AYESHA RASCOE, HOST:
A 90-day pause on President Trump's sweeping tariffs is set to expire on Wednesday. That's the deadline he set for countries to come to terms with the U.S. on trade policy. The administration touted 90 deals in 90 days, but so far, only a few have been announced. Now the president says he's sending out letters to a dozen countries, starting Monday, outlining tariff terms. Joining us now to discuss it all is Tim Meyer. He's a professor of international trade law at Duke University. Thank you for being with us.
TIM MEYER: It's great to be here.
RASCOE: Tell us more about these letters. Trump said last week that rates could be even higher than what was announced in April.
MEYER: Yes. So, you know, as you mentioned, in April, President Trump imposed what he called the Liberation Day tariffs. There was a significant adverse reaction in both the stock and bond markets, which led the president to pause those tariffs for 90 days and announce this goal of 90 tariff agreements in 90 days. And basically, you know, by its own, you know, the goal the president set out, the administration is not coming anywhere close to that. And so, actually, as early as May, you started to see the administration walk back this promise that there were going to be all of these - all these trade agreements. And so there's been a little bit of confusion even within the administration. The secretary of the treasury has said, well, maybe we would look to be wrapping up negotiations by Labor Day, you know, by the first weekend of September. We're seeing a little bit of the goalposts moving.
RASCOE: How effective has this 90-day pause been in terms of negotiating with other countries?
MEYER: It hasn't been effective in terms of negotiations really at all. What it's been effective at doing is giving markets some sense of calm, you know, markets and businesses that are trying to plan investments and are trying to decide how much to produce for export to the United States. This sort of uncertainty about what the tariffs might be is really, really difficult for them. And so when the president gives, you know, sort of a three-month runway, it signals to the markets that there's at least some stability in what tariffs are likely to be.
RASCOE: Is the calm going to remain now that these letters are going out, or, you know, what is the impact of the 90-day pause ending?
MEYER: You know, these letters, in terms of what they're actually doing to tariff rates, they're not any different, really, from what the president did on April 2. He's just announcing tariff rates that he's going to impose. So the administration is calling this letters so that it feels like they have done something that is negotiated. But, in fact, this is really the same thing they did in April. And what the administration has said is that they're also going to back the deadline up. So the deadline sounds like maybe it's going to be extended. One date that's been thrown out is August 1.
Another thing that we've seen this administration do is it will announce agreements in principle or framework agreements, and it will sort of hold those up as having achieved the goal of an agreement, even if the terms are not fully specified. There's not really enough of a deal there that any trade lawyer would really consider it to be an agreement, but it will allow the administration to sort of claim a successful negotiation and then announce some stability to tariffs going forward.
RASCOE: What about legal challenges to these tariffs? You know, there are lawsuits in courts. Where do things stand?
MEYER: Part of the reason the administration is likely having difficulty with these negotiations is that two separate federal courts have already held that the president lacks the authority to impose the, quote-unquote "Liberation Day" tariffs. Those rulings have been put on pause while the appeals go through, which is why the president is still able to make these threats of increasing tariffs. But it seems likely that ultimately the president isn't going to have the authority to impose these tariffs that date back to April, which makes it really difficult to see why if you were one of the U.S.'s trading partners, you would make what might be for you difficult concessions to the United States in order to avoid tariffs if the court system is ultimately going to say, hey, the president doesn't have the authority to impose these tariffs.
RASCOE: How do you think this will play out and, like, impact consumers, especially when it comes to, like, back-to-school shopping and, you know, the holiday season?
MEYER: We're looking in the second half of the year at fairly significant inflation, I think. Part of what happened when the president announced these tariffs and then paused them or dialed them back only to the baseline 10% rate is that importers were able to start stockpiling goods in the United States, and that provided, essentially, a buffer. But once the goods that are on the shelves in the stores, and this will certainly be true by the holiday season at the end of this calendar year, once those goods have been hit by the tariffs, you're going to see price increases be passed along to consumers.
It's essentially like a sales tax. You know, if you go to a store and you buy something, you see the subtotal and then you see the sales tax. It's the store that ultimately remits the sales tax to the government. But you, the consumer, pay it. And tariffs work the same way. And so, you know, we've seen the Federal Reserve, for instance, indicate that it's really waiting on interest rates because it's waiting to see how much of the president's tariffs are going to be passed through to consumers in the second half of 2025.
RASCOE: That's Tim Meyer of Duke University. Thank you so much for joining us.
MEYER: My pleasure.
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