US sets new August 1 deadline before higher tariffs start

Australia will likely avoid further tariff hikes after the US Treasury Secretary said countries would ‘boomerang’ back to their April 2 tariff rates by the start of August.

US Treasury Secretary Scott Bessent speaks to reporters. Picture: Getty Images via AFP.

Australia appears to have dodged the prospect of a fresh US tariff hike next week, with Treasury Secretary Scott Bessent saying that countries will “boomerang” back to their April 2 tariff rates by the start of August if they fail to negotiate deals with Washington.

Speaking on CNN on Sunday morning local time, Mr Bessent said the administration was “going to be very busy over the next 72 hours” in the lead-up to the July 9 deadline ending the 90 day pause on the reciprocal tariff rates unveiled by Donald Trump.

The US President announced the new regime of reciprocal tariff rates on April 2 – dubbed “Liberation Day” – but then paused them for 90 days to allow nations to strike better deals with the US.

However, Australia was not hit with reciprocal tariffs and instead was captured by the universal ten per cent tariff rate imposed by Washington – the lowest rate applied by the Trump administration to any country.

There were fears that, upon reaching the 90 day deadline on July 9, Australia could face a more punitive tariff rate and the Opposition had heaped pressure on Anthony Albanese to negotiate an exemption with Washington.

In the lead-up to the deadline, Mr Trump made clear his administration would write letters to countries seeking to impose new trading arrangements on them – heightening the sense nervousness back home.

But Australia was informed some time ago by the US that it would not receive such a letter and Mr Bessent’s comments on Sunday – indicating that nations would revert to their April 2 tariff rates – would leave Australia no worse off.

“President Trump is going to be sending letters to some of our trading partners saying that, if you don’t move things along, then on August 1st, you will boomerang back to your April 2nd tariff level,” Mr Bessent said. “So, I think we’re going to see a lot of deals very quickly.”

“We’re going to send out probably one hundred letters to small countries where we don’t have very much trade and most of those are already at the baseline ten per cent,” he said.

Mr Bessent said that countries would “get a letter saying that, if we have not reached an agreement, then you will go back to the April 2nd level … on August 1st.”

“It’s not a new deadline,” he said. “We are saying, this is when it’s happening. If you want to speed things up, have at it. If you want to go back to the old rate that’s your choice.

“The playbook is to apply maximum pressure,” Mr Bessent said. “We saw three weeks ago that the EU was very slow in coming to the table. Three weeks ago, on Friday morning, President Trump threatened 50 per cent tariffs. And, within a few hours, five of the European national leaders had called him and Ursula von der Leyen, the head of the EU, was on the phone, and the EU is making very good progress. They were off to a slow start.”

Last week, Mr Trump clinched a deal with Vietnam – reducing its tariff rate from 46 to 20 per cent – and Mr Bessent said the administration was “close to several deals.” Other deals have also been struck with the UK and China and Mr Bessent indicated several more were in the pipeline.

“As always, there’s a lot of foot dragging on the other side,” he said. “I would expect to see several big announcements over the next couple of days … I’m not going to name names because I don’t want to let them off the hook.”

Speaking on Fox News, Mr Bessent said the threat of shifting US trading partners back to the April 2nd tariff rate was “really going to move things along in the next couple of days and weeks.” He also rejected suggestions the new tariffs would lead to inflation staying higher for longer.

Last week, Mr Trump said that official letters – “maybe ten a day” – would start being sent to nations hit by the higher reciprocal tariffs.

“My inclination is to send a letter out and say what tariff they are going to be paying. It’s much easier,” Mr Trump said. “You can make big deals, but they are very much more complicated.

“I’d rather send out a letter saying this is what you’re going to pay to do business in the United States. And I think it will be well received,” he said.

Mr Trump argued that this approach was simpler because trade negotiations could become very “specific” and there were “so many countries” wanting to strike deals.

“Let’s do this (and) let’s do that – beef, ethanol. I’d rather just do a simple deal where you can maintain it and control it,” he said. “You’re going to pay a 20 per cent or a 25 or a 30 per cent tariff. And we’re going to be sending some letters out … Maybe ten a day to various countries saying what they are going to pay to do business with the US.”

Speaking at the Crown Hotel in Sydney last week, Mr Albanese made clear his understanding that Australia would not be impacted by the July 9 deadline imposed by the President.

Pressed on whether the ten per cent general tariff would remain, the Prime Minister – who has not yet been able to meet with Mr Trump – replied that “I assume that will be the case.”

“We are in a position where on July 9 that won’t really have an impact on us because that’s about other countries who have higher rates,” Mr Albanese said. “No country has a better tariff level than ten per cent. Now we will continue to put our case as we do.”

Australia has been unable to negotiate an exemption to the general ten per cent tariff rate and there is a growing acceptance within the government that such a deal is unlikely given the position of the current administration.

Given concessions were made to provide tariff free market access under the 2005 free trade agreement with America, there is a reluctance to make further concessions now to achieve a lesser outcome.