More trade deals are coming, Donald Trump bellowed as he announced one with the UK, something he called “historic” before imploring people to buy the stock market or in his words, “you better go out and buy stock . . . This country will be like a rocket ship that goes straight up.”
The stock market seemed to agree, rising more than 500 points on the news that we might avoid tariff induced inflation or an economic slowdown.
But buying the stock market now with a difficult China trades deal looming plus the EU? Maybe, though consider the following:
More trade deals will be announced probably as early as next week with India and Japan. India would have emerged first if it weren’t for its government being distracted with a possible war with Pakistan, my sources with contacts in the White House say. Australia and South Korea could follow.
More good news. We may even get a surprise or two that should boost confidence that Trump learned from the near implosion of the markets that followed “liberation day” and caused him to “pause” his sledgehammer approach to trade and instead cut deals using the deft hand of Treasury Secretary Scott Bessent rather than the blunt of instrument of Howard Lutnick or Peter Navarro.
Here’s my worry: Those deals are small potatoes. So is the UK, with an economy valued at a little less than $4 trillion.
For comparison, the US has a GDP of more than $30 trillion, while China is hovering at $20 trillion, the EU (European countries outside of the UK) at $20 trillion.
We still don’t have deals with two trading partners with economies that, when combined, dwarf the size of the US.
Another worry: There seems to be something contrived about the UK framework. My sources say Team Trump pushed for the deal when it became clear that India was taking longer than expected. The framework, such as it is, was light on details.
The US runs a trade surplus with the UK, it’s a friend, yet the baseline 10% tariff remains. The deal cuts UK car tariffs to 10% from 25%, but how many working-class folks do you know who drive a Rolls, a Jaguar, or a Bentley?
Plus, the UK isn’t China — not even close. China with its massive consumer market and ability to provide US consumers with cheap stuff and it’s the big kahuna in Trump’s trade gable. Get it right with China, and the US economy could flourish.
Get it wrong and prepare for inflation — possibly a recession.
Bessent is preparing to fly to Geneva to meet with Chinese economic leaders to try and get it right in what many think will be a grueling series of trade negotiations. Trump certainly appreciates what is at stake.
The administration is already looking to exempt baby items — car seats and strollers — that use parts made in China because the last thing Trump needs is to stoke inflation on working families, something that followed Joe Biden and Kamala Harris right through the election.
Trump has already said is initial 145% tariff on Chinese good will be a lot less; The Post is now reporting it might be brought down to 50% to get a deal.
Full disclosure: I am not a fan of betting against Donald Trump because I learned from experience. Most thought he wouldn’t return from the political near dead after January 6, lawfare would put him in jail or at the very least slow him down. Sorry not even a bullet grazing his head could do that.
But Thursday’s UK deal is the beginning of something, not the end. The real challenge remains.
