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The Trump White House previously announced an ambitious plan to finalize “90 deals in 90 days” after temporarily suspending the implementation of tariffs, which the former president described as “reciprocal.”
However, the reality is that fewer than nine agreements will be reached by the initial deadline of July 9.
Notably, the administration has extended the deadline from Wednesday to August 1, with the possibility of further extensions or delays.
According to former Treasury Secretary Scott Bessent, the U.S. has primarily focused on the 18 countries responsible for 95% of America’s trade deficit.
The recent letters sent by the U.S. to its trading partners mirror the White House’s previous “Liberation Day” announcements.
The proposed rates remain largely unchanged since their initial unveiling on April 2, and the controversial equation using the deficit size as a proxy for trade imbalances persists.
These announcements have not triggered the market volatility seen earlier in the year, largely due to the repeated delays.
Financial markets seem to anticipate further postponements, reflecting a belief that Trump will ultimately avoid confrontation. However, this expectation could lead to complacency and potentially reignite the crisis.
The key takeaway is the Trump administration’s struggle to secure trade agreements. These letters effectively acknowledge this failure.
While the White House adopts a hardline stance, other nations are doing the same.
Japan and South Korea were the first recipients of these letters, further straining their trade relationships with the U.S.
Japanese officials have expressed considerable frustration with the U.S. approach.
Japan’s finance minister has even suggested leveraging its significant holdings of U.S. government debt as a potential bargaining tool.
The underlying dynamics from April remain largely unchanged.
Global markets react negatively when a trade war appears imminent, and American retailers have warned the White House of potential price increases and supply shortages.
Furthermore, a legal challenge questioning the legality of the tariffs is still ongoing.
The global community is also witnessing the tangible consequences of a disrupted global trade system.
The U.S. dollar has depreciated by 10% against various currencies this year.
During his confirmation hearing, Bessent suggested that a stronger dollar would offset the inflationary effects of tariffs.
However, the opposite has occurred.
Trade figures are also showing significant shifts, with substantial stockpiling preceding the tariffs, followed by recent declines.
Chinese exports to the U.S. have decreased by 9.7% this year.
Conversely, China’s exports to the rest of the world have increased by 6%, including rises of 7.4% to the UK, 12.2% to ASEAN members, and 18.9% to Africa.
While these numbers are subject to fluctuation, they align with expected trends.
Tariff revenues are increasing U.S. Treasury receipts, reaching record levels in May.
As the U.S. erects trade barriers, the rest of the world is likely to increase trade amongst themselves, as seen in recent agreements between the UK and India, and the EU and Canada.
It’s important to note that the effective tariff rate imposed by the U.S. is now approximately 15%, up from the 2-4% range of the past 40 years. These figures do not yet reflect the changes outlined in these letters.
The market reaction remains subdued for now, but this could change.
Follow the twists and turns of Trump’s second term with North America correspondent Anthony Zurcher’s weekly US Politics Unspun newsletter. Readers in the UK can sign up here. Those outside the UK can sign up here.
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