Latest news with #JoshLipsky
Japan Times
2 days ago
- Business
- Japan Times
Trump may look like he's winning the trade war, but hurdles remain
At a glance, U.S. President Donald Trump appears to be winning the trade war he unleashed after returning to the White House in January, bending major trading partners to his will, imposing double-digit tariff rates on nearly all imports, narrowing the trade deficit, and raking in tens of billions of dollars a month in much-needed cash for federal government coffers. Significant hurdles remain, however, including whether U.S. trading partners will make good on investment and goods-purchase commitments, how much tariffs will drive up inflation or stymie demand and growth, and whether the courts allow many of his ad-hoc levies to stand. On inauguration day, the effective U.S. tariff rate was about 2.5%. It has since jumped to somewhere between 17% and 19%, according to a range of estimates. The Atlantic Council estimates it will edge closer to 20%, the highest in a century, with higher duties taking effect on Thursday. Trading partners have largely refrained from retaliatory tariffs, sparing the global economy from a more painful tit-for-tat trade war. Data on Tuesday showed a 16% narrowing of the U.S. trade deficit in June, while the U.S. trade gap with China shrank to its smallest in more than 21 years. American consumers have shown themselves to be more resilient than expected, but some recent data indicate the tariffs are already affecting jobs, growth and inflation. "The question is, what does winning mean?" said Josh Lipsky, who heads economic studies at the Atlantic Council. "He's raising tariffs on the rest of the world and avoiding a retaliatory trade war far easier than even he anticipated, but the bigger question is what effect does that have on the U.S. economy." Michael Strain, head of economic policy studies at the conservative American Enterprise Institute, said Trump's geopolitical victories could prove hollow. "In a geopolitical sense, Trump's obviously getting tons of concessions from other countries, but in an economic sense, he's not winning the trade war," he said. "What we're seeing is that he is more willing to inflict economic harm on Americans than other countries are willing to inflict on their nations. And I think of that as losing." Kelly Ann Shaw, a White House trade adviser during Trump's first term who is now a partner at Akin Gump Strauss Hauer & Feld, said a still-strong economy and near-record-high stock prices "support a more aggressive tariff strategy." But Trump's tariffs, tax cuts, deregulation and policies to boost energy production would take time to play out. "I think history will judge these policies, but he is the first president in my lifetime to make major changes to the global trading system," she added. Deals so far Trump has concluded eight framework agreements with the European Union, Japan, Britain, South Korea, Vietnam, Indonesia, Pakistan and the Philippines that impose tariffs on their goods ranging from 10% to 20%. A port in Miami, Florida, on Thursday. American consumers have shown themselves to be more resilient than expected, but some recent data indicate Trump's tariffs are already affecting jobs, growth and inflation. | AFP-JIJI That's well short of the "90 deals in 90 days" administration officials had touted in April, but they account for some 40% of U.S. trade flows. Adding in China, currently saddled with a 30% levy on its goods but likely to win another reprieve from even higher tariffs before an Aug. 12 deadline, would raise that to nearly 54%. Deals aside, many of Trump's tariff actions have been mercurial. On Wednesday, he ratcheted up pressure on India, doubling new tariffs on goods from there to 50% from 25% because of its imports of oil from Russia. The same rate is in store for goods from Brazil, after Trump complained about its prosecution of former leader Jair Bolsonaro, a Trump ally. And Switzerland, which Trump had previously praised, is facing 39% tariffs after a conversation between its leader and Trump derailed a deal. Ryan Majerus, a trade lawyer who worked in both the first Trump administration and the Biden government, said what's been announced so far fails to address "longstanding, politically entrenched trade issues" that have bothered U.S. policymakers for decades, and getting there would likely take "months, if not years." He also noted they lack specific enforcement mechanisms for the big investments announced, including $550 billion for Japan and $600 billion for the EU. Promises and risks Critics lit into European Commission President Ursula von der Leyen after she agreed to a 15% tariff during a surprise meeting with Trump during his trip to Scotland last month, while gaining little in return. The deal frustrated winemakers and farmers, who had sought a zero-for-zero tariff. Francois-Xavier Huard, head of France's FNIL national dairy sector federation, said 15% was better than the threatened 30%, but would still cost dairy farmers millions of euros. European experts say von der Leyen's move did avert higher tariffs, calmed tensions with Trump, averting potentially higher duties on semiconductors, pharmaceuticals and cars, while making largely symbolic pledges to buy $750 billion of U.S. strategic goods and invest over $600 billion. Meeting those pledges will fall to individual EU members and companies, and cannot be mandated by Brussels, trade experts and analysts note. U.S. officials insist Trump can reimpose higher tariffs if he believes the EU, Japan or others are not honoring their commitments. But it remains unclear how that would be policed. And history offers a caution. China, with its state-run economy, never met its modest purchase agreements under Trump's Phase 1 U.S.-China trade deal. Holding it to account proved difficult for the subsequent Biden administration. "All of it is untested. The EU, Japan and South Korea are going to have to figure out how to operationalize this," Shaw said. "It's not just government purchases. It's getting the private sector motivated to either make investments or back loans, or to purchase certain commodities." And lastly, the main premise for the tariffs Trump has imposed unilaterally faces legal challenges. His legal team met with stiff questioning during appellate court oral arguments over his novel use of the 1977 International Emergency Economic Powers Act, historically used for sanctioning enemies or freezing their assets, to justify his tariffs. A ruling could come any time and regardless of the outcome seems destined to be settled ultimately by the Supreme Court.
Khaleej Times
2 days ago
- Business
- Khaleej Times
Trump may look like he's winning the trade war, but hurdles remain
At a glance, U.S. President Donald Trump appears to be winning the trade war he unleashed after returning to the White House in January, bending major trading partners to his will, imposing double-digit tariff rates on nearly all imports, narrowing the trade deficit, and raking in tens of billions of dollars a month in much-needed cash for federal government coffers. Significant hurdles remain, however, including whether U.S. trading partners will make good on investment and goods-purchase commitments, how much tariffs will drive up inflation or stymie demand and growth, and whether the courts allow many of his ad-hoc levies to stand. On inauguration day, the effective U.S. tariff rate was about 2.5%. It has since jumped to somewhere between 17% and 19%, according to a range of estimates. The Atlantic Council estimates it will edge closer to 20%, the highest in a century, with higher duties taking effect on Thursday. Trading partners have largely refrained from retaliatory tariffs, sparing the global economy from a more painful tit-for-tat trade war. Data on Tuesday showed a 16% narrowing of the U.S. trade deficit in June, while the U.S. trade gap with China shrank to its smallest in more than 21 years. American consumers have shown themselves to be more resilient than expected, but some recent data indicate the tariffs are already affecting jobs, growth and inflation. "The question is, what does winning mean?" said Josh Lipsky, who heads economic studies at the Atlantic Council. "He's raising tariffs on the rest of the world and avoiding a retaliatory trade war far easier than even he anticipated, but the bigger question is what effect does that have on the U.S. economy." Michael Strain, head of economic policy studies at the conservative American Enterprise Institute, said Trump's geopolitical victories could prove hollow. "In a geopolitical sense, Trump's obviously getting tons of concessions from other countries, but in an economic sense, he's not winning the trade war," he said. "What we're seeing is that he is more willing to inflict economic harm on Americans than other countries are willing to inflict on their nations. And I think of that as losing." Kelly Ann Shaw, a White House trade adviser during Trump's first term who is now a partner at Akin Gump Strauss Hauer Feld, said a still-strong economy and near-record-high stock prices "support a more aggressive tariff strategy." But Trump's tariffs, tax cuts, deregulation and policies to boost energy production would take time to play out. "I think history will judge these policies, but he is the first president in my lifetime to make major changes to the global trading system," she added. Deals so far Trump has concluded eight framework agreements with the European Union, Japan, Britain, South Korea, Vietnam, Indonesia, Pakistan and the Philippines that impose tariffs on their goods ranging from 10% to 20%. That's well short of the "90 deals in 90 days" administration officials had touted in April, but they account for some 40% of U.S. trade flows. Adding in China, currently saddled with a 30% levy on its goods but likely to win another reprieve from even higher tariffs before an August 12 deadline, would raise that to nearly 54%. Deals aside, many of Trump's tariff actions have been mercurial. On Wednesday he ratcheted up pressure on India, doubling new tariffs on goods from there to 50% from 25% because of its imports of oil from Russia. The same rate is in store for goods from Brazil, after Trump complained about its prosecution of former leader Jair Bolsonaro, a Trump ally. And Switzerland, which Trump had previously praised, is facing 39% tariffs after a conversation between its leader and Trump derailed a deal. Ryan Majerus, a trade lawyer who worked in both the first Trump administration and the Biden government, said what's been announced so far fails to address "longstanding, politically entrenched trade issues" that have bothered U.S. policymakers for decades, and getting there would likely take "months, if not years." He also noted they lack specific enforcement mechanisms for the big investments announced, including $550 billion for Japan and $600 billion for the EU. Promises and risks Critics lit into European Commission President Ursula von der Leyen after she agreed to a 15% tariff during a surprise meeting with Trump during his trip to Scotland last month, while gaining little in return. The deal frustrated winemakers and farmers, who had sought a zero-for-zero tariff. Francois-Xavier Huard, head of France's FNIL national dairy sector federation, said 15% was better than the threatened 30%, but would still cost dairy farmers millions of euros. European experts say von der Leyen's move did avert higher tariffs, calmed tensions with Trump, averting potentially higher duties on semiconductors, pharmaceuticals and cars, while making largely symbolic pledges to buy $750 billion of U.S. strategic goods and invest over $600 billion. Meeting those pledges will fall to individual EU members and companies, and cannot be mandated by Brussels, trade experts and analysts note. U.S. officials insist Trump can re-impose higher tariffs if he believes the EU, Japan or others are not honoring their commitments. But it remains unclear how that would be policed. And history offers a caution. China, with its state-run economy, never met its modest purchase agreements under Trump's Phase 1 U.S.-China trade deal. Holding it to account proved difficult for the subsequent Biden administration. "All of it is untested. The EU, Japan and South Korea are going to have to figure out how to operationalize this," Shaw said. "It's not just government purchases. It's getting the private sector motivated to either make investments or back loans, or to purchase certain commodities." And lastly, the main premise for the tariffs Trump has imposed unilaterally faces legal challenges. His legal team met with stiff questioning during appellate court oral arguments over his novel use of the 1977 International Emergency Economic Powers Act, historically used for sanctioning enemies or freezing their assets, to justify his tariffs. A ruling could come any time and regardless of the outcome seems destined to be settled ultimately by the Supreme Court.
Malay Mail
3 days ago
- Business
- Malay Mail
Trump's 40pc tariff targets transshipped goods, with China squarely in the crosshairs
WASHINGTON, Aug 6 — As the United States ramps up tariffs on major trading partners globally, President Donald Trump is also disrupting strategies that could be used — by Chinese companies or others — to circumvent them. Goods deemed to be 'transshipped,' or sent through a third country with lower export levies, will face an additional 40-per cent duty under an incoming wave of Trump tariffs Thursday. The latest tranche of 'reciprocal' tariff hikes, taking aim at what Washington deems unfair trade practices, impacts dozens of economies from Taiwan to India. The transshipment rule does not name countries, but is expected to impact China significantly given its position as a manufacturing powerhouse. Washington likely wants to develop supply chains that are less reliant on China, analysts say, as tensions simmer between the world's two biggest economies and the US sounds the alarm on Beijing's excess industrial capacity. But 'it's a little more about the short-term effect of strengthening the tariff regime than it is about a decoupling strategy,' said Josh Lipsky, chair of international economics at the Atlantic Council. 'The point is to make countries worried about it and then have them err on the side of not doing it, because they know that Trump could then jack up the tariff rates higher again,' he added, referring to tariff evasion. The possibility of a sharply higher duty is a 'perpetual stick in the negotiations' with countries, said Richard Stern, a tax and budget expert at the conservative Heritage Foundation. He told AFP that expanding penalties across the globe takes the focus away from Beijing alone. Alternative supplies Experts have noted that Vietnam was the biggest winner from supply chain diversions from China since the first Trump tariffs around 2018, when Washington and Beijing engaged in a trade war. And Brookings Institution senior fellow Robin Brooks pointed to signs this year of significant transshipments of Chinese goods. He noted in a June report that Chinese exports to certain South-east Asian countries started surging 'anomalously' in early 2025 as Trump threatened widespread levies. While it is unclear if all these products end up in the United States, Brooks cast doubt on the likelihood that domestic demand in countries like Thailand and Vietnam rocketed right when Trump imposed duties. 'One purpose of the transshipment provisions is to force the development of supply chains that exclude Chinese inputs,' said William Reinsch, senior adviser at the Center for Strategic and International Studies. 'The other purpose is to push back on Chinese overcapacity and force them to eat their own surpluses,' he added. But Washington's success in the latter goal depends on its ability to get other countries on board. 'The transshipment penalties are designed to encourage that,' Reinsch said. Lipsky added: 'The strategy that worked in the first Trump term, to try to offshore some Chinese manufacturing to other countries like Vietnam and Mexico, is going to be a much more difficult strategy to execute now.' China response? Lipsky noted that Beijing could see the transshipment clause as one targeting China on trade, 'because it is.' 'The question is, how China takes that in the broader context of what had been a thawing relationship between the US and China over the past two months,' he added. While both countries temporarily lowered triple-digit tariffs on each other's exports, that truce expires August 12. The countries are in talks to potentially extend the de-escalation, although the final decision lies with Trump. It will be tough to draw a line defining product origins, analysts say. Customs fraud has been illegal for some time, but it remains unclear how Washington will view materials from China or elsewhere that have been significantly transformed. The burden lies with customs authorities to identify transshipment and assess the increased duties. 'That will be difficult, particularly in countries that have close relations with China and no particular incentive to help US Customs and Border Protection,' Reinsch added. — AFP
Yahoo
7 days ago
- Business
- Yahoo
Trump stakes reputation as dealmaker with tariff policy
Donald Trump is staking his reputation as a tough negotiator and slick dealmaker -- that has served him well throughout his life -- with his ultra-muscular, protectionist tariffs policy. On Friday, the White House released a picture of the US president seen with a smartphone pressed to his ear, with the caption: "Making calls. Making deals. MAKING AMERICA GREAT AGAIN!" Every trade deal announced by the president, who is convinced that tariffs are both a tool and manifestation of America's economic might, is celebrated by his supporters as a show of his negotiating prowess. This week's flurry of rate changes was no different. On Thursday, with the stroke of a black marker, the former real estate developer slapped fresh tariffs on dozens of US trade partners. They will kick in on August 7 instead of August 1, which had previously been touted as a hard deadline. The Republican leader's backtracking, frequently setting trade deadlines only to rescind or extend them -- he most recently granted Mexico a 90-day extension -- has given rise to the mocking acronym "TACO" ("Trump always chickens out"). The jokes implying Trump is all talk and no action on trade have previously struck a nerve for the president. - 'Not chicken' - But analysts believe there will be no going back this time. Trump has "not chickened out," according to Josh Lipsky, an international economics expert at the Atlantic Council think tank. Lipsky told AFP the president is "following through, if not exceeding" what he vowed during his campaign in respect to tariffs. Matthew Aks, a public policy analyst at Evercore ISI, said he did not anticipate a "massive shift" on the latest order, aside from some economies like Taiwan or India striking deals during the seven-day buffer. Following crunch negotiations leading up to the tariffs announcement, Trump struck a series of compromises, notably with the European Union, Japan, and South Korea, setting varying tax rates and touting high investments in the United States. The details of these agreements remain vague and leave the door open to key questions: Are exemptions possible? What will become of key sectors like automobiles, pharmaceuticals, semiconductors? And what of China? The US president and leaders of other countries "have reasons to avoid going into detailed agreements" explained Aks, allowing all sides to present the deals in the most positive, or least negative, way possible to their public. The ability to conclude deals -- often with or without crucial detail -- is, for the 79-year-old Republican, an integral part of his political signature. - 'Art form' - In his book "The Art of the Deal," the billionaire wrote: "Deals are my art form. Other people paint beautifully on canvas or write wonderful poetry. I like making deals, preferably big deals. That's how I get my kicks." Trump explained in his book that he always "protects" himself "by being flexible." "I never get too attached to one deal or one approach." But despite comments about his trade policy reversals, Trump has hardly budged from his trade strategy, and that could prove politically painful. In a survey conducted by Quinnipiac University published in mid-July, only 40 percent of respondents said they supported the president's trade policy, while 56 percent criticized it. The latest employment figures bear the marks of Trump's protectionist offensive, according to experts. Job creation in May and June was revised sharply downward, falling to levels not seen since the Covid-19 pandemic. aue/aks/sla Sign in to access your portfolio
Telegraph
11-06-2025
- Business
- Telegraph
US and China ‘back to square one' after two days of trade talks
Talks between the US and China are 'back to square one' after two days of trade negotiations in London failed to secure a major deal. US commerce secretary Howard Lutnick said the two sides had agreed on a 'framework' to put their trading relations back on track and repair the truce initially agreed in Geneva last month. There was little market reaction to the announcement at Lancaster House shortly after midnight, with the dollar strengthening a little and stock markets opening marginally higher. The two sides have until August 10 to negotiate a more comprehensive agreement to ease trade tensions, or US tariffs on China will snap back from about 30pc to 145pc, with China's levies on America increasing from 10pc to 125pc. Josh Lipsky, of the Atlantic Council's GeoEconomics Center in Washington, said: 'They are back to square one but that's much better than square zero.' Deutsche Bank analyst Jim Reid added: 'While the mood music has stayed positive, investors may be wary of the pattern that emerged during the previous US-China trade talks in 2018-19, when apparently constructive in-person meetings seemed to take a step back as the negotiating teams returned to their capitals. 'So there's perhaps a little disappointment this morning that we haven't yet got a bigger announcement, even though there's time to hear the full conclusions of the meeting.' Top officials from Washington and Beijing had gathered in London after accusations from both sides that they had violated the terms of the deal made in Switzerland. Donald Trump and Xi Jinping held a call last week which Mr Lutnick said 'gave the fundamental foundation on which we were able to reach agreement'. Mr Lutnick said: 'We have reached a framework to implement the Geneva consensus and the call between the two presidents. 'The idea is we're going to go back and speak to President Trump and make sure he approves it. 'They're going to go back and speak to President Xi and make sure he approves it, and if that is approved, we will then implement the framework.' In a separate briefing, China's vice commerce minister Li Chenggang also said a trade framework had been reached in principle that would be taken back to US and Chinese leaders. Mr Lutnick said China's restrictions on exports of rare earth minerals and magnets to the US would be resolved as a 'fundamental' part of the framework agreement. He also said the agreement would remove some of the recent US export restrictions, but did not provide details. Kathleen Brooks, research director at XTB, said: 'Overall, the US-China trade agreement is taking its time, and it could test the market's patience.' Meanwhile, the European Union reportedly believes it could extend its trade negotiations with the US beyond the initial deadline next month. The EU thinks there could be scope for further talks if it agrees a deal in principle by July 9, which is considered its best-case scenario, according to Bloomberg. The Trump administration is scheduled to enforce 50pc tariffs on EU goods beyond that date unless a deal is reached.
