Trump's trade war victory is under pressure

Trump's trade war victory is under pressure

The expectations of the economy were dark. It was expected that the trade war would get out of control and the markets could break in drastically. But so far none of it has occurred. President Donald Trump has achieved the unpredictable: A kind of trade war victory that sets the import tax in America higher than in the notorious Smoot-hawley era, and so far without any noteworthy negative consequences. The revenue from the tariffs has risen sharply, while inflation moves in an acceptable framework. The trading partners of the USA also largely have accepted the higher tariffs without taking significant retaliation.

trade agreements and effects on the markets

Five central framework agreements between the USA and other trading partners have led to the tariffs raised to foreign goods that are imported into the USA, while the levies on US exports remain almost zero. Foreign trading partners have agreed to open up closed markets for some US goods, have promised to increase investments in the United States and to reduce some of the protective measures that the Trump government criticized as trade barriers, such as taxes on digital services.

The challenge of a fragile trade agreement

But Trump's initial trading victory could only be short -term. There is already signs for this success will not be long-term. The European Union, which has just achieved a compromise to conclude a trade contract in front of Trump's self -imposed period on August 1 href = "https://www.cnn.com/2025/07/28/business/eu-us-trade-deal-capitulation-intl"> already in turmoil . The French Prime Minister François Bayrou described Sunday as a "dark day". The Hungarian Prime Minister and Trump allied Viktor Orbán also criticized that Trump overrun the EU. Belgium’s Premier Bart de Wever joined the criticism and spoke of an "illusion of protectionism". Bernd Lange, Chairman of the European Parliament's Commercial Committee, said that the agreement was "unsatisfactory".

Canada fails due to negotiations

The trade talks of the Trump administration with Canada, one of the largest trading partners in the United States, have practically come to a standstill. Despite Canada's concession in relation to the digital service tax that the President has sharply criticized, Trump continued to threaten higher tariffs on certain Canadian products, including Wood. Many of Canada imported goods remain duty due to the US Mexico-Kanada agreement, but this agreement only covers about half of the Canadian goods. Higher tariffs on Canada could increase the costs for US consumers .

The difficult situation with China

A third round of negotiations between China and the trade negotiators of the United States are expected to continue to continue the historically high tariffs. However, it remains unclear what else could result from these conversations, since the Trump government is frustrated by China's pace as too slow when fulfilling the agreements. Both sides try to reduce more regulatory hurdles for sending key technologies. China strives for greater access to critical semiconductors, while the United States demands an increase in river less common.

court ruling on tariffs in sight

An important appeal procedure on Thursday could decide whether most of Trump's tariffs are legal at all. Trump relies on powers that are anchored in the law on international economic emergency powers. A federal court decided in May that Trump exceeded his authority to raise tariffs on this basis. A Court of Appeal put this judgment on ice and will listen to the oral arguments on Thursday. It is unclear when the court will decide.

Although the US economy remains strong with increasing retail sales, a still robust labor market and growing consumer confidence, the first signs show that Inflation in key areas slowly increases again, which is due to the tariffs. The Bureau of Labor Statistics reported that some of the tariffs affected have won the price. Prices for clothing, devices, computers, sporting goods, toys and tools have increased in recent months. Many large retailers, including Walmart, have announced that they increase prices due to the tariffs.

economists generally expect that inflation will increase in late summer and in the rest of the year, while the retailers are working through the stocks they had increased before the tariff came into force. Nobody expects inflation to the extent like a few years ago. But for consumers who are still dealing with the consequences of price increases, this will hardly be a welcome change.