President Trump is playing hardball as his self-imposed trade deadline looms next week, backing away from talk of extending the 90-day pause on “reciprocal” duties.
With a week to go, he announced the framework of a trade deal with Vietnam on Wednesday. But for countries that don’t strike deals with the U.S., he is insisting on setting the tariff rate himself.
Markets are now bracing for impact before the July 9 deadline, facing volatility similar to that experienced in the wake of Trump’s April 2 declaration of new tariff rates on all major trading partners, printed on a giant poster board.
“I’m concerned about that,” said Douglas Holtz-Eakin, president of the center-right American Action Forum, referring to an April repeat. “Where he sets them is the open question. I think if he were to go back to the original level, the reciprocal tariffs for what looks to be something like 70 percent of U.S. trade, that’s going to feel a lot like April 2 all over again.”
“I think that was a pretty clear economic overreach that he should be careful” about repeating, Holtz-Eakin added.
Trump and his administration have spent weeks insisting that dozens of agreements were in the works and set the lofty goal of 90 deals in 90 days. Wednesday’s announced Vietnam agreement, which sets the tariff rate on the country at 20 percent, comes on the heels of agreements with China and the United Kingdom, which were in the works prior to the “reciprocal” tariffs.
“President Trump pledged to use tariffs to level the playing field for American industries and workers. Today’s announcement proves that he is delivering,” White House spokesperson Kush Desai said in a statement on Wednesday.
But, Trump has also said tariff letters will be going out soon to set the rates, warning on Fox News’s “Sunday Morning Futures” with Maria Bartiromo that “we don’t care, we’ll just send a high number out” to some countries.
Meanwhile, the president used Japan as an example of stalled negotiations.
“We dealt with Japan. I’m not sure if we’re going to make a deal. I doubt it with Japan — they’re very tough. You have to understand, they’re spoiled,” Trump said on Tuesday, adding that the country won’t take rice from the U.S. despite a domestic rice crisis.
“So, what I’m going to do is I’ll write them a letter, say, ‘We thank you very much. We know you can’t do the kind of things that we need, and therefore you’ll pay a 30 percent, 35 percent,’ or whatever the numbers that we determine,” he said. “Because we also have a very big trade deficit with Japan, as you know, and it’s very unfair to the American people.”
Experts are concerned Trump’s strategy could push trading partners toward doing business with other countries.
“The letters and imposition of new tariffs on our close allies in the midst of negotiations is a novel power play. I think the allies who have hustled since day one to meet every demand made by the U.S. will be hugely discouraged,” said one former Commerce Department official, who is familiar with negotiations between the U.S. and Taiwan and asked to remain anonymous.
The former official warned that China is aiming to step in with those U.S. trading partners who receive new tariff rates from the Trump administration rather than continued negotiations.
“In Taiwan’s case … [China] is pumping in nonstop propaganda, telling the Taiwan people that the Americans cannot be relied upon and that they only want to steal your technology and abandon you. The president should take care not to confirm these attacks,” the former official said.
When Trump imposed tariffs on nearly every country in the world in April, it sent the U.S. and foreign stock and bond markets into chaos.
A week later, the president imposed the 90-day pause on “reciprocal” tariffs amid increasing pressure from Wall Street and fellow Republicans, and a 10 percent tariff remains on all countries.
In those nearly 90 days, the White House has insisted some deals are close to fruition and still appears to be hopeful that a deal with India will be struck, following the deal with Vietnam.
Since his presidential campaign last year, Trump has leaned into the idea that other countries have been ripping off the U.S. and that tariff rates will be set based on the trade deficit.
“It invites the rest of the world to simply turn their backs on the United States and cut deals among themselves. And that’s been a problem for a while. We saw the Pacific Rim basically make deals with China instead of the U.S. And this will invite the same thing with India and Europe and other places,” Holtz-Eakin said. “I’m worried we’re getting left behind.”
But, the White House could be playing hardball as a way to put pressure on other countries to strike more deals and not back away from them, argued Bruce Mehlman, who served as assistant secretary of Commerce for technology policy under former President George W. Bush.
“Trade deals are complicated and take a lot of time, and the White House hopes it can accelerate the pace and progress by pushing as aggressively as possible, as articulated way back in ‘Art of the Deal,’” he said, referring to Trump’s 1987 book.
In a win for the White House, U.S.-Canada trade talks resumed this week following Ottawa’s move to cancel its digital services tax. Trump said Friday he was suspending trade talks with Canada in response to the tax, but Canada walked back the plan on Sunday.
Mehlman argued that “markets now expect this” and assume that pressure from Trump will lead to successes, like that achieved with Canada, or pivots like the deal with China, “rather than the collapse of the global trading order.”
Throughout the 90-day pause, the administration has tried different messaging tactics to prepare Americans for possible higher prices from tariffs.
The president suggested in May that the U.S. needs to embrace a cultural shift on consumer spending, and he later likened the country to “a superluxury store, a store that has the goods” in insisting that countries would want to buy from the U.S.
A new tactic to sell his trade agenda is to insist that other countries are lucky to be able to do business with the U.S., telling Americans that only foreign nations can lose.
“Some countries we won’t even allow to trade,” Trump said on Tuesday. “But for the most part, we’re going to determine a number. Just, very simply, write them a nice letter. Probably one page or a page and a half at the most. And it’s going to be, essentially, ‘Congratulations, it’s going to be an honor to allow you to go and do business in the United States of America,’ because it really is an honor to be able to do that.”