During a business roundtable in the United Arab Emirates this Friday, Donald Trump hinted at the possibility of prematurely ending the trade truce established just over a month ago. He cautioned that "within the next two or three weeks," the White House would start informing affected nations of the tariffs they would face when trading with the United States, regardless of existing bilateral agreements.
Trump claimed that "150 countries are eager to finalize agreements simultaneously," but admitted that the U.S. lacks the operational capacity to address all of them at once. This acknowledgment signifies a shift from his previous narrative of America negotiating from a position of power, capable of securing advantageous terms individually.
From "Liberation Day" to Potential Trade Chaos
The roots of this trade strategy trace back to April 2, a date Trump dubbed "Liberation Day." On that day, the administration unveiled a sweeping "reciprocal tariffs" policy targeting over 150 trading partners, aiming to rebalance trade deficits and safeguard American industry. The approach included tariffs as high as 145% on certain imports, affecting both countries with which the U.S. has trade deficits and those of strategic importance.
Yet, just a week later, on April 9, Trump temporarily halted these tariffs for 90 days, allowing affected nations a window to negotiate new deals. This self-imposed pause, intended as a pragmatic move, now appears to be nearing an early end.
Trump himself confirmed this shift, suggesting that while nations might contest the tariffs, he believed the measures would be "very fair," though the negotiation timeline is rapidly closing.
Inequitable Negotiations and Internal Conflicts
Despite Trump's assertive stance, the progress of negotiations has been inconsistent. So far, only the United Kingdom has finalized an agreement with Washington, described by experts as "minimal." With China, the major trade rival, a temporary arrangement was reached, reducing tariffs from 145% to 30% on the U.S. side and from 125% to 10% on China's side, effective for 90 days.
Parallel to these developments, Trump has publicly stated, "We have many deals in the pipeline. In the end, we will only be signing the rest," mentioning "four or five more deals" expected soon. However, many of these claims lack official corroboration.
For instance, an alleged agreement with Vietnam never materialized, and a proposed tariff elimination deal with India was swiftly denied by the New Delhi government. This disconnect between Trump's rhetoric and actual outcomes highlights a level of improvisation and logistical strain threatening to derail the White House's initial plans.
A New Phase: Letters as Ultimatums
The new direction outlined by Trump involves formal notifications issued by the Treasury and Commerce Departments. Secretary of the Treasury Scott Bessent and Commerce Secretary Howard Lutnick are tasked with signing these letters, which will inform countries of the costs associated with doing business in the U.S.
These letters effectively impose unilateral tariffs without waiting for negotiation results. Although Trump assured these actions would be "very fair," he did not clarify the criteria for setting these tariffs or whether there would be options for appeal or review.
The lack of transparency and definitive planning has heightened uncertainty among foreign governments and financial markets, which had appeared relatively stable during the truce.
Domestic Impact: Inflation, Businesses, and Warnings
This strategy's consequences extend not only to U.S. trade partners but also to its domestic economy. Companies like Walmart have already announced price hikes on various goods due to increased import costs.
Economic experts, including Federal Reserve Chairman Jerome Powell, have warned of potential inflation and a looming recession if tariff policies are not adjusted. As a result, the U.S. business sector faces growing uncertainty. While some industries may benefit from protectionist barriers, many others—particularly those reliant on global supply chains—could encounter rising costs, product shortages, and diminished competitiveness.
A Geopolitical Puzzle: Priorities and Exclusions
Reports, such as one from The Guardian, suggest the Trump administration prioritizes negotiations with Asian countries, placing South Korea at the top of the list. Efforts also continue with the European Union, Japan, and even India, despite recent tensions.
Notably, Russia has been excluded from these discussions, a surprising omission given the broad scope of the measures. China was not part of the initial April 9 truce but was included in the subsequent mutual tariff suspension agreement.
In the coming weeks, the global trade landscape may undergo significant changes. As the letters are dispatched and deadlines approach, the world watches a truce teetering on the brink of collapse.
Key Questions About Trump's Trade Strategy
What is the reason behind Trump's decision to end the trade truce?
Trump claims that the U.S. lacks the operational capacity to negotiate with all 150 countries interested in trade deals simultaneously, leading to his decision to take unilateral action.
Which countries have successfully negotiated trade agreements with the U.S. so far?
To date, only the United Kingdom has managed to finalize a trade agreement with the United States, with China reaching a temporary tariff reduction arrangement.
How might Trump's trade policy affect the U.S. economy?
The policy could lead to increased import costs, prompting companies like Walmart to raise prices. Economic experts warn of potential inflation and recession risks if the strategy is not adjusted.