident.
On April 2nd, President Trump unexpectedly announced a “reciprocal tariff” policy targeting a wide range of global trading partners. The core logic is that if the average tariff faced by the goods exported from the United States to a certain country is higher than that faced by the goods exported from that country to the United States, the United States will impose “equivalent” additional tariffs on the imported goods from that country. This policy has an extremely wide coverage. It is no different from dropping a bombshell into the global trading system, triggering violent market fluctuations and strong protests from various countries.
On April 9th, in the face of huge international pressure and concerns from the domestic business community, the Trump administration announced the suspension of this tariff on “most” trading partners, with the suspension period set at 90 days. This means that the effective date of the “Sword of Damocles” hanging over global trade has been postponed to July 9th.
These 90 days should have been a precious window period for all parties to step up negotiations and seek solutions. The letter from the USTR indicates that the US government believes that the negotiation process is far from achieving its expected goals and time is running out.
The countries that have received this “ultimatum” mainly include the European Union, the United Kingdom, Japan, India, Brazil, etc. (It is worth noting that countries that have reached a phased agreement with the United States or have special arrangements, such as Canada, Mexico, Australia, South Korea, etc., may not be included for the time being or face different requirements.) They are now facing extremely difficult and urgent choices:
In just a few days, is it a choice to significantly increase commitments in purchasing American goods, lowering tariffs or expanding quotas to satisfy the appetite of the US side? This will face huge challenges in terms of domestic political and economic resilience.
Ready to withstand the tariff shock? If we are unable or unwilling to meet the demands of the US side, are we ready to face significantly increased additional tariffs on a large number of goods exported from our country to the US starting from July 10? This will deal a direct blow to the related industries and economic growth. Seek legal or WTO channels to fight back? Some countries may consider challenging the legal basis of the United States’ “reciprocal tariff” policy or filing a lawsuit at the World Trade Organization (WTO), but this is usually a long and uncertain process and cannot solve the imminent tariff threat on July 9.
A report by Reuters pointed out that diplomats from some countries privately expressed dissatisfaction and frustration, believing that the time limit set by the US side was too harsh and the requirements were unrealistic.
There are three possible scripts on July 9th
With the internal deadline set by the USTR, “This Wednesday” (June 5th), passing by in the blink of an eye, the future direction of global trade has become even more confusing. On the crucial juncture of July 9th, the following scenarios may arise:
If major trading partners make significant concessions that satisfy Trump at the last minute, the US government may announce an agreement (or make “sufficient” progress), thereby once again postponing or permanently eliminating reciprocal tariffs on these countries. This is the “soft landing” scenario that the market most hopes to see.
It is more likely that the United States will reach agreements with some countries, but impose reciprocal tariffs on those countries that fail to meet the requirements as scheduled. This will lead to the fragmentation of the global trade pattern, and the related industries of the countries not exempted will be the first to be impacted.
The worst-case scenario is that the negotiations completely break down and the United States imposes extensive reciprocal tariffs on most of the countries on the list on July 9. This will immediately trigger reciprocal retaliation from relevant countries, inflict another heavy blow on the global supply chain, trigger a new round of broader global trade conflicts, and cast a huge shadow over the recovery of the world economy.
No matter which scenario it is, the tug-of-war of negotiations in the next five weeks will be extremely intense and full of uncertainties. Every statement made by the relevant parties, every progress or setback of small-scale talks may trigger sharp fluctuations in the financial market.
The core logic of the Trump administration’s “reciprocal tariff” policy is the dissatisfaction and challenge to the existing global multilateral trading system (with the WTO at its core). The US side believes that the existing rules are “unfair” to the US and have failed to effectively solve the so-called “tariff imbalance” problem. This “ultimatum” letter from the USTR is yet another tough demonstration of its unilateral pressure tactics.
This approach bypasses the WTO dispute settlement mechanism and unilaterally sets standards and time limits based on its own economic strength.
It brings huge disruptions to global enterprises and supply chain planning.
If this move by the United States is “successful” (forcing other countries to make concessions), it may encourage other countries to adopt similar unilateral coercive trade strategies and further undermine the rule-based international trade order.
July 9th is no longer a distant date. The letter from the USTR and the confirmation from the White House are like the countdown bell for global trade. As the internal deadline of “this Wednesday” (June 5th) approaches, major trading partners are faced with a painful “choice of two” : either make major concessions that may harm their own economic interests under great pressure, or confront the heavy blow of the Trump administration’s “reciprocal tariffs” in five weeks.
The global trade high-pressure storm triggered by a single letter will profoundly influence the economic recovery trajectory in the post-pandemic era, the direction of global supply chain reconstruction, and even the future fate of the rule-based multilateral trading system. In the next five weeks, every round of confrontation at the negotiating table and every announcement of key decisions will be on the nerves of the global market. The world is holding its breath to see whether this imminent tariff crisis will eventually end in compromise or in the outbreak of a broader trade conflict. The sword of Damocles of the trade war hangs high, and the countdown has begun.
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