US Tariffs: the moratorium comes to an end
9 JUL, 2025
By Philippe Waechter
Philippe Waechter – Chief Economist at Ostrum AM, an affiliate of Natixis IM
Announcements and concerns about tariffs are once again making headlines. On 2 April, Liberation Day, Donald Trump announced tariffs ranging from 10% to 50%, depending on the country, on products entering the United States. A week later, only the 10% rate remained for all countries except China. The White Housethen gave all nations 90 days to negotiate a trade agreement with the United States.
This strategy has not proven very effective, as the United Kingdom and, more recently, Vietnam have signed memorandums of understanding on trade.
The 90-day deadline expires on 9 July, but Washington has already indicated that tariffs of 25% will be imposed on Japan and South Korea from 1 August. Announcements will be made in stages until 1 August, depending on the progress of negotiations.
This hard-line strategy was thought to have been abandoned due to warnings from financial markets around 2 Apriland because of the United States’ enormous financing needs.
However, Trump is at it again. And one can understand the reason for this stubbornness. Since Ronald Reagan, the global economic cycle has depended on American household consumption. This household spending represents 70% of US GDP — by far the highest level among developed countries.
The American market has opened itself to the entire world. China, whose economic opening to the world dates back to the early 2000s, rushed in, generating a considerable surplus. Europe enjoys a spectacular surplus with the United States. Other Asian countries have also found their economic cycles dependent on Mr Smith from Ohio and Mrs Suárez from Texas.
The economic cycle of many countries has thus become dependent on the behaviour of the American consumer.
The American trap closes when, suddenly, a tax must be paid to continue exporting goods to the US. In order to keep trading with the United States — which is essential for the economic cycle of almost every country — nations will accept being penalised by this tax. This will result in transfers to the benefit of the US. The increase in customs duties collected by the US Treasury is evidence of this.
This strategy, which is not necessarily effective from a collective standpoint, also reflects the rest of the world's inability to be self-sufficient. The American market, so vast and attractive for so long, is now ensnaring the entire globe.
However, China, Russia and India have become economically powerful countries that will want to write history differently. We will need to shape the future without depending directly on Mr Smith and Mrs Suárez. In the short term, the spotlight is on the United States. In the medium term, other lights will shine, signalling a more dispersed global economy, less dependent on the American consumer. That is the real disruption.
