News / August 'boomerang' for 'Liberation Day' tariffs

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1 August will likely see US tariff levels rebound to the initial ‘Liberation Day’ rates for most countries, but negotiations with China are more constructive, according to US treasury secretary Scott Bessent.  

Mr Bessent confirmed today that 1 August was “a pretty hard deadline for all countries” awaiting ‘Liberation Day’ tariff rates.  

“What I think will happen is that the tariff level will boomerang back to the reciprocal level from 2 April,” he predicted, indicating that negotiations had thus far been largely inconclusive. 

But Mr Bessent added that although higher tariff levels would come into play on 1 August, negotiations would continue in the background.  

“As a matter of fact, I think President Trump may have created a pretty ingenious strategy here, that if you’re working at the high level, you’re actually going to work faster,” he told Fox Business. 

Meanwhile, Mr Bessent revealed that there had been “constructive” discussions between the US and China, which could see the 12 August deadline for US tariffs on China postponed again.

“That deal expires on 12 August and I’m going to be in Stockholm on Monday and Tuesday with my Chinese counterparts and we’ll be working out what is likely an extension then,” revealed Mr Bessent.  

He continued: “I think trade is in a very good place with China. We’re going to be talking about a lot of the other things that our countries can do together. Hopefully, we can see the Chinese pull back on some of this glut of manufacturing they’re doing and concentrate on building a consumer economy.  

“We want to speak to them about the sanctioned Russian and Iranian oil they’re buying, and what they’re doing to aid Russia in the Ukraine war. 

“So, I think we’ve actually moved to a new level with China, where it’s very constructive. We’re going to be able to get a lot of things done now that trade has kind of settled in at a good level.” 

But in order to keep the tenuous trade deal to stick, Mr Bessent underscored that the US wants China “to open up”. 

“They are imbalanced right now. They’re about 30% of global manufacturing and exports. That’s unsustainable. And they’ve got 1.4bn people with very high savings rates. They have the potential for a big consumer economy. 

“President Trump is remaking the US into a manufacturing economy. If we [and China] could do that together – we do more manufacturing, they do more consumption – that would be a home run for the global economy,” he concluded.