“Trump’s Trade War Victory: What’s Shaking Its Foundation?” | CNN Business

The economy was expected to crumble with the start of a trade war. Predictions were dire, yet those concerns haven’t fully materialized—at least not yet. President Trump has achieved something few anticipated: raising import taxes beyond the Smoot-Hawley levels without significant damage to the economy. Surprisingly, customs revenue has increased while inflation remains low. Most trading partners have accepted these higher tariffs without serious retaliation.

Framework agreements with several countries have significantly elevated tariffs on imports to the U.S., while U.S. exports enjoy near-zero levies. Countries like Japan and South Korea have agreed to open up their markets for American goods, along with promising investments in the U.S. However, these early wins might not last.

The European Union recently expressed discontent regarding its trade relationship with the U.S. French Prime Minister François Bayrou labeled it a “dark day,” showcasing a growing backlash among some European leaders against perceived U.S. bullying. The EU consists of 27 members, and if internal discontent grows, the fragile truce between two of the world’s largest economies could falter.

Relations with Canada also remain tense. The trade talks have stalled, despite Canada’s concessions on digital taxes. Trump has continued to threaten increased tariffs on certain Canadian goods, which could drive up prices for American consumers. Currently, the U.S.-Mexico-Canada Agreement (USMCA) only covers about half of Canada’s exports, meaning that further tariffs could lead to higher costs for U.S. shoppers.

Looking towards China, negotiations are ongoing but frustrating for the Trump administration. The U.S. wants to speed up China’s compliance with previously made agreements, particularly concerning technology exports. Despite some progress, there’s a looming tension, with both sides pressuring each other on various trade issues.

Experts point to potential risks if tariffs continue to rise. A recent survey indicated that 70% of economists believe tariffs could lead to consumer price increases later this year. Already, some goods, such as clothing and electronics, are seeing price hikes due to these tariffs. Major retailers have warned that higher prices are on the horizon, with many already feeling the pinch.

In summary, while the trade war might not have wreaked havoc just yet, underlying tensions are building. Retail prices are expected to rise, and political sentiments could shift quickly, making the future of these trade agreements uncertain. As history has shown, periods of economic peace can swiftly turn into conflict, and the current trade climate remains precarious.

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