Although, there are already reports that the US and China will extend the tariff pause for another 3 months, US Commerce Secretary Howard Lutnick on Sunday news programs said that the tariffs would go into effect on August 1. No more extensions (well, except for China?)
He also said the European Union must open its markets to U.S. exports if it wants President Trump to reconsider the 30% reciprocal tariffs set to take effect on August 1.
Lutnick indicated that Trump is open to a deal, but currently sees only a 50-50 chance of reaching one. He emphasized that it depends on whether the EU can offer a deal “good enough” for Trump to back down.
Trump is expected to meet European Commission President Ursula von der Leyen just days before the tariff deadline. He said on Friday that there were "20 different things" that needed to be resolved.
Lutnick also said today that the tariff revenue would lead to $700B dollars of revenue a year into the US, or $7T in 10 years. Scott Bessent on July 8, put that number at $300B. The treasury collected $27B in June. That extrapolated out to $27 x 12 = $324B. Bessent was on target if not light at the time if the running rate continues.
To reach $700 billion in annual tariff revenue, monthly collections would need to average about $58 billion. How realistic is that?
In 2024, the total value of U.S. goods imports was $3.295 trillion. To collect $700B in tariffs at that level of imports, the average tariff rate would need to be:
$700B ÷ $3.295T = 21.24%
That’s a massive average rate.
According to the U.S. Census Bureau, the top five import sources in 2024 were:
Mexico – 15.5%
China – 13.4%
Canada – 12.6%
Germany – 4.9%
Japan – 4.5%
These five countries alone accounted for 50.9% of total U.S. goods imports, highlighting a high concentration among key trading partners. Expanding to the top 10 (which adds Vietnam, South Korea, Taiwan, Ireland, and India) brings the share to 73.8%. Including the top 15 (adding Italy, UK, Switzerland, Thailand, and France) raises the total to 78.7% of all U.S. imports.
So the question becomes:
Will the U.S. really impose an average 21.24% tariff on 78.7% of its imports to hit $700B?
That’s what we’ll find out after August 1, when final tariff rates are expected to be confirmed. Treasury Secretary Lutnick insists the math works. But does it?
Crucially missing from the discussion: Who pays for this?
Do foreign exporters cut prices and sacrifice margins?
Do U.S. importers absorb the cost and reduce their profits?
Or do consumers bear the burden through higher prices?
At the end of the day, tariff revenue is not free money. If import costs rise by 21.24%, someone in the chain pays. The cheerleading around "$700B coming in" ignores the real impact: somebody—likely everybody—ends up footing the bill.
