Brace yourself: Why this could be the summer of economic hell for millions of Americans

Time of India

5 hours ago

The American economy has been able to remain healthy in the face of a tsunami of economic headwinds, but that could soon shatter. After months of steep tariffs on almost all imports and mounting crisis in the Middle East, inflation is still held steady, unemployment is close to record lows, and the stock market has just set new highs last week, as reported by CNN. Yet pending deadlines could quickly thrust millions of Americans into
economic hell
, as per the report.
Tariff Pause Set to Expire July 9
The initial significant flashpoint is on July 9, that is when US president Donald Trump's 90-day tariff pause expires, according to CNN. It is a halt he had granted after imposing sweeping "reciprocal" tariffs earlier this year on virtually all of America's trading partners, as per the report.
Without trade agreements between those countries and the United States, dozens of nations would face even steeper tariffs, as per CNN. That will make everything from electronics to appliances suddenly more costly, just as many households are already reducing spending, according to the report.
Chief US economist at Oxford Economics, Ryan Sweet, said, 'We know it's coming. There's a lag between changes in tariffs and when they show up in prices you and I are paying,' as quoted by CNN.
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Only Two Trade Deals Inked So Far
Until now, only China and the United Kingdom have managed to reach agreements, while Trump had pointed out that it was unrealistic that 200 countries that have been aiming to sign trade deals with the US would have them finalised by July 9, as reported by CNN.
The US president said that, 'At a certain point, over the next week and a half or so, or maybe before, we're going to send out a letter. We talked to many of the countries, and we're just going to tell them what they have to pay to do business in the United States,' as quoted in the report.
He also pointed out that, 'We have a lot of great things going, and we're getting along with countries, but some will be disappointed because they're going to have to pay tariffs,' quoted CNN.
While the Trump administration officials have hinted at potential extensions for countries 'negotiating in good faith,' but have not specified what that means or which countries that applies to, according to CNN.
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Treasury Secretary Scott Bessent told during a CNBC interview that, 'There are probably another 20 countries where they could go back to the reciprocal tariff (rate) of April 2 as we work on the deal. Or, if we think that they are negotiating in good faith, then they could stay at the 10% baseline,' as quoted by CNN.
Commerce Secretary Howard Lutnick even highlighted of the possibility of a regional tariff strategy, saying, 'You'll have South American deals, African deals… We will put these people in their proper buckets on July 9,' as quoted in the report
That could potentially mean some countries might be imposed higher tariffs compared to the April levels just based on where they're located or by July 9, tariff policy could just come down to picking a number out of a hat, as Bessent said, 'It will all be up to President Trump,' quoted CNN in its report.
Experts Warn of Rising Inflation, Economic Uncertainty
Chief US economist at Deutsche Bank, Matthew Luzzetti highlighted that, 'Whether or not the July 9th deadline spells trouble for the economy depends on how the Trump administration handles trade policy,' as quoted in the report.
He explained, 'If he were to reinstate the historically elevated tariffs announced on 'Liberation Day,' (April 2) this would bring back fears of an economic slowdown that were prevalent in April,' adding that it didn't seem like a strong possibility, as reported by CNN. Luzzetti also said, 'More likely, we get a mix of extensions, trade deals and threats of increased tariffs on specific countries or sectors. If that is the outcome, it could leave the economy in its current holding pattern for a bit longer until uncertainty clears,' quoted CNN.
While, the US head of economic research at Fitch Ratings, Olu Sonola pointed out that, 'Regardless of the outcome of these deadlines, we expect (Consumer Price Index) inflation to trend higher towards 4% at the end of the year. If 'Liberation Day' tariffs return, we'll likely see inflation higher than 4%," as quoted in the report.
FAQs
What's happening on July 9?
That's when US president Donald Trump's 90-day pause on tariffs ends, and without new trade deals, many countries could face steeper tariffs.
Have many countries signed deals?
No. Only China and the UK have finalized agreements so far.