BERLIN
The Trump administration’s expectations for new trade deals are dimming as a 90-day tariff pause set to expire July 9 draws near.
US President Donald Trump shocked the entire world with his sweeping reciprocal tariffs announced April 2, rattling global markets due to massive customs duties on the US’ major trade partners, particularly the EU, Japan, and China, prompting investors to flee from US assets.
One week later, Trump imposed a 90-day pause on these tariffs for all partners except China; that hiatus ends July 9.
His administration initially aimed for 90 deals in 90 days — but with fewer than seven days left, that target appears out of reach.
Trump’s team had planned simultaneous negotiations with multiple partners but now intends to focus on 18 major economies — including the EU, Japan and India — while imposing tariffs unilaterally on smaller countries that fail to strike deals.
US Treasury Secretary Scott Bessent said on June 30 that countries were “being recalcitrant” when it comes to reaching trade agreements and tariffs for these countries could revert to the April 2 levels.
However, he noted Trump could extend the pause for countries negotiating in good faith.
Markets are anxious about what happens post-July 9, as investors are concerned over the return of the reciprocal tariffs.
Some economists say it is the Trump administration’s inconsistent policies that are hindering new trade agreements, as Washington demands countries to support US’ domestic manufacturing, exempt US tech corporations’ digital taxes, take actions on alleged drug trafficking, and reduce bilateral trade deficits by importing more from the US.
The UK stands as the sole country Trump has signed a trade deal with. UK-based goods will be subject to a base rate of 10% tariffs when being imported to the US, according to a “historic” agreement between Trump and UK Prime Minister Keir Starmer.
The deal includes the export of some 100,000 cars from the UK to the US at a tariff rate of 10% instead of 25%, while the 10% tariffs on engines and aircraft parts were lifted. The details of the UK side of the agreement are still being determined.
The US and China also agreed on a memorandum of understanding to instate preliminary trade conditions and a framework for further negotiations. China will review and approve applications for exports of controlled products like rare earth, and in return, the US will lift certain restrictions on China.
On May 14, the US agreed to reduce tariffs on China from 145% to 30% for 90 days, while China agreed to reduce its tariffs on Washington from 125% to 10%. The agreement is limited and China is on a separate timeline for negotiations with the US.
Trump boasts about having agreements with the UK and China, but reports argue these agreements are not concrete and his critics say he has failed to address some fundamental concerns.
Meanwhile, the EU is pushing for lower rates in certain key sectors and exemptions from high tariffs, with Trump having imposed 50% steel tariffs and 25% auto tariffs on the bloc, alongside the baseline 10% tariff.
The EU has accelerated trade talks with China in recent months as the bloc is gearing towards issuing countermeasures against the US amid EU-US talks.
Trump threatened to raise tariffs on the EU from 20% to 50% starting on July 9, should negotiations yield no results.
Non-tariff barriers such as the EU’s Digital Markets Act and the Carbon Border Adjustment Mechanism are some of the stagnant issues in trade talks with the US.
As for Japan, Trump voiced his doubts over reaching an agreement with the world’s fourth-largest economy before the deadline. Japan was one of the first countries to initiate trade negotiations with the US after the announcement of reciprocal tariffs, but talks have been challenged by discrepancies over Japan’s policies to protect its rice industry.
Trump is considering raising tariffs on Japan from 30% to 35%, which is well above the 24% reciprocal rate, if Japan does not agree to purchase US rice. Trump also said reaching an agreement with India is also a possibility.
Investors expected Trump to extend the deadline for the tariff pause but he refuses to do so, while many companies are stocking up in preparation for tariffs to return. Analysts warn that consumers may be hit by higher prices this summer and fall.
Anything is possible
Andreas Baur, economist and deputy director for international economics at Germany's Ifo Institute, told Anadolu that while the tariff disagreements leave room for various outcomes, initial indications suggest that the end of the tariff pause may not be strictly enforced. He noted that a framework could be announced just before the deadline, but the EU may face higher tariffs than last year.
Carsten Brzeski, head of global macro research at ING, stated that the US and its trading partners do not expect negotiations to conclude by the July 9 deadline and ongoing talks are expected to be extended.
He mentioned that temporary tensions between the US and Japan are possible due to auto tariffs, while US-EU tensions may continue in areas where the US has yet to make sufficient concessions to its trade partners, emphasizing that protectionism will persist.
US’ 2nd time weaponizing tariffs
President Donald Trump's use of tariffs as a bargaining tool is not unprecedented in US history. The Smoot–Hawley Tariff Act of 1930, enacted during the Hoover administration, serves as a cautionary tale.
Intended to protect American industries during the Great Depression, the Act raised import duties on over 20,000 goods. This in turn led to a significant decline in US exports.
Exports to its major trade partners dropped by over 30%, while other countries targeted high-value US products such as automobiles.
The decline in trade contributed to the Great Depression and triggered a currency war, during which some 70 countries were forced to devalue their currency, undoing the benefits of the global gold standard.
Today, however, trade disputes are far from that of the 1930s, yet that era serves as a reminder of what could happen when international coordination is disrupted and countries act unilaterally on trade and exchange rate policies.
Protectionist trade has increased since the 2008 financial crisis, especially via non-tariff barriers such as regulations, standards, certifications, administrative costs, and subsidies.
Trump’s tariff wars, however, have elevated protectionism to a whole new level.
