Trade agreements: victories for Donald Trump, uncertainty for the American economy

Are we finally witnessing the epilogue of the customs duties saga? Nevertheless, After months to breathe hot and cold, and push the deadlines, Donald Trump finally concludes deals.

Established on April 2, customs duties had been suspended a week later for 90 days, then the July deadline was again postponed. Moreover, This time, the deadline of 1^is August could allow you to see more clearly.

Diplomatic victories

Indeed, agreements were trade agreements: victories donald trump, signed this month with Vietnam, Indonesia and the Philippines. Meanwhile, Above all, a compromise was found with two major partners: Japan and the European Union.

Each time, the observation is a bit the same. In addition, The United States gets much more than they concede. They increase customs duties, while lowering (or even eliminating) those on American products. And with the bonus of commitments from the countries concerned to invest in the United States and/or to buy. American products.

The conclusion is that the American market is vital and that no country can afford to lose access to it. It was a bit of Donald Trump’s bet. This is why he played the balance of power and this approach was paid from his point of view.

If so many concessions are granted to Americans, it is also because, behind these agreements, it is not just trade. For the Japanese. as trade agreements: victories donald trump, for Europeans, the United States is also an ally which one cannot do without to ensure its defense. All the subjects being linked with Donald Trump, everyone also has the need to secure American military support.

What consequences for the American economy?

The assessment that is made of this sequence (at least what the media hold it) is that the United. States obtained what they wanted. It is a diplomatic victory for Donald Trump, who folds his counterparts. All the comments of the last days are focused only on this aspect.

This is certainly a fairly objective observation. but it is not the only subject, and perhaps not the heart of the problem either. Because the real question is not so much to know who extorted what to whom. but what will be the economic impacts of this new pricing environment, and first of all on the American economy.

Taking trade agreements: victories donald trump, into account the customs duties imposed on each country. to which are added the sectoral part (automotive, steel, aluminum), the average customs level should be between 15 and 20%. According to the last estimate of the University of Yale, we are currently at 17.3%, a level more seen since the 1930s.

It will therefore be necessary to monitor the impacts on the American economy, both on growth and inflation. Knowing that customs barriers are generally a stagflationist shock (less growth, more inflation).

These impacts will themselves depend on the distribution of customs duties between consumers, American importers and exporters. Without forgetting the change. because the increase in the currency can help to partially absorb the additional cost of tariffs (or accentuate it if the motto depreciates).

This week. a whole series of data will be published (employment, inflation and growth) and could provide us with the first answers. But trade agreements: victories donald trump, it is likely that the full impact will only be felt in the coming months. as stocks must be renewed and that companies will pass up the price increases.