Preliminary Deals with UK and China Spark Hopes, but Trump Rekindles Tariff Fears
Preliminary agreements with the United Kingdom and China sparked enthusiasm on Wall Street and among business leaders, raising hopes that the U.S. might begin to roll back the highest tariffs imposed in nearly a century.
Tariff Threats Against EU and Tech Giants Shake Markets
On Friday, Trump reversed the mood by threatening a 50% tariff on the European Union and a 25% levy on smartphones. He directly targeted Apple and Samsung, demanding they move production to U.S. soil. Global markets tumbled, the dollar fell to its lowest level since 2023, and trade uncertainty returned.
White House Reaffirms Unilateral Strategy and Pressure Tactics
From the Oval Office, Trump rejected the idea of seeking compromise: “It’s time to play the game the way I know how,” he said. The statement came just days after a legislative victory in the House of Representatives, where his sweeping fiscal package was passed after intense Republican lobbying.
Trump gains momentum in the House with his ambitious tax plan
President Donald Trump secured a narrow legislative win on Thursday as the House of Representatives passed his flagship tax bill with a 215 to 214 vote.
EU Prepares Countermeasures Amid Threats of Auto Tariffs
Faced with Trump’s threat of a 25% tariff on cars and components, the European Union is preparing countermeasures worth €95 billion ($107 billion). While a 90-day pause on some retaliatory tariffs is in effect, Brussels is advancing plans to protect critical exports should talks collapse.
Washington Imposes Unilateral Terms for Future Deals
Treasury Secretary Scott Bessent stated that several trade agreements are nearing completion, although negotiations with the EU remain challenging. Commerce Secretary Howard Lutnick warned that most nations will face at least a 10% tariff unless they offer compelling trade proposals. Officials emphasize the need for balanced terms, pushing partners to meet stricter conditions before securing favorable access to U.S. markets. These statements reinforce a firm U.S. stance, signaling pressure on allies to adjust or risk steeper economic consequences.
Economic Outlook: Higher Tariffs, Limited Domestic Gains
Although the U.S. paused some aggressive tariffs in April, a 10% charge still burdens most international trade partners today. Targeted levies on steel, aluminum, automobiles, copper, semiconductors, and pharmaceuticals continue to strain specific industries and trading relationships. Goldman Sachs forecasts a 13-percentage-point rise in the effective tariff rate this year, driven by expanding protectionist measures. Despite the higher costs, analysts expect minimal gains in domestic production, questioning the long-term economic value of these policies.
Global Outlook: Persistent Risks and Eroding Trust
The U.S. holds ongoing trade talks with India, Japan, Vietnam, and Israel, but uncertainty clouds every negotiation and expectation. Marcus Noland from the Peterson Institute noted that tariffs affect countries like Korea and Australia despite existing free trade agreements. He emphasized that Trump’s actions toward international deals damage America’s credibility and weaken its global economic partnerships. This approach risks long-term consequences by alienating allies and reducing faith in U.S. commitment to international trade frameworks.
