One trade ‘deal’ done, 199 to go

President Donald Trump has finally gotten his first trade deal done. Well, not quite a “deal,” per se. More like a concept of a plan: a framework for negotiations between the United States and the United Kingdom that will take place between the two countries over the next several months or years … to hammer out a potential future trade agreement … that may or may not ultimately prove more beneficial to the United States than the existing trade situation. But a win’s a win, and this is a big win for Trump. The agreement with the UK also gives other world leaders a reason to hope that other deals can rescue the global economy from the abyss, providing a framework for future negotiations. Asked whether the deal is an improvement on the trading relationship of six months ago, before Trump took office, British Prime Minister Keir Starmer replied Thursday: “The question you should be asking is: Is it better than where we were yesterday?” Undeniably, the answer is yes. Even if the details of the framework are sparse, tariffs on some UK goods will go down, and it could open up the market for some more US goods to enter the UK. Now, the dealmaker-in-chief just needs to get more than a hundred more of these done before the clock runs out on July 8 – when punishing reciprocal tariffs as high as 50% on dozens of nations are set to go back into effect. No biggie. Or, at least that’s what Trump says. In a Time interview last month, he said he had made 200 trade deals already, later clarifying that they’ll be done soon. Even if that were somehow possible, these deals have been promised for months, and the slow-as-molasses pace of striking any kind of compromise on trade doesn’t bode well for the ultimate prize: a détente with China. With tariffs of at least 145% on most Chinese imports, and a 125% retaliatory tariff by China on most US goods, trade has all but stopped with one of America’s most important economic partners. US and Chinese officials are set to meet this weekend in Geneva to negotiate the trade situation, though US Treasury Secretary Scott Bessent said this week it was unlikely that they’d hammer out a deal – he’s hoping for a “de-escalation.” Trump, however, on Wednesday said he would not lower the high tariffs on China in advance of discussions, which Beijing has previously said was a pre-condition for talks. In the meantime, America’s aggressive trade war has put its effective tariff rate on imports at more than 22%, according to Fitch Ratings, the highest by far of any developed country. That has sent the US economy into reverse. Last week’s report on gross domestic product, the broadest measure of the US economy, showed America’s first contraction since early 2022, as an otherwise-healthy economy was dragged down by companies stockpiling goods to get ahead of tariffs. And that was the first quarter – before the most aggressive trade policy had taken effect. Not a trade deal Despite the administration’s rhetoric that it is in advanced trade negotiations with more than a dozen countries, actual trade deals take significant time – often years – to hash out. They typically involve incredibly complex agreements, delving into the minutiae of various goods and nontariff barriers. They often involve significant political considerations, as various parties seek to protect voters with special interests. Instead, the “deal” the Trump administration inked with the UK Thursday is more like a memorandum of understanding. That may result in lower tariffs in the near term, but they’ll do little that amounts to a substantial economic win for quite some time. “The 90-day tariff pause, which is now roughly 25% over, provides little time for the typical back-and-forth trade discussions that require months if not years to craft a trade deal,” said Jacob Jensen, trade policy analyst for the American Action Forum, a center-right policy institute. “There is a significant difference if these deals are official, written trade agreements rather than verbal commitments to buy more US products, as one has long-term economic implications and the other can be ignored down the line,” he added. And so far this is just a single announced agreement. The reciprocal tariffs that went into effect April 7 and were paused for 90 days on April 9 affect dozens of countries. A hundred or so more are subject to the 10% universal tariff. The administration can’t possibly get those all done by July 8. Trump said last week he would not extend the tariffs a second time – and, in fact, may act sooner to reinstate some tariffs with countries with whom his administration cannot reach an agreement, perhaps in a matter of a couple weeks. “It will be difficult for the US trade representative to negotiate potentially 100 separate trade agreements within 90 days, meaning President Trump must soon determine whether tariffs will be reinstated or delayed further,” Jensen said. And even if deals are ultimately completed with all countries, there’s no guarantee Trump would keep them. For example, Trump, in his first term, was instrumental in negotiating the USMCA free trade agreement with Canada and Mexico, only to abandon it in his second term, charging an on-again, off-again 25% tariff on some Mexican and Canadian goods. And by placing significant tariffs on virtually all goods coming into the United States, Trump also blew up a number of existing trade deals with allies. China is the real problem The stock market cheered Thursday. Now the hard work begins. “The market was desperately waiting for a deal to get done,” said Art Hogan, chief market strategist at B. Riley Wealth Management. “This was probably the easiest one to do.” Regardless of how many trading partners the United States reaches deals or even “deals” with, the one that really matters is China. A lot is riding on the success of US and Chinese officials’ discussions in Geneva this weekend. The historically high tariff on China has effectively stopped all trade between the two countries, Trump has said repeatedly. Sailings from China to the United States fell 60% in April, according to Flexport, a logistics and freight forwarding broker. JPMorgan estimates Chinese imports into the United States will plunge by as much as 80% by the second half of the year. As goods that were warehoused before tariffs took effect begin to run out over the next week or so, American consumers should expect pandemic-like disruptions, including higher prices, shortages and empty store shelves, port executives and supply chain experts tell CNN. Bessent has said repeatedly that the high tariff on China is “unsustainable,” and Trump also said he expects the tariff to come down. But it would need to come down significantly – by more than half – for any real trade to recommence, trade experts say. Even then, the economic damage would be done – and it would be weeks or even months before American shelves would be replenished. Despite the increasingly dire warnings and economic turmoil, the countries seem not to be remotely close to a deal. Even with the talks set to kick off this weekend, Bessent said it could take two to three years for trade to normalize with China.