Tariffs

Who really thought Donald Trump’s America was about to join the stampede of first-world powers promising to recognize Palestine at the United Nations?  "Wow!" He exclaimed this morning on Truth Social. "Canada has just announced that it is backing statehood for Palestine. That will make it very hard for us to make a Trade Deal with them."  All over the world, commentators convinced themselves that Trump’s expression of concern on Monday about "real starvation" in Gaza meant he was pivoting with global opinion and against Israel.  It turns out, however, that Team Trump is not for turning when it comes to the Middle East. Marco Rubio, the US Secretary of State, has accused the countries now embracing Palestinian statehood of falling for "Hamas propaganda".

Trump has got almost everything he wanted in the trade deal between the United States and the European Union. Goods imported into the US from the EU will now be subject to tariffs of 15 percent - half the rate that Trump had threatened but far higher than existed prior to "Liberation Day" on April 2.  What has Ursula von der Leyen got in return? Nothing at all, other than the punitive tariffs being dropped. She has agreed to lowering tariffs on imports from the EU, in some cases to zero. She has also agreed to the EU buying more products from the US, including liquefied natural gas (LNG), making a mockery of the EU's net zero policy.

They say three times makes a pattern. So what should we make of the President’s trade agreements, three of which he confirmed this week, as the August 1 deadline for "reciprocal tariffs” looms?  If there remained any confusion about his agenda, he helpfully laid it out in all caps. “I WILL ONLY LOWER TARIFFS IF A COUNTRY AGREES TO OPEN ITS MARKET. IF NOT, MUCH HIGHER TARIFFS!” he wrote on Truth Social. “USA BUSINESSES WILL BOOM!” Given the size of the lettering, and the similarities to the deals secured with Indonesia, the Philippines and Japan this week, we should take Donald Trump at his word on this one. Put simply: so long as other countries cut taxes for their businesses, he will hike taxes on American businesses ever so slightly less.

The reaction of markets to the US trade deal with Japan shows yet again that if you presage bad news with even worse news you can make people pathetically grateful at the outcome. Shares in Toyota surged by 14 percent at the news. Yet why, when the deal will see imports of Japanese cars to the US slapped with tariffs of 15 percent? Because back on "Liberation Day" in April,  Donald Trump announced that Japanese imports would be subject to 24 percent tariffs. Reactions to Trump’s reset in trade relations with the rest of the world have undergone wild swings in recent months. First, markets plunged.

President Trump sent out another round of passive-aggressive tariff letters to foreign leaders Wednesay, which he posted to Truth Social so the world could marvel at his negotiating prowess. He worded each letter exactly the same, using Find and Replace to change country names, so Cockburn will just quote the Libya letter here: “It is a Great Honor for me to send you this letter in that it demonstrates the strength and commitment of our Trading Relationship, and the fact that the United States of America has agreed to continue working with Libya, despite having a significant Trade Deficit with your great Country. Nevertheless, we have decided to move forward with you, but only with more balanced, and fair, TRADE.

“TARIFFS WILL START BEING PAID ON AUGUST 1, 2025,” Donald Trump shared on Truth Social this morning. “There will be no change... No extensions will be granted. Thank you for your attention to this matter!” It’s a rather definitive statement from the President. But we’ve been here before. The original 90-day extension of “reciprocal tariffs” (better described as trade deficit figures with a percentage symbol attached) was also supposed to be a hard deadline. The President suggested only last week that there were no plans to push implementation back again. But here we are: a new date, a new deadline and a mixed market reaction.

When President Trump told Walmart to “EAT THE TARIFFS,” he implied that to not do so was a profit-mongering conspiracy against the American people. He noted Walmart’s extensive trade relationships with China and its large profit margin. But Walmart maintained that tariffs made price rises unavoidable. And when Amazon flirted with noting on some of its products the precise amount of cost increases attributable to tariffs, Trump called Jeff Bezos to complain and Amazon backed away from its plan. After observing Trump’s hostility to Walmart and Amazon, Home Depot took a different approach and asked: what trade war? Unlike numerous major American corporations, Home Depot has not rescinded its 2025 guidance for investors because of the uncertainty from tariffs.

Is life worse today than it was 50 years ago? According to a Pew Research survey, 58 percent of respondents believe it is. Perhaps watching the doom and gloom of the nightly news gives the impression that times have never been worse. But the facts show otherwise.The world has never been richer, food has never been more abundant, and extreme poverty is at historic lows. We are fortunate to live in a country where the people have a strong work ethic and control a vast, resource-rich territory. Yet, even with those advantages, we rely on trade to access goods that America simply does not produce in abundance, like coffee and bananas. Perhaps we should ask a more nuanced question: is international trade good or bad?

The White House press conference between President Trump and newly-elected Canadian Prime Minister Mark Carney shows that every generation gets the summit it deserves. World War Two had Yalta, the 1970s the Camp David Accords. Barack Obama had a beer with the cop who arrested Henry Louis Gates, Jr. And Trump bragged about the new 24-karat White House gold décor and said, about Canada, “I think we have a lot of things in common.” The half-hour press scrum veered between mutual respect and Trumpian disdain, while Carney struggled to get a word in, flopping his hands in his lap like fish on a deck. He called Trump a “transformational President” and said, “We’re stronger when we’re together.” Trump said, “I have a lot of respect for this man.

How was your Liberation Month? It’s been almost 30 days since Donald Trump stood in the Rose Garden of the White House and announced a shocking set of massive tariffs on the world. The event caused huge convulsions in the economic universe: trillions were wiped off the stock market and, under huge pressure, Trump did agree to a 90-day pause on reciprocal tariffs. After that he exempted electrical goods, though his standard 10 percent remains, and the heads of most financial analysts are still spinning trying to figure out what it all means. Yet for all the angst and the apoplexy, yesterday the S&P 500 index closed just 1 percent down from where it was at the beginning of the month.