As the 90-Day Tariff Deadline Approaches, Four Possible Scenarios
We explore what might happen in two weeks when President Donald Trump’s “reciprocal” tariffs pause comes to an end.
On July 4 each year, the United States celebrates Independence Day, marking the date in 1776 when the young American colonies formally declared independence from Great Britain. This year, many US citizens and businesses will also be anticipating another date, just four days later.
On July 8, the 90-day pause on President Donald Trump’s “Liberation Day” tariffs is due to expire. These “reciprocal” tariffs, which he unveiled from the White House at the beginning of April, levy duties of up to 50% on US imports from more than 180 countries.
The big question is: what happens next?
If the US Court of International Trade gets its way, the tariffs will be scrapped completely. In late May, it ruled that President Trump had exceeded his authority by justifying universal tariffs based on a “national emergency.”
However, the administration immediately appealed, and the legal process could go all the way to the US Supreme Court and drag on for many months. In the meantime, the tariffs remain in place.
Four Scenarios for Supply Chains
Zero100 has mapped out four potential scenarios of how the tariffs situation could play out in the coming weeks and months, ranging from an escalating global trade war at one extreme end of the spectrum to a full reversal of all tariffs imposed since 2018 at the other.
Scenario #1: Global Trade War
For supply chain leaders, the most severe outcome is a “global trade war” – in other words, full implementation of the tariffs announced on April 2. These include:
• 46% on Vietnam – number six on the top ten list of US trading partners and a major source of apparel and footwear and electronics.
• 32% on Taiwan – trading partner number eight and a big exporter of machinery and advanced semiconductors to US firms.
• 26% on South Korea and India – numbers seven and ten on the list, respectively, and large suppliers of transport equipment and pharmaceuticals.
Impact: This scenario would see a hike in tariff rates as US trading partners retaliated; a significant rise in the cost of imported materials and components; shortages of some products; a rise in global inflation; declining global trade volumes; and the fracturing of key trade deals (eg, the United States-Mexico-Canada Agreement) and institutions (eg, the World Trade Organization).
Implications: Actions that companies might be forced to take include ramping up domestic sourcing, reformulating or localizing product designs, reducing SKU complexity, and building up inventories of critical imports.
Odds: Wall Street is betting against it. Enough said?
Scenario #2: US-China Trade War
Less critical, but highly disruptive (and costly) nonetheless, would be a continuation of high tariffs and export restrictions between the US and China (still the US’s second biggest trading partner, if you exclude the European Union as a bloc, despite an eight-percentage-point fall in China’s share of US imports since 2018).
Impact: This would likely include cost increases for Chinese-made products and intermediate goods; limited availability of technology, robotics, and automation systems; further restrictions on exports and company operations; stock volatility for exposed firms; and a growing threat to Taiwan’s independent status.
Implications: In such a scenario, companies would need to step up their shift away from China for technology, packaging, equipment, and other products, while helping strategic suppliers to transition their operations to countries such as Vietnam, India, and Mexico.
Odds: Progress in bilateral trade talks in London earlier this month sounded a positive note. But underlying geopolitical tensions remain, so this scenario can’t be ruled out.
Scenario #3: Deal-Making Prevails
Back in April, the US administration pledged to do 90 deals in 90 days so it wouldn’t have to impose “reciprocal” tariffs on countries prepared to negotiate fair terms. Aside from talks with China (subject to a separate 90-day timeline expiring August 14), negotiations with the EU, Japan, and other countries continue. A deal with the UK was signed in May, limiting tariffs on most imports to 10%.
Impact: An intensification of government and business lobbying efforts; further promises of US manufacturing plant and infrastructure investment; volatile but declining input prices; and relatively stable consumer demand are among the likely trends in this environment.
Implications: As well as increasing their government affairs and lobbying budgets, companies would need to consider further geographic diversification in their sourcing of key direct inputs.
Odds: Expect further announcements – but also the possibility of another tariff pause to allow talks to continue.
Scenario #4: A Free Trade Reversal
In this scenario, talk of “the end of globalization” proves to be premature. The tariffs imposed during Trump’s first term from 2018 and continued by President Biden are wiped out, and the US’s trading partners respond positively by steadily cutting their duties on US imports.
Impact: Includes a return to “business as usual” on global trade; a new focus on engaging with government policy; and back to the drawing board for automation and modernization in manufacturing industries.
Implications: The need for geographic supply network reshuffling would be minimized; companies would focus instead on applying lessons learned to the next supply chain disruption involving government policy (eg, health legislation, labor standards).
Odds: Maybe the biggest stretch scenario of them all, based on the current geopolitical climate.
And Now?
Given the steady uncertainty of proposed tariffs policies in 2025, it would be tempting for supply chain leaders just to stay buckled up and wait it out. That would be a mistake: Tariffs are just one manifestation of a broader political and economic realignment in which the rules of global trade are being rewritten.
Bold planning and action are required now to get ahead of this shift and ensure that supply chain networks are designed appropriately for the future, whatever scenario plays out after July 8.