When Donald Trump left the recent G7 summit in Canada, he left world leaders bewildered. He has not closed a single new trade agreement, and his time is fast running out on an ambitious trade agenda. In this, too, Trump is under extraordinary pressure, and the key deadline is coming up fast on July 9, just four weeks away. He should complete the bilateral trade agreements that will expand American companies’ access to foreign markets and revitalize U.S. manufacturing. As the President made his way back to Washington, we hope he emphasized the money that his approach will save. He repeated without hesitation, “We’re a very profitable company.”
During his flight aboard Air Force One, Trump discussed his negotiations with the European Union, stating, “They’re either going to make a good deal or they’ll just pay whatever we say they have to pay.” Indeed, this statement is emblematic of his directly combative approach to America’s trade partners. Recent movement in some of these negotiations gives us hope. Yet the clock continues to tick down, raising the stakes on Trump’s ability to fulfill his promises.
Trade Deals Still Elusive
Since taking office, that has been the goal of Trump’s administration—securing bigly trade deals that American farmers and manufacturers would love to see in play. So far he has only two signed agreements to show for his last two months of Czar-ing. The President’s insistence on unilateral negotiations has alarmed many economists and industry leaders as well.
This is hardly the first time Trump’s team has promised that deals are “coming soon,” but still no fruits are borne. Recent talks with Japanese Prime Minister Shigeru Ishiba during the G7 yielded no agreements, disappointing officials who had anticipated a breakthrough. The President’s admission in those negotiations in jest when he said, “The Japanese are tough,” is very true.
While these obstacles would be formidable, Trump’s economic advisors are cautiously optimistic about the improved effects they could produce. “We can get them done. We need to open these other countries’ markets,” noted an advisor. He touted the benefits for American farmers and ranchers, arguing that they would stand to realize significant benefits from increased market access.
Escalating Conflicts Complicate Negotiations
The stakes in Washington, D.C. over Trump’s trade negotiations just got a whole lot higher. Right now, he is consumed with the growing conflict in the Middle East, particularly Israel and Iran. That’s why Trump left the G7 summit early on Monday. He was worried primarily about the military conflict and turning discussions back towards trade. This will be a big test as he works to reconcile foreign policy priorities with his domestic trade agenda.
The Trump administration’s aggressive approach has made the ongoing trade retaliation further muddled and chaotic. His administration has used tariffs as a bargaining chip in negotiations with other countries and has thus fostered a contentious environment for foreign trade relations. Trump thinks this is smart art of the deal poker that’s going to get countries to negotiate better deals. Critics warn it risks triggering retaliatory action that would harm U.S. companies.
Federal Reserve Chair Jerome Powell commented on the ongoing trade tensions, stating, “So we’re beginning to see some effects. We expect to see more.” The long-term implications of these various effects are significant, potentially imposing a heavy burden on annual cumulative economic growth if trade disputes continue to escalate.
A Race Against Time
As July 9 looms, Trump is running out of time to get actually substantial trade deals in place. This threat of raising tariff rates hangs heavy over this negotiation, should they fail to produce an outcome. With increased pressure from all angles—both inside and outside of the Administration—the President’s eye is resolutely fixed on the ball, on hoping for successful outcomes.
Now, a series of recent developments have placed Trump’s new administration in a bind. They need to triple down and recalibrate their approach to unpair the paralyzed negotiations. The stakes are high, as failure to finalize agreements could undermine his economic agenda and impact his standing before the midterm elections.
