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Investing.com - The average U.S. tariff rate would be lifted should the levies threatened in a series of letters sent out by President Donald Trump to different trading partners this week come into effect, according to estimates from Deutsche Bank (ETR:DBKGn).
The letters from Trump to 14 different countries, including major suppliers Japan and South Korea, detailed the higher tariff rates they face if they do not reach a trade deal with the United States.
Trump also extended the deadline for the heightened levies to take effect to August 1. They were previously slated to kick in today, following an earlier 90-day pause.
However, Trump insisted at a cabinet meeting on Tuesday that the new deadline will not be pushed back any further, despite having previously stated that it was “not 100% firm.” He added that negotiations are going well with the European Union and China, but flagged that the EU may be days away from receiving its own tariff letter.
So far, the White House, which previously aimed to notch 90 trade deals during the 90-day delay, has announced preliminary trade pacts with the United Kingdom (TADAWUL:4280) and Vietnam. A fragile trade truce has also been reached with China.
In a note, analysts at Deutsche Bank predicted that, factoring in the potential new duties laid out by Trump’s letters, about 1.7 percentage points would be tacked on to the average U.S. tariff rate, bringing the figure up to 18.7%. The uptick would add up to 15 basis points to inflation as well, economists at the brokerage said.
They flagged that while some of the rates in Trump’s letters were in line with those the president described at his "Liberation Day" event in early April, others differed.
Should the heightened "Liberation Day" tariffs on those other countries kick in, Deutsche Bank projected that the average duty rate would rise by a further 3.7 percentage points to 22.4%, possibly adding up to another 30 basis points to inflation.