It’s now almost four months since the world first learned of President Trump’s plans to impose a broad swathe of high tariffs on the US’s trade partners. The news all but shattered equity markets over the course of early April – before recovering once Trump put his plans on a months-long pause.
The strategy then seemed to pivot from ‘tariffs for tariffs’ sake’ to using import taxes as a negotiating tool to bludgeon better terms from other nations. For a long time, not much seemed to happen. Yet the picture has now started to change.
Over the past two weeks, deals have been announced with two of the biggest economies on Earth: Japan and the European Union. Although some of the details differ, in each case Trump has got the other side to promise hundreds of billions of dollars of investment into the US – plus sign up to a baseline 15% tariff on all of their exports into the United States. These would have been unthinkable, unacceptable deals for these regions even a short time ago.
Further, with both sides having made some concessions already, it seems that talks with China are also starting to progress well. Temporarily reduced tariffs here are set to end on 13 August but US Treasury Secretary Scott Bessent has said talks are in “a very good place”. It’s rumoured that an extension is likely to be agreed before a deal is eventually struck.
Even despite the tariff fun and games, the American economy has continued to prosper. The latest reading of financial data firm S&P Global’s US economy activity survey was released last week, covering the month of July. This showed solid expansion and rose to a seven-month high. The chief business economist at the group, Chris Williamson, remarked the “data indicated that the US economy grew at a sharply increased rate at the start of the third quarter”.
While the long-term impact of these policies remains to be seen, the early signs suggest that the administration’s bold gamble on tariffs is beginning to reshape global trade on America's terms.
