Media

Key Takeaways

• U.S. trade negotiations appear far from complete after the August 1 deadline: The Trump administration has announced trade deals with the UK, Vietnam, Indonesia, Japan, the Philippines, the EU, South Korea and Pakistan. Additionally, U.S. President Donald Trump unveiled an executive order on July 31 imposing reciprocal tariffs of 10-40 percent on around 60 other countries. Active negotiations are continuing with several economies including Bangladesh, Brunei, Cambodia, Canada, Laos, Malaysia, Myanmar, New Zealand, Taiwan, and Thailand—with a new implicit deadline of August 7.
• China remains on a separate negotiation track: Following three rounds of high-level negotiations, Washington and Beijing have signaled—but not yet confirmed—their intent to extend the August 12 trade negotiation deadline and continue to work toward deliverables for a possible leaders’ meeting in China this fall. The temporary détente has resulted in the easing of U.S. export controls and a rollback of Chinese licensing restrictions on rare earth shipments.
• Indo-Pacific markets are adapting to a new normal: Indo-Pacific countries have shown great resilience amid shifting U.S. tariff demands, quickly adapting to new baselines and recalibrating their negotiating strategies. Several U.S. trade partners—including Indonesia, Japan, the Philippines, and the EU—made major concessions, such as procurement commitments, large investment pledges, and sizable reductions of tariffs and non-tariff barriers (NTBs), sparking concern from domestic audiences. In return, some secured favorable outcomes on key issues like sectoral tariff reductions.
• Negotiated outcomes will have a marginal impact on U.S. regional trade: Each trade deal is highly individualized, with many non-trade issues introduced into the frameworks. The resulting uncertainties have yielded generally negative effects on U.S. relationships with allies and partners, but it will take time to assess the lasting impact. Overall, however, the general shape of U.S. trade relationships in the region may not change significantly given the high tariff rates now set across-the-board on almost all partners, with tariff rates on the largest economies falling mostly within the 15-20 percent range.