WASHINGTON — President Trump has “leveraged American bargaining power” with three Asian nations this week — and given himself momentum ahead of the looming Aug. 1 deadline for most “reciprocal tariffs,” experts predict.
Trump secured Japan’s agreement to pay a 15% tariff on exports to the US while making $550 billion in new investments in America in what he called a “signing bonus” — while Indonesia and the Philippines said they would accept 19% tariffs on their goods while applying 0% tariffs on US products.
“I was a little bit surprised by the extent to which the US, at least at this stage of the game, has succeeded in striking what seems to me to be quite a hard bargain,” said Pravin Krishna, an economist at the Johns Hopkins School of Advanced International Studies.
Robert Lawrence, an international trade professor at the Harvard Kennedy School, agreed, saying he was also left stunned that Trump roped in a large Japanese investment in addition to the tariff terms — likening it to his successful demand for a “golden” US stake in this year’s Nippon-US Steel merger deal.
“He’s a wheeler-dealer, our president, needless to say, and he’s kind of cutting these deals — but he has scared these people, and he’s leveraged American bargaining power,” Lawrence said.
“The next one on the block is [South] Korea… for the Koreans, the auto issue is just about as important as for the Japanese.”
Wilbur Ross, who served as Trump’s commerce secretary during his first term and at one point expressed concern about administration emissaries potentially over-playing their hand, hailed Trump’s trio of Asian deals.
“It’s very important that people realize why he yoked the three together and announced them at the same time, and I think that’s largely to send a message to China that their hope that his tough trade policy would somehow drive the Asian countries to China is simply incorrect,” Ross explained.
“I think the second importance of it is it puts tremendous pressure on the EU to make a deal because they have a great danger of being relatively isolated and relatively stuck with a worse deal.”
Trump traveled to Scotland Friday and will meet with European Commission President Ursula von der Leyen over the weekend to discuss averting a threatened 50% tariff.
The president previously announced deals with Vietnam, which agreed to a 20% tariff — or 40% on items sourced in China — while breaking down barriers to US imports, as well as a UK deal that features a 10% tariffs — with British steel and car exports also paying 10% rather than Trump’s much higher sectoral tariffs, in exchange for promises to open UK markets to American ethanol, beef and chicken.
China, meanwhile, brokered a cease-fire with Treasury Secretary Scott Bessent — with the US applying a 30% rate on Chinese goods and China applying a 10% rate on American imports.
Meanwhile, the impact of Trump’s tariffs — which also include 50% on foreign steel and aluminum and 25% on foreign cars — have been slighter than anticipated thus far on inflation, with the annual increase in consumer prices 2.7% in June.
“The same ‘experts’ that were loudly spewing doomsday predictions are now quietly looking at their portfolios and planning their early retirement or vacation home purchases,” said Arthur Schwartz, a Republican operative with close ties to the administration.
Major challenges remain on the horizon for Trump, however, and academics remain divided on the merits of higher tariffs now padding federal coffers.
Krishna, the Hopkins economist, said questions remain about whether the Asian nations that just agreed to steep terms are able to ratify them politically due to the fact that Trump seems to have secured such lopsided terms.
He also said that India — initially expected to be one of the first nations to ink a trade deal — faces notable trade-talk road bumps due to the potentially devastating effects on poor farmers who comprise about 45% of the labor force.
“It’s a very sensitive sector for India. The Modi government itself, a few years ago, tried some reasonably market-oriented reforms in the agricultural sector.. and they were unable to push that through,” he said.
“That is an extremely challenging thing for the Indian government to manage politically,” Krishna said. “You’re talking about survival-level incomes for a large number of farmers. And to mess with that would be, again, politically challenging and even morally questionable from an Indian standpoint.
“It really is a question of how much of a change the US wants in terms of reduction of protectionism and so on, and how much India’s willing to give up,” he added.
It’s also unclear how talks with China will end — with the temporary deal set to expire in mid-August, though it may be extended.
“There’s a real question whether we will make a deal with [China],” Ross said.
“It’s hard for me to imagine that they’re going to make very big concessions, and meanwhile, we’re collecting very high tariffs. So it’s not so clear to me that there’s a big, compelling motive for President Trump to make a deal.”
China also may be politically constrained by an upcoming Communist Party congress next month and a housing crash that has sapped the nation economically, Ross noted.
Lawrence, of Harvard, said that the disruption of Trump’s trade wars remains worrying for certain US industries — with carmakers General Motors and Stellantis reporting quarterly income slumps this week — and that he’s skeptical of an ensuing boom in US manufacturing employment.
“I personally think it’s damaging our economy … We have to be competitive to make sales abroad, not to bludgeon people through threats of tariffs. That’s not the way you win friends, and it’s also not the way you retain customers,” he said.
But Lawrence noted that Trump’s delays in implementing “reciprocal” tariffs initially announced on April 2 likely make them more palatable for the American public and less stinging on their budgets.
“By dragging out the process, it’s kind of like the famous boiling of the frog who doesn’t quite notice it. [If the] net effect of these tariffs would be to raise the consumer price index by one percentage point or even two, that would be a huge increase, right? But if I told you it was take place over a couple of years, it is going to work out to half a point, or less a fraction each month. Are you going to notice it itself?” he said.
“From the standpoint of, ‘How do you want to distribute the shocks?’ I think… whether it’s negotiating strategy or it’s dithering or it’s intuition, it actually serves to cushion the blow.”
