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Donald Trump’s White House had grandly promised “90 deals in 90 days” after partially pausing the process of levying what the US president called “reciprocal” tariffs.
In reality, there won’t even be nine deals done by the time we reach Trump’s first cut-off date on 9 July.
The revealing thing here, the poker “tell” if you like, is the extension of the deadline from Wednesday until 1 August, with a possibility of further extensions – or delays – to come.
From the US perspective, Treasury Secretary Scott Bessent says all focus has been on the 18 countries that are responsible for 95% of America’s trade deficit.
The jaunty letters being sent from the US to its trading partners this week are simply a reincarnation of that infamous White House “Liberation Day” blue board.
The rates are basically the same as were first revealed on 2 April. The infamous equation, which turned out to use a measure of the size of the deficit as a proxy for “the sum of all trade cheating” lives on, in a form.
This is all being announced without the market turmoil seen earlier this year because of this additional delay.
Financial markets believe in rolling delays, in the idea of TACO, that Trump Always Chickens Out – although they may embolden foot-dragging on all sides that lead to a renewed crisis.
However, the real takeaway here has been the Trump administration’s inability to strike deals. The letters are an admission of failure.
The White House may be playing hardball, but so are most other nations.
Japan and South Korea were singled out for the first two letters, which effectively further blow up their trade deals with the US.
The Japanese have done little to hide their fury at the US approach.
Its finance minister even hinted at using its ownership of the world’s biggest stockpile of US government debt – basically the biggest banker of America’s debts – as a source of potential leverage.
The dynamic from April has not really changed.
The rest of the world sees that markets punish the US when a trade war looks real, when American retailers warn the White House of higher prices and empty shelves.
And there is still a plausible court case working its way through the system that could render the tariffs illegal.
But the world is now also starting to see the numerical impact of an upended global trade system.
The value of the dollar has declined 10% this year against a number of currencies.
At Bessent’s confirmation hearing, he said that the likely increase in the value of the dollar would help mitigate any inflationary impact of tariffs.
The opposite has happened.
Trade numbers are starting to shift too. There was massive stockpiling before tariffs, there have been more recent significant falls.
Meanwhile, Chinese exports to the US have fallen by 9.7% so far this year.
But China’s shipments to the rest of the world are up 6%. This includes a 7.4% rise in exports to the UK, a 12.2% increase to the 10 members of the ASEAN alliance and 18.9% rise to Africa.
The numbers are volatile, but consistent with what might be predicted.
Revenues from tariffs are starting to pour into the US Treasury coffers, with record receipts in May.
As the US builds a tariff wall around itself, the rest of the world is likely to trade more with each other – just look the recent economic deals between the UK and India, and the EU and Canada.
It is worth nothing that the effective tariff rate being imposed by the US on the rest of the world is now about 15%, having been between 2% and 4% for the past 40 years. This is before the further changes in these letters.
The market reaction is calm for now. It might not stay that way.
