President Donald Trump has granted Mexico a crucial 90-day extension on tariff negotiations, postponing threatened 30% levies on America’s largest trading partner as dozens of other countries scramble to secure deals before Friday’s deadline.
The reprieve for Mexico comes amid a flurry of last-minute diplomatic activity, with Trump announcing he would extend Mexico’s current tariff rates to allow more time for negotiations. The decision marks a significant shift for a country that had been facing imminent higher duties alongside the European Union.
On the eve of what Trump had dubbed “Liberation Day” – the deadline for countries to reach trade agreements or face punishing tariffs – the president unleashed a series of surprise announcements, including new deals with Thailand and Cambodia following Monday’s ceasefire agreement between the nations.
“To all of my great lawyers who have fought so hard to save our Country, good luck in America’s big case today,”Trump posted on Truth Social, defending his tariff strategy. “If our Country was not able to protect itself by using TARIFFS AGAINST TARIFFS, WE WOULD BE ‘DEAD,’ WITH NO CHANCE OF SURVIVAL OR SUCCESS.”
The chaotic rush to beat the deadline has left global markets and business leaders struggling to adapt to rapidly changing trade policies.
High Stakes for Major Trading Partners
The postponement for Mexico provides breathing room for America’s southern neighbour, which conducts billions in bilateral trade annually. Mexican President Claudia Sheinbaum had previously warned that Mexico would retaliate if an agreement wasn’t reached and the 30% tariff took effect.
Other major trading partners face varying fates. The European Union reached a trade agreement with the US on Sunday, establishing a 15% import tariff on most EU goods, with the bloc pledging to invest approximately $600 billion (£470 billion) in the United States.
Japan secured a deal earlier this month, lowering tariffs to 15% from a previously threatened 25%, including on automobiles. South Korea faces 15% tariffs matching those of Japan, while India confronts 25% levies amid Trump’s criticism of its Russian energy and weapons purchases.
Smaller Nations Scramble
Beyond the major economies, smaller trading partners are racing against time. Cambodia and Bangladesh, crucial sources of apparel imports, face tariffs of 36% and 35% respectively if deals aren’t concluded.
Treasury Secretary Scott Bessent has been instrumental in advocating for extensions, particularly for the EU negotiations, according to sources familiar with the discussions.
The Philippines, a longstanding US ally, will face a 20% tariff rate, up from the 17% initially imposed in April. The Southeast Asian nation confirmed it would hold further talks with Washington.
Economic Impact Mounting
The tariff uncertainty has already taken a toll on the US economy, particularly the manufacturing sector. The Institute for Supply Management reported that tariffs are weighing heavily on factory orders.
“The erratic trade policy with on-again/off-again tariffs has led to price uncertainty for customers, who appear to be prepared to hold off large capital purchases until stability returns,” the institute noted in its recent report.
Yale Budget Lab analysis suggests Trump’s proposed tariffs could cost an average household an additional $2,400 (£1,880) this year. Price increases could hit everyday items from coffee to shoes to appliances if the August 1 deadline holds for countries unable to secure deals.
Copper Surprise Shakes Markets
In an unexpected move, Trump announced new tariff rules on copper, exempting the most widely traded forms from 50% duties. The decision sent copper prices in New York plummeting by a record amount, highlighting the market volatility created by the administration’s trade policies.
The copper tariffs on certain semi-finished products will still take effect on August 1, with Commerce Secretary establishing processes for including additional derivative copper articles by October.
Legal Challenges Loom
The administration’s tariff strategy faces significant legal hurdles. In May, the US Court of International Trade ruled that certain International Emergency Economic Powers Act (IEEPA) tariffs were illegal, permanently enjoining relevant executive orders.
Despite legal setbacks, Trump has pressed forward with his trade agenda, imposing what economists calculate as the largest tax increase since 1993 when including all announced tariffs.
Completed Deals
So far, the White House has announced trade agreements with:
- United Kingdom: Maintaining 10% baseline tariffs with reduced levies on cars, steel, aluminium, beef and aerospace products
- Vietnam: 20% tariffs, down from threatened 46%
- Indonesia: Terms not fully disclosed
- China: Preliminary accord following talks in Sweden
- Thailand and Cambodia: Expected agreements following ceasefire
Political Complications
Trump added unexpected political dimensions to trade negotiations, criticising Canada’s support for Palestinian statehood. “Wow! Canada has just announced that it is backing statehood for Palestine. That will make it very hard for us to make a Trade Deal with them. Oh’ Canada!!!” he posted on Truth Social.
Canadian Prime Minister Mark Carney acknowledged Wednesday that talks might not conclude by Friday’s deadline. Canada faces potential 35% tariffs, up from current 25% levies on non-USMCA goods.
Business Uncertainty Deepens
The constant shifts in trade policy have created what Wells Fargo economists Shannon Grein and Tim Quinlan describe as a “pervasive sense of uncertainty” that continues to drag on economic growth.
“Putting off the increased levy will no doubt bring some short-term relief for impacted business owners and purchasing managers, though it does little to alleviate the pervasive sense of uncertainty,” they wrote in a research note.
Importers face particular challenges, with many rushing to bring goods into the country while tariffs remain paused, whilst simultaneously navigating increasingly complex filing requirements at borders.
What Happens Next
With Mexico’s 90-day extension, attention turns to which other countries might secure similar reprieves. Bloomberg reported Trump would speak with President Sheinbaum on Thursday morning, suggesting ongoing high-level engagement.
For countries unable to reach agreements by Friday, the threatened tariffs ranging from 15% to 50% would take effect, though Trump’s pattern of last-minute changes leaves room for further surprises.
The administration views these unilateral tariff rates as negotiated deals, though critics argue they represent one-sided impositions rather than mutually beneficial agreements. Trump had initially promised 200 trade deals within his first 100 days but has announced only a fraction of that number.
As Friday’s deadline approaches, the global trading system remains in flux, with businesses, consumers, and governments worldwide watching anxiously to see which nations join Mexico in securing extensions and which face the full force of Trump’s tariff regime.
The coming days will likely bring more announcements as negotiations continue around the clock, with the ultimate economic impact depending on how many countries can reach accommodations with Washington before time runs out.
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