Trump Says No More Delays, New Tariffs to Start on August 1

No More ‘TACO’? Trump Says New Tariffs to Start August 1
President Trump reignited his one-man global trade war this week, slapping new tariffs starting August 1 on imports from more than a dozen countries, including major trading partners Japan and South Korea. On Tuesday, he doubled down on that effort, saying there would be no more extensions of the deadline for the “reciprocal” tariffs on many countries he announced back in April, which he had twice delayed, supposedly to give countries more time to negotiate new trade agreements.
On his social media platform, Trump announced that “there will be no change” to the August deadline, leaving just a few weeks for countries to agree to alternative terms. “In other words, all money will be due and payable starting AUGUST 1, 2025 - No extensions will be granted,” he wrote.
The ‘TACO trade’ persists: Markets plunged in April after Trump announced his new tariff plan, which would impose historically high import fees on goods from most countries around the world. The delay of those tariffs provided immediate relief, and some investors began to talk about the “TACO trade,” based on the belief that the high tariffs would never take effect, at least not in full, because “Trump Always Chickens Out.” That view of the tariffs continues to hold sway to some extent, as indicated by the muted reaction in global markets to Trump’s most recent announcements.
“The ‘TACO’ (Trump Always Chickens Out) trade is back on the table as the Trump administration’s latest announcements on tariffs offered some relief to financial markets,” Dan Coatsworth of AJ Bell Investment said Tuesday, per CNBC. The relief came primarily in the form of another delay, with a July 9 deadline for the tariffs being moved to August 1.
Jonas Goltermann of Capital Economics said Tuesday that he expects tariffs to remain roughly where they are currently in the long run. “Markets are (probably) right to ignore Trump’s latest tariff flip-flop,” he wrote, per NBC News. “While continued noise around tariffs could well generate some volatility in the near term, we think the bar for another major sell-off remains quite high.”
The TACO theory may not hold forever, though. Trump announced that he plans to impose a 50% tariff on copper imports, and Commerce Secretary Howard Lutnick said that tariff could take effect as soon as the end of July. Trump also said that he plans to eventually impose a tariff as high as 200% on pharmaceutical imports, to encourage drugmakers to manufacture as much as they can in the U.S.
In addition to the sector-specific tariffs, which are already raising prices for key materials including steel and aluminum, the full slate of national tariffs could take effect in a few weeks, as promised — an outcome that may be more likely if Trump bristles at the TACO epithet.
“At a very basic level, nothing actually happened based on Trump sending these letters, so there’s no reason to panic over headlines,” Tobin Marcus, an analyst at Wolfe Research, wrote, referring to the letters Trump sent to the leaders of the countries he imposed new tariffs on this week. “But we think these moves do contain some signal about where the trade war is heading, and that signal is mostly hawkish.”
Even if Trump’s tariff scheme remains unresolved through yet more extensions, the mere threat of them creates a situation that paralyzes international firms as they try to plan for the future. “The ongoing uncertainty,” ING analysts wrote in a research note, “could do almost as much economic harm as actual tariffs.”
Tariff costs already at historic highs: Trump may delay the tariffs once again, but the tariffs already in place have risen near historic highs. According to a new analysis by the Yale Budget Lab, U.S. consumers currently face an effective tariff rate of 17.9% — the highest level since 1934, and an increase of more than 15 percentage points from last year.
The Yale researchers said that price increases for imported goods will likely push importers to seek out sources in lower-tariff nations. For example, an importer could buy more from suppliers in Mexico and less from suppliers in China, thereby lowering their net effective tariff rate. Over time, that process would push the average effective tariff rate down to 16.5% — the highest rate since 1936.
In terms of prices, the tariffs would raise the price level by 1.7% in the short run, the researchers said. That’s the equivalent of a loss of income of $2,300 for the average U.S. household. After importers find alternative sources, the price level settles into an estimated 1.5% increase, equivalent to a loss of $1,900 per household.
The price increases would weigh on the economy, reducing GDP growth by 0.7 points in 2025, the researchers said. Over the long haul, the economy is persistently smaller by 0.4 points, a loss worth roughly $110 billion per year.
As a tax on domestic firms and consumers, the tariffs raise federal revenues substantially. From 2025 to 2034, the tariffs would generate about $2.4 trillion in revenues in a conventional analysis. On a dynamic basis, which includes feedback effects — which in this case are negative by about $400 billion — the tariffs would produce about $2.0 trillion over a decade.
The tariffs hit low-income households the hardest. “Tariffs are a regressive tax, especially in the short-run,” the report says. Although the effects are more ambiguous over the long-run, households at the bottom of the income ladder will lose about three times as much from the tariffs as households at the top when measured as a share of income.
‘No Concerns at All’: How Republicans Plan to Turn Their Legislative Win Into a Political One
Republicans won their battle to pass the “One Big Beautiful Bill Act.” Now they’re turning to the battle to define the law for voters. House Speaker Mike Johnson told NBC News on Tuesday that he has “no concerns at all” that the megabill might hurt Republicans in the 2026 midterm elections.
“This is a bill that was written for hardworking Americans, middle- and lower-class Americans in particular, and they will feel the effects of that in the economy and they’ll have higher wages and more opportunity and more economic growth, and that’s a major factor in a midterm election,” Johnson said before listing other elements of the bill and predicting voters will reward Republicans.
“In fact, it’s going to gain seats for us,” Johnson said. “We’re that confident.”
A messaging challenge: A Congressional Budget Office analysis last month found that a version of the bill would benefit top-earning households and hurt low-income ones. The nonpartisan agency estimated that Americans in the bottom 10% of earners would lose an average of $1,600 in resources annually, representing a 3.9% drop in income.
Another analysis by the conservative-leaning Tax Foundation of the major tax provision in the bill found that the new law prevents a tax hike that would have affected most households and that middle-income households would see the biggest gains in after-tax income next year — but also said that, by 2034, top earners would be the biggest beneficiaries, while the bottom fifth of earners would gain the least, or would see incomes fall, under conventional modeling.
Those analyses and others like them, combined with the widespread healthcare coverage losses projected because of the new law and poor polling numbers for the legislation so far, suggest Republicans have a long way to go to turn perceptions of the package in their favor.
Democrats are already gearing up their own political messaging efforts in hopes of ousting Republican lawmakers who got the legislation to Trump’s desk — in large part by highlighting criticisms of the bill that Republicans offered before voting for it. Democrats can look back to their 2018 campaign playbook, in which they slammed Trump’s original tax cuts as disproportionately benefitting the wealthy, and used those attacks to win back control of the House. And the reportedly already have research demonstrating the effectiveness of messaging about the GOP combination of Medicaid cuts and tax cuts helping the rich and corporations.
“This is a rare policy gift to Democrats in that it was perpetrated by Republicans, harms almost everybody, and it’s actually relatively easy to talk about,” Democratic strategist Christy Setzer told The Hill.
The GOP plan: NBC News’s Sahil Kapur, Melanie Zanona and Julie Tsirkin report that Republicans say they have an aggressive strategy to tout their new law and defend against Democratic attacks: “Republicans say they will campaign on individual pieces of the bill that poll well and ignore the provisions that are less popular. GOP leaders and strategists are encouraging their candidates to lean into the ‘wins’ of Trump’s agenda: tax cuts on overtime and tips, child care subsidies and work requirements for able-bodied adults.”
Republicans reportedly also expect workers to start seeing the benefits of Trump’s tax cuts on tips and overtime pay ahead of the midterms — and won’t see the effect of $1 trillion in Medicaid cuts, which were delayed until after the 2026 election. And the NBC report adds that the National Republican Congressional Committee plans to go on the offensive, urging Republican lawmakers to accuse Democrats of voting to “block tax cuts” and “leave the border wide open.”
Fiscal News Roundup
- Supreme Court Clears the Way for Trump’s Plans to Downsize the Federal Workforce – Associated Press
- Trump on DOGE Cuts: ‘I Would Have Done It Differently’ – Politico
- Trump’s New Trade Threats Set Off Global Scramble to Avoid Tariffs – New York Times
- Democrats See Political Gift in Trump’s ‘Big, Beautiful Bill’ – The Hill
- GOP Faces ‘Big, Beautiful’ Blowback Risk on Obamacare Subsidy Cuts – The Hill
- ‘Essential Isn’t a Strong Enough Word’: Loss of Foreign Workers Begins to Bite US Economy – Politico
- Texas County Deflects Mounting Questions Over Actions Before Deadly Flood – Associated Press
- Ag Secretary Says Able-Bodied Medicaid Recipients Should Replace Immigrant Farm Workforce – Politico
- Social Security Hits Major Milestone for Millions – Newsweek
- Education Department Dismisses Thousands of Civil Rights Complaints at an ‘Unheard of’ Pace – Politico
- Trump Hires Scientists Who Doubt the Consensus on Climate Change – New York Times
- Medical Students Fret Over the New Student Loan Cap in the 'Big, Beautiful Bill' – NBC News
- World’s Premier Cancer Institute Faces Crippling Cuts and Chaos – CNN
- Measles Cases Reach Highest Point Since the Disease Was Eliminated in U.S. in 2000 – NBC News
- Most Canadians Now See US as a ‘Threat,’ Study Reveals – Politico
- TSA Will No Longer Require All Passengers to Take Shoes Off at Airport Security Checkpoints – CNN
Views and Analysis
- Our Bipartisan Plan Could Rescue Social Security – Sens. Bill Cassidy (R-LA) and Tim Kaine (D-VA), Washington Post
- This Law Made Me Ashamed of My Country – Lawrence H. Summers, New York Times
- How to Make Senate Republicans Pay for Their Awful Bill – Michelle Goldberg, New York Times
- Three Big Takeaways From That “One Big Beautiful Bill” – Sarah Binder, Good Authority
- What a $178 Billion Gift Means for the Immigration Police State – Catherine Rampell, Washington Post
- Latest Tariff Pause Shows Limits of Trump’s Frenzied Dealmaking – Jenny Leonard, Bloomberg
- The Tariff Beatings Will Continue Until Morale Improves – Paul Krugman, Bloomberg
- The Paradox of Trump's Tariff Policy – Neil Irwin, Axios
- MAGA’s Gift to China – Robert Kuttner, American Prospect
- Inside the Collapse of the F.D.A. – Jeneen Interlandi, New York Times
- The Surprise Medical Bills Just Keep Coming – Elisabeth Rosenthal, Washington Post
- Why Americans Can’t Buy the World’s Best Electric Car – Michael Dunne, New York Times