Recently, US stock markets reached new highs, driven by the expectation of a trade agreement with several countries, tax reform measures, and anticipation of interest rate cuts in Q3. On July 9, the 90-day exemption for reciprocal tariffs on most countries will expire. Will the US reach a trade agreement by then? If not, will Trump choose to extend the exemptions further or raise the tariff rates again?
July 9 Deadline Approaching: Where Are the Negotiations Stalled?
July 9, 2025, marks the expiration date for the 90-day tariff exemption on reciprocal tariffs. The EU, in particular, faces significant pressure regarding tariffs. On April 9, 2025, under pressure from the market, allies, and other factors, Trump withdrew the reciprocal tariff policy on most countries and announced a 90-day exemption. On May 23, due to dissatisfaction with the progress of negotiations, Trump threatened the EU with a 50% tariff on imports from the EU starting June 1. However, after receiving a commitment from the EU to “expedite and decisively” advance trade talks, Trump agreed to delay the imposition of the 50% tariff until July 9.
As of July 3, with the deadline for the reciprocal tariff exemption approaching, Trump has not received the “quick resolution” he had hoped for. Currently, countries are no longer as eager to “be the first to reach” a trade agreement with the US, and there is a strong sense of waiting and seeing. Looking at the negotiations from the “fast-to-slow” perspective, we can categorize US foreign trade talks as follows:
Category 1: Agreements Already Reached, US-UK and US-China Negotiations
On May 8, the US and the UK reached an agreement where the UK opened its ethanol, agricultural, and machinery markets to the US in exchange for a 10% tariff quota for 100,000 cars annually and the cancellation of steel and aluminum tariffs between the two countries. The UK is a surplus trading partner with the US, so the US only imposed a 10% basic tariff on the UK, and its car exports to the US are not a key pillar of its economy. Therefore, the UK made minimal concessions to meet the US’s demands.
On May 12, after a meeting between US and China in Geneva, both sides reached a “truce” agreement, canceling 91% of tariffs and suspending the implementation of 24% reciprocal tariffs for 90 days.
Category 2: US-India Trade Talks Close to Agreement
After US Vice President Pence visited India in April, positive signals regarding US-India trade talks emerged. On July 1, White House Press Secretary Karoline Leavitt stated that US officials were “finalizing” a trade deal with India. There is room for mutual benefits in both economic and geopolitical terms between the US and India, and India may become one of the first countries to reach an agreement with the US.
According to India’s Financial Express, the US-India trade deal mainly involves India opening further access to its markets for US agricultural products and ethanol, while also seeking to expand market access for dairy products, alcoholic beverages, automobiles, pharmaceuticals, and medical devices. Specifically, India aims to allow imports of US genetically modified agricultural products and remove strict regulations on animal feed used for dairy production. India also wants the US to cancel the reciprocal tariffs and commit not to impose them in the future, while giving India favorable treatment for labor-intensive products like textiles and footwear.
Category 3: Small Countries Negotiating with the US
Some smaller countries, in a weaker position in trade negotiations with the US, have been intensifying talks with the US. According to Bloomberg, in May, the US government outlined a priority negotiation list that includes 20 countries or regions. US Commerce Secretary Wilbur Ross stated that this list is intended to establish a “template” for broader agreements. These countries include Vietnam, Fiji, Lesotho, Mauritius, Brazil, the Philippines, Australia, Argentina, Cambodia, Ecuador, Indonesia, Israel, Madagascar, Malaysia, Switzerland, and Taiwan.
Southeast Asian countries are likely to be the first to reach a series of agreements with the US, such as Vietnam, Malaysia, and Indonesia. On June 23, Malaysia announced “good progress” in tariff negotiations with the US, aiming to complete talks before the 90-day exemption period ends. On July 2, Trump announced that Vietnam had reached a preliminary trade agreement with the US. On July 2, Indonesia Business Daily reported that the Indonesian government had agreed to US demands on tariffs and trade barriers, and the US had expressed approval of several Indonesian concessions. On July 3, Indonesia’s Economic Minister stated that Indonesia would sign a $34 billion agreement with US business partners to increase purchases from the US and expedite the trade agreement.
Category 4: Major Trading Partners like the EU and Japan
The EU and Japan, key sources of the US trade deficit, have been engaged in multiple rounds of negotiations with the US, but significant differences on core issues make it difficult to reach a compromise.
For Japan, the key points of negotiation are auto tariffs and imports of agricultural products like rice. Both auto and agricultural products involve political interests in Japan and the US, making the US position tough. Due to slow progress in US-Japan talks, on July 1, Trump threatened to raise the tariff to “30% or 35%” on Japan, higher than the 24% tariff proposed on April 2. This is likely a negotiation tactic, and the actual imposition is unlikely, but the deadlock in negotiations makes it unlikely that a major agreement between the US and Japan will be reached before July 9. According to Japan’s Asahi TV, Japan’s Economic Rebirth Minister Akio Yata is preparing for the eighth round of trade negotiations in the US, scheduled for July 5.
The difficulty in US-EU negotiations lies in coordinating internal interests within the EU. Different EU countries have varying degrees of dependence on US exports, and the impact of tariffs varies. However, the EU must reach a unified stance on any compromise with the US. Germany, which has a larger trade deficit with the US, wants to conclude a trade deal quickly to reduce the impact of tariffs on the EU auto industry, but France, with a smaller trade deficit, takes a more hardline stance. Currently, no agreement has been reached between the EU and the US. On July 1, The Financial Times reported that European Commissioner for Trade and Economic Security, Valdis Dombrovskis, will meet with US Commerce Secretary Wilbur Ross and US Trade Representative Robert Lighthizer on July 3.
Category 5: Other Countries Like South Korea and Canada Requesting a Negotiation Extension
South Korea: South Korea is seeking an extension of the negotiation period. Under the 2012 US-Korea Free Trade Agreement, South Korea has implemented nearly zero tariffs on US imports, and US demands primarily focus on technical trade barriers and regulatory standards. On June 30, South Korean government officials stated that due to the current negotiations’ inability to meet the established deadline, they hoped for additional time for talks.
Canada: Canada had previously insisted on implementing a digital services tax on US tech companies, prompting Trump to halt trade negotiations. On June 29, Canada canceled the digital services tax, and the White House stated that trade negotiations with Canada would “immediately resume.” Canadian Finance Minister Bill Morneau said that Prime Minister Justin Trudeau and President Trump had agreed to resume negotiations with the goal of reaching a deal by July 21.
How Will the US Respond to the Expiration of Tariff Exemptions on July 9?
Before the July 9 deadline, the US has little time to reach broad trade agreements and can only “settle for what it can.” Trump previously stated that 150 countries are lining up for negotiations with the US. According to several officials, the US is adopting different strategies for different countries:
First, before July 9, the US will focus on 10 trade agreements. Preliminary agreements have been reached with Vietnam, and agreements with India, Malaysia, and Indonesia may also be finalized. On June 27, US Secretary of Commerce Wilbur Ross told Bloomberg that by July 9, the US would choose the best 10 deals and leave the rest behind.
Countries likely to reach agreements with the US before July 9 include India, possibly Malaysia, Cambodia, Madagascar, and others. We expect that, similar to the US-UK agreement, these will likely be “principle” or “framework” agreements, with detailed negotiations still required. Following the US-UK agreement on May 8, many details were not finalized until June 16.
Second, negotiations with 10 countries or regions will be extended to September 1. This may include South Korea, Japan, and the EU. On June 27, Treasury Secretary Steven Mnuchin responded to Secretary Wilbur Ross’s view, saying, “If we can sign 10 or 12 of the 18 important deals — and there are another 20 important agreements — I think we can finish trade talks before Labor Day (September 1).” This aligns with White House Press Secretary Karoline Leavitt’s comments on June 26 that the tariff deadline “is not critical.”
Currently, South Korea has already requested an extension, and the EU and Japan are likely to enter the extended negotiation category due to difficulties reaching quick compromises. However, considering Trump’s previous threat to raise tariffs on the EU to 50%, there is a possibility that the EU will sign a principle or framework agreement before July 9 to continue negotiations and avoid the risk of tariffs being raised.
Third, for the remaining countries, the US will implement a unilateral approach. Treasury Secretary Mnuchin told CNBC that for smaller trading partners, the US would “just send them letters.”
If these countries are US trade surplus countries, they will be subjected to lower tariff rates. These countries are likely to passively accept this. If they are trade deficit countries with higher tariff rates assigned and do not accept the US’s unilateral arrangement, there could be a retaliatory re-imposition of reciprocal tariffs or the direct imposition of a unilateral tariff.
On June 26, Trump stated that the US would not sign trade agreements with all countries, and for some, the US would only send letters informing them of tariffs of 10%, 25%, 35%, or 50%.