Donald Trump’s administration once promised “90 deals in 90 days” regarding trade. However, reality has set in. By the initial deadline of July 9, it’s clear there won’t even be nine deals. The deadline has now been pushed to August 1, hinting at more delays ahead.
Treasury Secretary Scott Bessent says the focus is on 18 countries behind most of America’s trade deficit. Yet, the new letters sent to trading partners are just rehashing old terms. The original trade figures appear to be unchanged, indicating a lack of real progress.
While the market turmoil seen earlier has lessened, there’s a notable sentiment: some believe Trump often backs down from tough negotiations, leading to hesitancy on all sides. The crux of the issue is the administration’s struggle to finalize agreements. These recent communications show a lack of success.
Countries like Japan and South Korea were the focus of the first letters and are not taking this lightly. Japan’s finance minister even suggested leveraging its massive holdings of U.S. debt as a bargaining chip.
Historically, trade tensions, especially when involving the U.S., have caused significant market shifts. For example, in 2018, the start of tariffs on steel and aluminum led to increased prices domestically and inverted trade patterns globally. Currently, we’re seeing the dollar’s value drop by 10% against other currencies this year, contrary to predictions.
Interestingly, while U.S. exports to China fell by 9.7% in 2023, China has boosted exports to other regions— 7.4% increase to the UK and 18.9% to Africa. This suggests that while the U.S. tries to isolate itself, other countries are strengthening their trade ties.
Trade revenues are increasing for the U.S., but they come at a steep cost—both to American consumers and global relationships. The effective tariff rate imposed by the U.S. now sits around 15%, a significant jump from the 2% to 4% range over the past four decades.
As these developments unfold, many around the world are watching closely. The path of global trade is shifting, and the consequences are yet to fully reveal themselves.
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