With the 90-day Window Closing, Will Trump Restore "Reciprocal Tariffs"? Goldman Sachs Makes This Prediction.....

With just three weeks remaining until the expiration of the Trump administration's exemption period for "reciprocal tariffs," Goldman Sachs' chief economist, Jan Hatzius, predicted on Wednesday that the "reciprocal tariffs" would not be reinstated for the time being.

In early April, US President Trump signed two executive orders on "reciprocal tariffs," announcing a 10% "minimum benchmark tariff" on trading partners and higher tariffs on certain trading partners. Some countries even faced "reciprocal tariffs" of nearly 50%. This move dealt a severe blow to financial markets.

In response to market volatility, Trump announced a few days later a 90-day suspension of the "reciprocal tariffs" for the vast majority of countries and regions, while maintaining the 10% benchmark tariff rate until July 9. The US is using this period to negotiate with major trading partners.

"We expect (the tariff suspension period) to continue to be postponed," Hatzius said at an event hosted by the conservative think tank American Enterprise Institute. He was referring to the White House having more time to negotiate with US trading partners, rather than adhering strictly to the July 9 deadline.

Hatzius said his team estimated that the overall US tariff rate had risen by about 10 percentage points since the beginning of the year.

He also said the overall tariff rate was expected to "increase by another 4 to 5 percentage points, coming from 25% sectoral tariffs on semiconductors, communications equipment, pharmaceuticals, copper, and possibly some other products."

Some industries are expected to face new tariffs, as the necessary investigations for these tariffs have been underway for weeks or months.

Hatzius also said, "Obviously, there are significant risks associated with all these individual assumptions, but overall, I would be surprised if the final (tariff) increase is far from 13, 14, or 15 percentage points." He was referring to the current 10-percentage-point increase, plus the additional increase from sectoral tariffs.

He also predicted that if "reciprocal tariffs" were reinstated, they were expected to affect most countries, excluding Canada, Mexico, and the UK, among others, as these countries were engaged in separate trade negotiations with the Trump administration.

Last week, both US Treasury Secretary Bentsen and President Trump "softened their stance," expressing willingness to extend the tariff suspension period. This was a positive signal for investors, who have been watching for signs of progress on trade issues, such as the reduction of tariff and non-tariff barriers.

Bessent said last Wednesday that the Trump administration was willing to extend the current 90-day tariff suspension period for the US's major trading partners beyond July 9, as long as they demonstrated "good faith" in the ongoing trade negotiations. Trump also indicated on the same day that he was willing to extend the deadline for trade negotiations, but did not consider it necessary.