President Donald Trump finally managed to close his first trade agreement.
Well, it’s not quite a “agreement” by itself. It is another 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 coming months or years … to define a potential future trade agreement … which may or may not end up being more beneficial to the United States than the current commercial situation.
But a victory is a victory, and this is a great victory for Trump. The agreement with the United Kingdom also gives other world leaders a reason to expect other agreements to save the global economy of the abyss, providing a picture for future negotiations.
Asked if the agreement is an improvement in relation to the commercial relationship of six months ago, before Trump’s inauguration, British Prime Minister Keir Stmerer answered on Thursday: “The question that should be asked is better than we were yesterday?”
It is undeniable that the answer is yes. Even though the details of the agreement are scarce, customs rights to some British products will be reduced, which could open the market for the entry of some more American products in the UK.
Now, the chief negotiator only needs to complete more than a hundred agreements before the end of the deadline, on July 8 – when reciprocal tariffs of penalty of dozens of countries, which reach 50%, will again come into force.
Nothing special. Or at least that’s what Trump says. In an interview with Time last month, he said he had already made 200 business agreements, clarifying later that they would be done soon.
Even if this were possible, these agreements were announced months ago and the slowness that you reach any kind of commercial commitment does not increase anything good for the final award: a denunavation with China. With at least 145% rates on most Chinese imports and a retaliation tariff of 125% of China over most American products, trade has practically stopped with one of the most important economic partners in the United States.
US and Chinese authorities will meet this weekend in Geneva to negotiate the commercial situation, although US Treasury Secretary Scott Bessent said this week that they were unlikely to reach an agreement-expects a “unfolding.” Trump, however, said on Wednesday that he would not reduce the high customs rates imposed on China before talks, what Beijing had previously said was a previous condition for the conversations.
However, the aggressive US trade war has placed its effective rate of imports on imports by more than 22%, according to Fitch Ratings, the highest from far from any developed country. This situation caused the American economy to regress. Last week’s report on Gross Domestic Product, the broadest measure of the US economy, showed America’s first retraction since early 2022, as a healthy economy has been dragged by companies that stored goods to anticipate tariffs.
And that was in the first quarter – before the most aggressive trade policy came into force.
It is not a trade agreement
Despite the administration’s rhetoric that it is in advanced trade negotiations with more than a dozen countries, real trade agreements take a long time – many times – to be completed. Normally, they involve incredibly complex agreements, which focus on the details of various non -public goods and barriers. They often involve significant political considerations, as the various parties seek to protect voters with special interests.
Instead, the “agreement” that the Trump administration signed with the United Kingdom on Thursday resembles a memo more understanding. In the short term, the agreement may result in lower rates, but for a long time it will not have any significant economic effect.
“The 90-day tariff break, which has reached about 25%, provides little time for typical commercial discussions that require months, if not years, for the preparation of a trade agreement,” said Jacob Jensen, a trade analyst at the American Action Forum, a right-wing policy institute.
“There is a significant difference if these agreements are official, written trade agreements rather than verbal commitments to buy more American products, as one has long -term economic implications and the other can be ignored a posteriori,” he added.
And to date, it is only a single agreement announced. Reciprocal customs rights, which entered into force on April 7 and were suspended for 90 days to April 9, affect dozens of countries. One hundred others are subject to a 10%universal tariff. Administration is not possible to complete all these agreements until July 8th.
Last week, Trump said he would not extend rates a second time – and in fact he could act earlier to restore some tariffs with countries with which his administration cannot reach an agreement, perhaps in a two -week issue.
“It will be difficult for the US commercial representative to potentially negotiate 100 distinct trade agreements within 90 days, which means President Trump should soon determine whether tariffs will be restored or postponed,” said Jensen.
And even if the agreements are completed with all countries, there is no guarantee that Trump will keep them. For example, Trump, in his first term, was fundamental to negotiate the USMCA Free Trade Agreement with Canada and Mexico, just to leave it in his second term, applying a 25% rate to some Mexican and Canadian products. And by imposing significant tariffs on virtually every product entering the United States, Trump has also destroyed a series of existing commercial agreements with allies.
China is the real problem
The stock market was cheered on Thursday. Now the hard work begins.
“The market was desperately waiting for an agreement to be made,” said Art Hogan, B. Riley Wealth Management’s head of market strategy. “This was probably the easiest to do.”
Regardless of the number of commercial partners with which the United States closes agreements or even “agreements”, what really matters is China. Much depends on the success of the conversations between American and Chinese employees in Geneva, this weekend.
Historically high customs rights applied to China effectively prevented all trade between the two countries, Trump said repeatedly. China’s trips to the United States fell 60% in April, according to Flexport, a logistics and commodity company. JPMorgan estimates that Chinese imports to the United States will fall up to 80% in the second half of the year.
As the goods that were stored before the tariffs will start to run out next week, US consumers should expect disturbances similar to those of a pandemic, including higher prices, scarcity and empty shelves, port-chain specialists told CNN.
Bessent repeatedly said that the high rate on China is “unsustainable,” and Trump also said he expects the tariff to go down. But, according to trade experts, it would be necessary for the tariffs to drop significantly – in more than half – for trade to actually start. Even so, economic damage would already be done – and it would spend weeks or even months until US shelves were replenished.
Despite increasingly terrible warnings and economic turbulence, countries do not seem to be remotely close to an agreement. Even with the start of the conversations scheduled for this weekend, Bessent said that the normalization of trade with China could take two to three years.
