You Get A Deal And YOU Get A Deal And YOU Get A Deal

By Maartie Wiiffelaars, Senior Economist At Rabobank

You get a deal and YOU get a deal and YOU get a deal. Trump seems to be making deals these days as Oprah once gave away cars. The UK, China, Qatar, Saudi Arabia, and the United Arab Emirates have all signed some kind of deal with the US in a week’s time – while Syria may be granted sanctions relief and Iran basically has to choose between a nuclear deal or stricter enforced sanctions on its oil exports. 

Yet mutual benefit is not obvious in all of the above cases, and in any case skewed. The 10% universal tariff is still in place, with Chinese goods still being subject to a 20% to 30% import tariff hike – with the risk of much higher rates in 90 days if a conclusive deal cannot be reached in the meantime. Meanwhile, it has been rather silent recently on the front of Japan and Korean talks, while talks with India are still ongoing, and talks with South-East Asian countries and the EU off to a slow start. Although Scott Bessent recently said that talks with Japan had been “very productive”, conversations with Indonesia “very forthcoming” and the proposal from Taiwan to be “very good”. 

So, essentially, half-way the 90-day reciprocal tariff pause, lots and lots of work still needs to be done to prevent the reciprocal rate increasing back again from 10% to 20% for the EU, to 26% for India, to 46% for Vietnam – China’s regional gateway to the US – and, perhaps, 54% for China itself. That is absent an extension of the pause of course. 

With respect to US-India talks, India has so far lowered import tariffs on US Bourbon and motorcycles, among other things and Trump claimed India had “offered us a deal where basically they are willing to literally charge us no tariff”. To which India’s foreign minister replied by saying “nothing is decided till everything is” and that the deal would have to be mutually beneficial. One of the stumbling blocks highlighted in yesterday’s news was the US requests for India to open up its market for US ethanol – as the UK did. It will be difficult for India to accommodate, however, given its ambitions to reduce dependence on foreign energy and stimulate domestic ethanol production which would benefit domestic farmers – with farmers clearly being hurt if if doors for US ethanol and other agriculture products would open. Meanwhile, Trump made clear the US doesn’t want India to replace China as the hub for large-scale manufacturing production, telling iPhone’s Tim Cook to invest in US iPhone manufacturing rather than in India. 

So, while India will be very happy to work with the US to counter China – although China’s export curbs on equipment necessary to produce anything from electronics to electric vehicles shows how difficult it actually is to cut out China –, this doesn’t ensure easy dealmaking. 

Over to South-East Asia, where countries like Vietnam, Thailand and Indonesia are trying to discuss a deal at the APEC meeting in South Korea this week, where the US trade representative Greer is present and which concludes today. Apart from tariff reductions on US goods, the main issue will be the countries’ gateway for Chinese stuff to be re-exported through the countries to the US. There are multiple ways through which the region is supporting such flows. One is by means of ‘rules-of-origin washing’ at its ports, basically relabelling Chinese manufacturing without adding value. This is illegal, and hardly beneficial to any of the countries involved – though hard to track. Yet another route is through importing Chinese inputs and parts to be used in manufacturing, which is profitably and very difficult if not impossible to eliminate at all. 

Recent port data show that imports into the region surged over the past two months, as did exports out of it from some ports in the region, providing Trump with ammunition. As we underscored before, for these countries to secure a deal or not, it will come down very much to how tough the Trump administration’s stance will be.. Vietnam’s Prime Minister stressed this week that the US top priority is countering illegal transshipment, which bodes some hope for an agreement down the line. Although officials have expressed doubt to Tyler Durden Fri, 05/16/2025 – 10:30

READ MORE