Trump urgently needs a trade agreement, the time is running out

Trump urgently needs a trade agreement, the time is running out

President Donald Trump, who is known as a "deal maker", has declared for weeks that a trade agreement with one of the many countries with which the United States is currently in negotiations is imminent to avoid high tariffs. But where is the agreement?

trade agreements are supposedly on the march

on Sunday, during a flight with Air Force One, Trump said that it could be "quite good" that trade agreements could be announced this week. Last week and before that, he had made similar statements. At the same time, however, he dampened expectations and emphasized that both friends and hostile countries have "exploited" the United States for years. The trade agreements would only come about if the conditions for the Americans are advantageous. Trump argues that the ball lies in its field and not in the other countries.

The negotiations run

"We are negotiating with many countries, but in the end I will determine the agreements because I set the conditions, not them," he told reporters on Sunday. "This is not like a great agreement that is signed - in some cases we will sign it, but we don't have to. I will determine the conditions and the tariffs."

The prospect of a possible trade agreement-the government said that India, Japan and South Korea are the most likely candidates for a first US trade agreement-has restored confidence in the American financial markets and aroused some hopes that the world could avoid the worst consequences of the trade war. But the longer the weeks pull into the country without visible progress, the greater the risk that the Trump administration causes serious economic damage that could quickly develop into a US and_Global recession.

economic effects of the trade wars

The aggressive trade war of the United States already has a negative impact on the US economy. A current report on the gross domestic product (GDP) has shown the first contraction since the beginning of 2022, since the companies began to store goods to prepare for the tariffs. This took place in the first quarter before the restrictive trade policy became completely effective.

The slow progress in the negotiations also leads to a bad light on the overarching goal: a relaxation in relation to China. In view of tariffs of at least 145 % on Chinese imports and a 125 % counter-custom China on US goods, trade in one of the most important economic partners in the United States has almost come to a standstill. This could soon lead to pandemic -like disorders in the supply chains, which could result in higher prices and empty shelves.

no trade agreement in sight

In an interview with Time, Trump emphasized that he had already concluded 200 trade agreements, but was surprised that they could not be signed immediately. In the administration, it was stated that there is more than a dozen countries in advanced trade negotiations. Nevertheless, actual trade agreements usually need considerable time - often years - to be negotiated. These elaborate agreements concern many details of a wide variety of goods and non -tariff trade barriers and often require significant political considerations.

Every "agreement" that the Trump administration signs-whenever that may happen-is therefore more likely to be like a memorandum of understanding, which could result in short-term lower tariffs for certain countries, but probably hardly brings with it in the long term.

Time runs

Trump has set a tight deadline to complete everything: the "mutual" tariffs, which came into force on April 7 and were exposed to 90 days on April 9, affect dozens of countries. The deadline will take place on July 8th when tariffs of up to 50 % are to return to numerous nations.

"The 90-day customs break offers little time for the typical negotiations that can take months or even years to design a trade agreement," said Jacob Jensen, trade analyst of the American Action Forum. "It makes a difference whether it is official, written trade agreements or verbal promises to buy more US products-this has long-term economic consequences, while the other side can easily be ignored."

China remains the biggest challenge

Regardless of how many trade agreements the United States conclude, the most important challenge remains China. But not much is happening here at the moment. Historically high customs in China has almost completely brought the trade between the two countries to a standstill. According to Flexport, the number of cargo ships that drive from China to the USA fell by 60 % in April, and JPmorgan estimates that Chinese imports to the United States could go back up to 80 % in the second half of the year.

American consumers should be prepared for pandemic -like disorders if the inventory of goods that were stored before the tariffs come into force in the next few weeks. These include rising prices, bottlenecks and empty shelves.

Waiting for progress

The finance minister Scott Bessent has repeatedly stated that the high tariffs in China were "not sustainable", and Trump also said the expectation that the tariffs would have to be reduced. However, in order to resume retail, the tariffs would have to be reduced by more than half. Even if this happens, the economic damage has already been done, and it would take weeks or even months to replenish the shelves in the USA.

Despite the increasingly alarming warnings, the two countries seem to be far from an agreement. China has repeatedly rejected Trump's statements that negotiations take place, and both sides insist that significant concessions are necessary to start the discussions. Besser expects it to take two to three years for the trade to normalize.

Nevertheless, there are some signs that indicate that there are cracks between the countries. China said last week that the USA "currently evaluated" for trade talks. Trump also confirmed that the tariffs were "ultimately" reduced to Chinese imports into the United States.

"At some point I will lower them, otherwise you could never do business with them," he said in an interview with NBC’s "Meet the Press". "You want to do business very much ... your economy breaks down."