What’s the significance of July 9th for Trump’s policy agenda?
On April 9th 2025, President Trump announced a 90-day pause on his country specific tariffs (excluding China), reducing them to his 10% universal tariff from the significantly higher rates he had unveiled in his April 2nd ‘Liberation Day’ announcement, as he gave countries time to negotiate trade deals. This pause expires on July 9th though, creating uncertainty for markets around whether Trump will extend his trade deal deadline. Alongside this, the president has set July 4th as his target for passing his extension of the 2017 Tax Cuts and Jobs Act, as a part of his ‘Big, Beautiful Bill,’ that is currently awaiting a final vote in congress.
Where will tariff’s land?
White House press secretary Karoline Leavitt most recently stated on June 27th that Trump’s July 9th tariff deadline could be extended to give more time for trade deals, adding that “the deadline is not critical,” but that ultimately “it’s a decision for the president.” Which has seen markets remain near all-time highs, as investors declare further tariff hikes unlikely1.
To date, Trump has negotiated trade deals with the UK and China, with China placing 10% tariffs on US goods and reciprocally, the US placing 55% tariffs on Chinese goods. These numbers are still above Trump’s 10% baseline rate on most countries, but significantly lower than his previous 145% tariff on China. Analysis from J.P. Morgan suggests the deal revealed Trump’s potential flexibility on tariffs in the face of economic risks, which were present if Trump had maintained his exorbitant tariff rates that virtually froze vital trade like Chinese rare earth exports to the US2.
The UK deal saw tariffs on UK cars reduced from 27.5% to 10% for the first 100,000 vehicles, and more favourable rates for steel and aluminium exports. The 10% baseline that applies to all countries remains on the UK, which JP Morgan argues is likely a non-negotiable floor for Trump’s tariffs. JP Morgan overall expects a 10% universal tariff rate to remain post July 9th, with China and specific sectors subject to higher rates.
Other commentators broadly confer with this view as well, with Financial Times columnist Robert Armstrong coining the TACO acronym (Trump Always Chickens Out)3, where he identifies a pattern of the president making aggressive tariff threats, only to delay or retreat from these as their economic and market consequences play out.
In fitting with this pattern, Trump may therefore decide to delay his trade deal deadline beyond July 9th, to avoid the economic fallout and give himself more time for trade deal negotiations.
In contrast the Australian Financial Review presents arguments from some commentators who disagree with this view. Arguing Trump may lose patience with trade negotiations and implement his tariffs as planned on July 9th, which may give him greater leverage in future negotiations4.
However, Trump has recently commented following the recent meeting of NATO leaders that he’ll make Spain—who has refused to meet NATO’s 5% of GDP defence spending commitment—pay “twice as much” through tariffs5. Which suggests that for military allies, Trump’s tariff rates may depend on their defence spending commitments. This could bode poorly for Australia, who Washington has repeatedly called on to increase core defence spending to 3.5% of GDP from around 2% currently.
Regardless of where tariffs land post July 9th, the average US tariff on the rest of the world is still going to be higher than it has been in generations. This will undoubtedly have repercussions for supply chains and profit margins.
What about Trump’s big, beautiful bill?
It is highly unclear whether Trump’s tax cuts bill will pass congress by July 4th, with Republican negotiations on its specifics still ongoing. What is clear, though, is that if the bill doesn’t get through, the tax cuts in the initial 2017 bill will expire. This would mean more than 60% of households could potentially face higher marginal tax rates, posing risks to consumer spending. If the bill does get through, it introduces around $US4.5 trillion in tax cuts over the next decade, providing a tailwind for economic growth. The downside, however, would be that it would add around $US2.4 billion to the US federal deficit over the next ten years6. This has raised concerns from some bond investors, who argue markets would need to ascribe greater credit risk to US debt —pushing up US government borrowing costs.
July 4th therefore looms particularly large for investors this year, with fireworks expected in more ways than one as Trump’s policies come to a head and investors brace for the fallout.
References
- The Wall Street Journal, “White House says July 9 trade deadline could be extended,” 26 June 2025
- JP Morgan Asset Management, “Trade turbulence (part 6): Are we out of the woods yet?” 26 May 2025
- Financial Times, “TACO trade theory and the US market’s surprise comeback,” 2 May 2025
- Australian Financial Review, “Markets asleep at the wheel as tariff D-Day looms,” 25 June 2025
- Australian Financial Review, “How NATO’s ‘daddy strategy’ conquered Trump,” 26 June 2025
- Congressional Budget Office, “An update on CBO’s support of the congress throughout the reconciliation process,” 17 June 2025