Why the American-Real Commercial Agreement may not be as good as it sounds

President Trump praised his new Commerce pact with the United Kingdom As a “maximum agreement” that will serve as a template for agreements with other nations. But some experts are having a more dim vision, noting that the United Kingdom agreement suggests that high tariffs will remain in force in the long term.

Although the agreement with Great Britain offers some concessions, a 10% rate remains in place in the imports of the United Kingdom. Trump announced that baseline tax, which serves more widely as a minimum import tax in other nations, as part of his announcement of the “Liberation Day” of April 2.

White House spokeswoman Karoline Leavitt said Friday that the president is “committed to the 10%reference rate, not only for the United Kingdom, but also for their commercial negotiations with all other countries.”

While a 10% tariff rate is lower than some import rights than Mr. Trump imposed Other nations last monthranging from a maximum of 145% for China to 11% for the Democratic Republic of the Congo, it is still much higher than the effective rate of 3% before the second Trump administration, according to the economic policy research center, a group of non -partisan policy experts.

Reducing Radical Tariffs of Mr. Trump to 10% could offer some relief to US companies and consumers who face higher costs. But it still represents a great wind against the importers, who pay the tariffs of the goods and then transmit all or most cost for consumers, economists say.

“Even with a slow launch of trade agreements in the coming months, it will still have an effective average tariff rate that will be in the range of two digits,” said EY chief economist Gregory Daco, to News Moneywatch. “What that means for companies is that they will simply pay more for the same goods that have been importing, and they will increase prices to customers who have much less capacity to resist continuous price increases.”

That, in turn, could cause Americans to press their wallets, a serious risk since consumer spending represents approximately 70 cents of every $ 1 in economic activity. Companies that are emphasized by tariffs could delay hiring, which leads to a decline in household income growth, Daco said.

“Modest improvement”

The agreement with Great Britain is “a modest improvement on what we had yesterday, but, with most American tariffs even in place and the newly limited liberalization of the United Kingdom, it is still worse than the status quo previously Trump,” said Scott Lincicome, vice president of the Cato Institute, in an email.

Economic bets for commercial conversations in the United States are high, and economists raise the possibilities of a recession Due to the consequences of Trump’s commercial war. The stock market fell and The Treasury prices of the United States slide In the days immediately after the announcement of the rate of April 2, underlining the concerns of investors that a commercial war could torpedo economic growth.

Closed actions modestly higher Thursday after Mr. Trump announced the new Commercial Agreement With the United Kingdom

Although Wall Street has been largely recovered since the growing optimism of investors that the Trump administration will soon reach the new commercial agreements, many Americans are souring into Trump’s policies. In Recent News themezone survey53% of respondents said they believe that the United States economy is getting worse, while only 41% approved Trump administration tariffs.

Although the United States tries to negotiate additional trade agreements, companies continue to face significant risks, economists point out. These are derived from the ongoing uncertainty about the final level and the duration of tariffs, which makes it difficult for companies that depend on trade, make plans in spending, hiring and their supply chains.

“Even if this rate is lower, this fundamental anxiety related to uncertainty and unpredictability” remains, “said Han-Koo Yeo, the main member of the Peterson Institute for the international economy.” If this is not resolved or addressed, then I think it will be difficult for consumers, investors and businesses to recover completely. “

Even so, some experts point out that the efforts of the Trump administration to reach new trade agreements could provide some relief to investors and companies, as long as there is growing clarity about where tariff policies could resolve.

“Now, at least the wheels are in motion in relation to discussions with a variety of countries, with the agreement between the United States and the United Kingdom as perhaps indicative of the fact that there could be rates and de -lasks related to trade, even without a completely exaggerated trade agreement,” said Mark Luschini, Protege Head of Investment of Janney Capital Management.

The Secretary of Commerce Howard Lutnick told News Business on Thursday that the Trump administration “focuses on large countries”, although he added that negotiations could be dragged.

“The president does not want to go fast,” Lutnick said. “He wants to make the kind of treatment we made today, where we said: ‘Look, this is just a victory for the United States’, and we discover how to make a victory for them.”

Key meeting with China

The United Kingdom is a fairly modest commercial partner for the United States, which represents around $ 65 billion in annual imports, or less than a tenth of China’s annual imports.

The Secretary of the Treasury, Scott Besent, and the commercial representative of the United States, Jamieson Greer, are scheduled to meet with Chinese negotiators this weekend in Switzerland, and Trump said he is open to reduce tariffs on the goods of the nation from his current level of 145%.

“80% of the Chinese rate seems correct!” The President wrote Friday morning.

But that might not be enough to cushion the United States against the highest rates, according to experts.

“Even if we had to see a continuation of the universal rate of 10% applied and a reversal of higher levels, or in the case of China, 145%, we are still talking about a rate of rates that is the highest since World War II,” Luschini said. “And so it will have an impact in some way.”

In:
• Duty