Trump wins another big trade deal after securing a large investment promise, but China is less willing to save the cave, analysts say
Now that trade deals have been concluded with the European Union and Japan, the US is looking to focus on China in preparation for high-stakes talks, with the world’s two biggest economies.
Negotiations between Treasury Secretary Scott Bescent and China’s Deputy Prime Minister are scheduled to begin in Stockholm on Monday.
That said, a trade ceasefire between the two sides is scheduled to end on August 12th, but reportedly Deadline will be extended by 90 days.
The US can trade with Japan, and the EU can provide China with a blueprint. The EU invests According to Trump, he has bought $600 billion in the US and $700 billion in the US, and “a huge amount of weapons” in the US.
It’ll come in a week Same agreement as in Japanhas vowed to invest $550 billion in major US industrial sectors. Both the EU and Japan face 15% tariffs on most of their exports to the US
Bescent highlighted the $550 billion pledge as the main reason the US and Japan can settle for collections below the 25% rate Trump previously threatened.
“They were willing to offer this innovative fundraising mechanism, so they got a 15% rate,” he said. Bloomberg TV When asked on Wednesday if other countries could get similar rates.
Similarly, Trump pointed to Japanese deals, suggesting that the EU would need to “buy back” the 30% threatened tariff rate.
But discussions with Beijing may be even more severe.
“When Japan broke down and traded, the EU had very few options,” Jamie Cox, managing partner at Harris Financial Group, said in a note on Sunday. “The biggest piece of trade contract puzzles is still there, and it’s unlikely that the Chinese will be happy to fold.”
Without a permanent agreement between the US and China, tariffs could have returned to prohibitively high levels by effectively blocking trade. In April, Trump set China’s tariffs at 145%, urging Beijing to retaliate with a 125% collection.
Meanwhile, the US has reached deals elsewhere in Asia, with the Philippines and Indonesia facing 19% tariffs, while Vietnam is owing to 20% obligations. It appears Trump is trying to discourage the transportation of Chinese goods through other countries in the region.
The US investment pledge comes as a court hearing scheduled on Thursday on whether the president has the authority to impose broad obligations under international emergency economic forces as Trump’s tariffs face legal challenges.
On Sunday, European Commission President Ursula von der Leyen confirmed that the EU’s US energy purchases of $750 billion will be made over the next three years. This means that it will happen while Trump is in office.
However, US tariffs could be void before the money is spent, and Wall Street is skeptical that Japan will fully offer a target that is not a binding commitment.
Analyst Piper Sandler I concluded that Trump’s tariffs are illegal And it should be noted that the $550 billion Japanese investment includes very little specific details.
“Our trading partners and major multinational companies know that Trump’s tariffs are on a legal basis for volatile,” they write. “Therefore, it’s hard to believe that many of them will make a massive investment in the US that was not made in response to tariffs that may not otherwise last.”