Trump’s tariff ultimatum looms as 90-day reprieve ends, rattling global trade

The world economy is on edge this week as the United States closes in on a self-imposed deadline for fresh tariffs, ending 90 days of frantic negotiations that have kept businesses and governments guessing. According to Bloomberg, Wednesday marks the end of a temporary pause on President Donald Trump’s so-called “reciprocal” levies, an approach that threatens to bring a new wave of protectionism aimed at cutting US trade deficits and reviving domestic industry.

Trump has suggested the first of these tariffs could hit as early as August 1, telling supporters “the money will start to come into the United States” on that date. His administration says the strategy will restore fairness to trade, but critics warn it risks undermining decades of progress in lowering global barriers under World Trade Organization rules. Negotiators have been scrambling for last-minute deals before the cutoff. Treasury Secretary Scott Bessent describes trade as one of the three main pillars of Trump’s agenda, along with tax cuts and deregulation. Bloomberg reports that all three are designed to boost investment and job growth, though they’ve also drawn fire for fuelling debt and sowing uncertainty.

Tariffs as economic weapon and gamble

Trump’s embrace of unilateral tariffs marks a stark shift from previous US trade policy, which favoured alliances and rules-based dispute resolution. The president argues that other nations have long taken advantage of American openness and says tariffs will level the playing field. Bloomberg notes that the administration also sees tariffs as a handy source of revenue at a time when debt sustainability is a growing concern. After Congress approved a massive $3.4 trillion tax cut and spending package, Washington is eager for new ways to fill its coffers.

Yet economists warn that Trump often misrepresents how tariffs work. According to Bloomberg, while he claims foreign exporters pay these duties, in reality the costs usually land on American importers. That forces companies to choose between absorbing the extra expense, pressuring overseas suppliers to cut prices, or passing costs on to US consumers. Bloomberg Economics estimates that if Trump’s threatened tariff hikes take effect this month, average US import duties could soar to about 20 per cent—far above the roughly 3 per cent level when he first took office.

US economy steady but cautious

So far, the US economy has weathered the uncertainty reasonably well. Bloomberg reports that hiring has remained solid and inflation relatively contained, helping the Federal Reserve resist political pressure for aggressive rate cuts.

June’s jobs data showed surprisingly strong growth, driven in part by a surge in public education employment that pushed the jobless rate down. But the Fed remains cautious. Investors will pore over the minutes of the central bank’s June policy meeting this week for hints about whether policymakers see tariffs as a threat to growth or inflation down the line. Weekly jobless claims data due Thursday is expected to show a labour market still tight overall, even as elevated continuing claims hint at challenges for those trying to find new work.

Canada’s job market feels tariff stress

Canada, too, is bracing for fallout. Bloomberg notes that June labour market data is likely to show further weakening after unemployment ticked up to 7 per cent in May. Business sentiment in manufacturing and other trade-exposed sectors has cooled as tariff threats cloud hiring plans.

Cross-border tourism is also under pressure, with June figures expected to reveal another drop in return visits.

Asia’s central banks balance growth and risk

Across Asia, policymakers are weighing how to support slowing growth while managing inflation risks, especially as Trump’s tariffs threaten to weaken global demand.

Bloomberg says Australia’s central bank is widely expected to cut its cash rate to 3.6 per cent on Tuesday, marking a third straight reduction as inflation cools. That move will follow key business confidence and hiring surveys, with Deputy Governor Andrew Hauser scheduled to speak Wednesday.

New Zealand’s central bank is expected to hold its rate steady at 3.25 per cent, while Malaysia’s Bank Negara is also likely to keep its overnight rate unchanged this week. South Korea’s central bank is forecast to maintain its base rate at 2.5 per cent on Thursday, balancing growth support with efforts to contain surging housing prices in Seoul.

China will release fresh inflation data on Wednesday that will give clues about domestic demand, while indicators on loans and money supply will also be closely watched. Japan, meanwhile, will report labour cash earnings on Monday, a key gauge of whether rising wages are feeding through to broader consumption. Other Japanese releases this week include bank lending, current account data and the Eco Watchers Survey of business sentiment.

Elsewhere in Asia, Bloomberg highlights upcoming data from the Philippines (May employment report), Taiwan (June CPI and trade numbers) and Indonesia (foreign reserves and consumer confidence).

India is also keeping a close watch on these developments. While the Reserve Bank of India has adopted a cautious approach to policy in 2025, it remains focused on maintaining a balance between controlling inflation and supporting growth. Officials are monitoring monsoon-driven food price trends, global commodity costs and rupee movements—all of which could be further complicated by any escalation in US trade tensions.

Europe braces for tariff effects

European economies remain exposed to the fallout from US protectionism. Bloomberg reports that Germany saw a sharper-than-expected drop in factory orders in May, a sign that businesses are already feeling the chill.

This week will bring Germany’s industrial production data on Monday and trade figures on Tuesday, with France’s exports due the same day. Italy will publish industrial output on Wednesday.

In the UK, GDP data for May is due Friday, with economists hoping for a modest rebound after April’s sharp contraction. The Bank of England will release its financial stability report on Wednesday, with

Governor Andrew Bailey set to discuss risks to the economy at a press conference.

Eurozone finance ministers will also meet early in the week, discussing topics including Bulgaria’s planned switch to the euro in January. Meanwhile, Sweden will release inflation data Monday, followed by housing prices on Tuesday and monthly GDP on Wednesday. Norway and Denmark will also publish consumer price numbers.

Russia, which cut rates last month for the first time in nearly three years, will release June inflation data Wednesday that could influence whether the central bank opts for a larger cut at its next meeting. Deputy Governor Alexey Zabotkin has said the data will be key to that decision.

Latin America focuses on inflation battle

Bloomberg notes that inflation is the top economic story in Latin America this week. Colombia will kick things off Monday with data expected to show annual inflation dipping below 5 per cent, its lowest level since late 2021.

Chile will release June numbers Tuesday, with analysts looking for either stability or a slight uptick from May’s 4.4 per cent reading. Mexico is due to publish its inflation data Wednesday, followed by central bank minutes on Thursday that could offer clues on future rate cuts after four consecutive half-point reductions.

Brazil, the region’s largest economy, will release its data Thursday, with Bloomberg Economics predicting it may breach the country’s new continuous inflation target. Peru’s central bank is also meeting Wednesday and is widely expected to deliver a modest rate cut after holding steady at its last session.

As Trump’s tariff deadline arrives, governments around the world, from Berlin to Beijing, Delhi to Brasília, are weighing the risks of caving to US demands against the potential shock of a new era of protectionism that could reshape global commerce for years to come.

(With inputs from the agencies)