Believers will say it’s been months of 4D chess. But believers of the US tariff policy are few and far between. It is more likely that, following months of whiplash and negotiations, the deals that countries reach (if they manage to) will be cloaked by a feeling of “hey, it could have been worse”.
At the time of writing, that seems to be the case for two countries that have reached such deals: the UK and Vietnam. It is worth noting that these deals, according to analysts, look far more like skeletal frameworks with many details to be hashed out later rather than what a formal trade agreement would entail.
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China and the US also reached a deal to de-escalate tensions after a tit-for-tat escalation that reached 145% tariffs on Chinese goods to the US. However, details of the agreement are scarce.
“It appears that the US President is aiming for commitments to purchase US agricultural products such as soybeans and LNG,” Yvonne-Bendinger Rothschild, European American Chamber of Commerce New York director, told Just Food sister site Investment Monitor.
“On a personal note, I am wondering how much LNG and soybean products we have left to sell to the dozens of countries we are supposedly negotiating with.”
For most countries, a product deal is still better than crippling tariffs. When the new rates were first announced in April, Vietnam was given a 46% rate for imports into the US. This has now been reduced to less than half that rate, to 20%. Part of the deal is also expanding market access to Vietnam for US companies, as American imports will face no tariffs at all.
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By GlobalDataYesterday (7 July), the tariff saga continued, as Trump sent out a slew of letters once again threatening key partners with higher tariffs while delaying the tariff deadline to 1 August (although he showed some flexibility towards delaying this even further). Major economies such as Japan and South Korea were hit with a 25% levy while others such as Thailand, Cambodia and Indonesia were also affected.
Despite the seeming unpredictability of tariff turmoil, after three months of negotiations, some US pressure points have been revealed. What have we learned about America’s new modus operandi?
Buy more American goods
In all of the current trade deals, the US has gained more market share for their exports. In Vietnam, US exports will face no tariffs, which, according to Trump, will provide American companies with more business opportunities.
However, transshipments from third countries in Vietnam will still face a 40% tariff, and how the US defines what falls into this category will be crucial. If products made in Vietnam with raw materials imported from China are included, then this would still have major implications for US manufacturers.
The UK deal has also loosened some restrictions on US products that can enter the country. The 20% on US beef imports has been scrapped, as well as the 19% rate on US ethanol. UK suppliers of these products have pushed back, saying that it will be impossible to compete under such conditions.
Although little is still known about the US-China deal, US Secretary of Commerce Scott Bessent said that China would loosen export controls on rare earth minerals, which are essential for the US to fulfil its semiconductor ambitions.
Beware of tech as a bargaining chip
For months, there has been widespread speculation about whether the European Union would cross what has so far been a red line for the bloc, and budge on a landmark tax applied to major tech companies to secure a more favourable trade deal with the US. This is because, given the Trump administration’s clear admonishment of these taxes, there is a clear sense that it could help alleviate tariff rates.
While Europe has so far resisted this route, despite some reported temptation, Canada eliminated its digital services tax hours before it was meant to take effect after Trump terminated trade talks over it. He described the tax as a “blatant attack” on the US.
After Canada backed down, the country was thanked by US Commerce Secretary Howard Lutnick in a social media post, saying it would have “been a deal breaker for any trade deal with America”.
According to GlobalData’s latest Strategic Intelligence: Tariffs and Trade Wars Executive Briefing: “The US is the world’s biggest exporter of [digital] services and ran a global surplus of $278bn in 2023 – putting this important and politically influential [tech] sector squarely in the crosshairs if push comes to shove.”
Watch out for financial market pushback
Another factor that has contributed to dampening Trump’s tariff plans has been the reactions of global financial markets, according to the same report.
It outlined: “The market bloodbath from ‘Liberation Day’ tariffs wiped $10trn off the value of global equities, spooked the US bond market and briefly tipped the S&P 500 into bear market territory, forcing Trump’s retreat.”
It also suggests that a key guardrail to further tariff disruption has been the Big Beautiful Bill, saying that the US president was likely to be “cautious about roiling markets” until the bill was passed. Last week, the House of Representatives passed the bill, sending it to Trump’s desk. It warns that now “the gloves can come off again, with a focus on new strategic sector tariffs (chip/pharma)”.
Remember that Trump loves a tax break
Four years after the OECD reached a landmark deal to create a minimum global tax rate of 15% for multinational corporations, the US managed to secure a carve-out for US companies, heavily diluting the intended redistributive effects of the agreed-upon tax regime. The G7 agreed to the exemption in exchange for the US dropping an amendment in the One Big Beautiful Bill that had spooked Wall Street and foreign investors.
Section 899 would have allowed the US to punish foreign companies operating in the US for the trade policies of their countries of origin if the US deemed these to be unfair. Given that Trump’s reciprocal tariffs target all countries to some capacity with the universal baseline of 10%, no foreign business operating in the US would have been exempt.
While Section 899 has been scrapped for now, one of the authors of the bill, Congressman Ron Estes, emphasised to fDi Intelligence that it would only remain that way if the G7 acted quickly to do their part.
“If that doesn’t happen… if we need to come back and revisit,” Estes said, noting that reintroducing Section 899 would still be “a possibility”.
Where are negotiations now?
According to Rothschild-Bendinger, businesses already expected the postponement of this tariff deadline.
“Why? The market won’t be able to bear it,” she said.
“Regarding the effects on global trade, companies front-loaded deliveries before the last round of tariffs, but we are going to run out of options to repeat that with the tariffs currently in place. Traffic at ports both on the East and West Coast of the US has come to a standstill.”
While a continuation of negotiations is better for both companies and governments than having to unexpectedly absorb high tariff rates, businesses must “find a way to work around the US tariffs”.
Bendinger-Rothschild said: “It won’t be easy but the profit margins of most manufacturers just don’t allow for tariffs at this level. Companies have two options: be bold or go bust.”
