Why Trump’s Trade Deals Are Facing Major Roadblocks Right When We Need Them Most | Insights from CNN Business

The clock is ticking for the White House to finalize trade deals before the deadline on July 9. As the temporary pause on President Trump’s “Liberation Day” tariffs nears its end, concerns are growing about an uncertain economy.

The administration has promised to lower trade barriers with 18 key partners but has only succeeded with two agreements so far. Analysts are skeptical that more deals will come in such a short time, especially as economic signals seem to shift.

Trump previously claimed he had made numerous trade deals. In a recent press conference, he admitted that completing many agreements in just over a week isn’t feasible given the number of countries involved. As he put it, “We can’t do that,” suggesting that new tariffs may be imposed soon for countries that don’t negotiate.

In fact, Treasury Secretary Scott Bessent recently hinted that about 20 countries could revert to higher tariffs come July 9. These tariffs could reach as high as 50%, significantly impacting international trade. The need for clarity in trade relations is pressing. As Justin Wolfers, an economist at the University of Michigan, noted, optimism is fading regarding immediate resolutions to tariff uncertainty.

Current economic indicators reveal a concerning trend. While the stock market is at an all-time high, consumer spending dropped in May for the first time since January, reflecting hesitancy among households. Inflation is rising, and job growth is slowing down. James Knightley, a chief US economist at ING, pointed out that households are cautious about the impact of tariffs on their finances. Despite high equity markets, factors like declining house prices are raising alarms.

Recent consumer sentiment surveys show that while confidence has slightly improved, it hasn’t yet translated into increased spending. Economists suggest that the low inflation experienced earlier this spring may soon be replaced by price hikes due to tariff-related pressures. Robert Ruggirello, a chief investment officer, remarked that rising costs from tariffs are starting to affect consumer prices.

The ramifications of trade tensions are significant. While some tax cuts may provide modest relief, escalating tariffs could provoke retaliatory actions from trading partners, potentially slowing the US economy and increasing the risk of recession. Economist Michel Nies from Citi warns that retaliatory measures could have lasting effects on US economic output and public finances.

Urgent trade deals are essential. America’s economy is still showing strength, but vulnerabilities are beginning to surface. Delays in resolving trade issues could contribute to a rapid shift in economic sentiment, turning the current optimism into uncertainty.

As the situation unfolds, keeping an eye on developments in trade negotiations may provide valuable insights into the future of both the economy and consumer confidence.

Source link