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Back in April, President Trump gave trading partners 90 days to strike trade deals, or face the reimposition of his so-called reciprocal tariffs. July 9 (last Wednesday) was D-Day.
The deadline came and went. Trump kicked the can down the road, giving trading partners until August 1 to strike a deal, or face levies once more. And this time, he really means it.
What has this whomp-whomp trade deadline actually taught us about the way Trump negotiates?
Dmitry Grozoubinski joins MainFT’s senior trade writer, Alan Beattie, on this week’s The Economics Show podcast. Dmitry is a former Australia trade negotiator and founder of the consultancy ExplainTrade.
He’s also the author of Why Politicians Lie About Trade — which, as Alan points out, feels quite apt at the minute.
Trump’s trade strategy isn’t just unusual, says Grozoubinski; it also seems to be pretty ineffective. Some of the glitches, such as when Trump sent a tariff-threatening letter to the King of Thailand, can be blamed on what Alan calls “bumbling ineptitude”.
Other flaws are more fundamental:
If a deadline isn’t a deadline, it sort of loses its power. Or as Dmitry says, “if you threaten to shoot a hostage and then you keep pushing the deadline back … it’s not entirely clear you’re going to do it.”
The US isn’t giving its trading partners the chance to paint negotiations as a victory back home. Dmitry again: “every outcome or every step of progress is immediately heralded to the press as a triumph over a weak adversary.” That makes it “much more difficult for the people that they need to do favours for them to do those favours.”
It isn’t entirely clear what the Trump administration actually wants from its tariff threats. Does the President want to bring business back home? Does he feel the US is getting ripped off? Or, as Dmitry suggests, does he simply want to show that he’s the world’s “apex predator”?
The podcast’s free to access and there’s a full interview transcript. Your thoughts are welcomed in the FTAV comment box.
