Under the “Delay + Threat” Combo, Where Will Trump’s Tariff Lead?

Last week, U.S. President Donald Trump once again postponed the long-anticipated tariff announcement originally scheduled for July 9, pushing the new deadline to August 1. However, in parallel, he escalated his tariff rhetoric, issuing warning letters to numerous countries. This “delay + threat” strategy has further strengthened the market’s belief in the “TACO” logic — Trump Always Chickens Out. Yet at the same time, it also deepens the uncertainty surrounding future tariff actions. Are these moves signs of negotiation compromise, or part of a larger, calculated strategy? Opinions are now sharply divided.

Tariff Delays Accompanied by Aggressive Letters

As the July 9 deadline approached, Trump announced the new tariff implementation date would be delayed to August 1 — despite repeated claims earlier that there would be “no delay.” But alongside that, he began issuing a series of formal “last warning” letters to multiple countries:

• Last Monday, Trump sent letters to 14 countries, stating that tariffs ranging from 25% to 40% would be imposed on U.S. imports from those countries starting August 1.

  Japan, South Korea, Malaysia: 25%

  Indonesia: 32%

  Thailand, Cambodia: 36%

  Laos, Myanmar: 40% These levels largely mirror the rates he announced on his “Liberation Day” earlier this year.

Tariff letters to Japan and South Korea, Truth Social

• Last Wednesday, Trump issued letters to eight more countries, with tariff rates between 20% and 50%, including:

  Philippines: 20%,

  Iraq, Libya, Sri Lanka: 30%,

  Brazil: 50%. The Brazilian rate far exceeds the previously announced 10% “reciprocal tariff.” Trump cited the U.S.-Brazil trade imbalance and legal action against Brazil’s former president as justification.

• Shortly after, Trump also posted tariff letters on social media, targeting major U.S. trade partners:

  Canada: 35%;

  European Union and Mexico: 30% (effective August 1). These proposed tariffs go beyond the earlier 25% threats and could potentially undermine existing USMCA trade agreements. The EU tariffs are also significantly higher than the previously stated 20%.

Tariff letters to Cananda, Mexican and Europe, Truth Social

In addition to these letters, Trump declared: He is considering a 50% tariff on copper imports, potentially impacting Chile and Canada the most; He intends to impose a 200% tariff on pharmaceuticals, though companies will be given one year to shift supply chains back to the U.S.; He will soon announce tariffs on semiconductor products; and he is evaluating across-the-board tariffs of 15%-20% on most U.S. trading partners — well above the current 10% base rate.

The Purpose and Potential Consequences of These Escalating Threats

Back in April, during a prolonged tariff standoff with China, the U.S. eventually softened its stance after Beijing issued a firm counter-response. Since then, many other countries have taken a tougher posture in trade talks with the U.S., which has visibly stalled Trump’s negotiations — likely against his expectations.

This latest flurry of threats seems motivated by several factors, but at its core, it serves as both a tactical delay and a pressure mechanism:

• Trade talks are complex and time-consuming, and it became clear that the U.S. could not finalize negotiations with most countries before July 9. Delaying tariffs gave Trump more time, while the threat-laden letters helped “save face” for the postponed deadline.

• These letters — forceful and highly specific — are designed to apply maximum pressure, forcing nations to negotiate more urgently before the window closes. This strategy helps the U.S. retain the upper hand — but at a cost.

Such a rigid approach reduces policy flexibility, essentially burning bridges for potential concessions. The worst-case scenario? If other countries double down with strong “China-style” resistance, Trump may have no choice but to follow through with his August 1 threats — triggering a lose-lose outcome.

A Surprisingly Calm Market Reaction

After enduring several months of Trump’s tariff volatility, financial markets are no longer easily rattled. Even in the face of the latest postponement and aggressive threats, investors remained calm, with no major signs of panic in stocks, commodities, or bonds.

Markets no longer take Trump’s threats at face value, viewing them more as negotiation tactics than policy certainties. The dominant narrative remains the “TACO” playbook — that Trump is unlikely to follow through and that the tariff storm will eventually pass without much damage.

TACO: Trump Always Chickens Out

Instead, investors appear more focused on the outlook for the AI supercycle, the Federal Reserve’s interest rate path, CPI and labor market data, and the upcoming earnings season.

However, this “habitual disregard” for Trump’s threats may prove dangerous. If this time the “boy who cried wolf” does act, the market could be caught off guard — triggering another round of heavy selling across risk assets.

Invesight Viewpoint

While Trump’s recent actions appear to be tactical plays amid stalled trade negotiations, this ongoing game of “chicken” is fast approaching a critical breaking point.

• If he follows through on August 1, it could trigger retaliation from multiple countries and severely disrupt fragile global supply chains and investor sentiment.

• If he backs off again, it would significantly damage his credibility, turning his tariff threats into little more than background noise at the negotiating table.

For now, markets still seem to believe that the “TACO” script will repeat — but the risk is building within that very trust. If the wolf really comes this time, who will be quick enough to escape? That, perhaps, is the real black swan to watch for as August approaches.