U.S. trade negotiations are easier said than done, and the delay in tariffs further solidifies the "TACO" predicament

On April 2nd, "Liberation Day," Trump enthusiastically stated that after decades of "plundering" suffered by American workers and businesses, trade would finally begin to tilt in favor of the United States. For this president, unrestricted tariffs would soon transform America into a "completely different country." He elaborated on what he called a "reciprocal" policy with trade partners, saying, "That means they do it to us first, and then we do it to them. It's that simple, nothing more to it." Three months later, the situation regarding this shift indicates that the implementation process is proving to be more difficult and slower than originally advertised. As the effective date for tariffs approaches on Wednesday, and with only a few agreements (or merely rough frameworks of these agreements) ready to be announced, the Trump administration has effectively acknowledged that its self-imposed deadlines are overly optimistic for completely dismantling and rebuilding the existing structure of the U.S.-led global trading system. The move to delay the effective date of tariffs this week is partly aimed at prompting those economies that Trump believes are still willing to cooperate to provide "final offers." Kelly Ann Shaw, a partner at Akin Gump and former senior trade advisor to the Trump administration, stated, "This is clearly the final wrap-up." But this also reflects a more practical reality: the U.S. negotiating team seems overwhelmed and unable to secure the trade concessions during the 90-day tariff suspension period as Trump had hoped. On Tuesday, stock markets in Asia and Europe were relatively stable, as Trump appeared willing to continue negotiations during the new extension period. U.S. stock index futures rose, as the panic caused by Trump's intense tariff warnings eased, replaced by optimistic expectations regarding the current negotiation trajectory. According to informed sources, negotiations with India, the European Union, and others were nearing completion earlier this week, but any significant breakthrough results are difficult to announce before Wednesday. Shaw stated, "The final outcome of any trade negotiation will be complex, and this negotiation is no exception, as the U.S. government is negotiating with countries around the world. I believe these tariffs will decrease as more agreements are completed." He still expects an agreement to be reached within the next three weeks. Many of Trump's trade advisors believe that the 90-day deadline is too arbitrary and unrealistic. The U.S. stock market's plunge and the actions taken by most members of his economic team convinced Trump that temporarily halting trade would force countries to sit at the negotiating table. This month, Trump was once again persuaded to give ongoing trade negotiations more time to ensure a smooth completion. On Monday, he refused to acknowledge that the new deadline was non-negotiable Trump is Not 100% Resolute When asked whether his August 1 deadline meant that countries would be unable to avoid higher tariffs, Trump stated, "I would say the attitude is resolute, but not 100% resolute. If they call and express a willingness to handle it differently, we would be willing to consider it." For the White House, the risk is that any retreat or delay will undermine Trump's image as someone who acts quickly and decisively. Trump has repeatedly claimed with confidence that he is imposing tariffs on countries such as Mexico, Canada, China, and the European Union (which he later temporarily suspended or reduced). He has also publicly expressed dissatisfaction with Wall Street's questioning of his courage on the "TACO" trade issue—"TACO" stands for "Trump Always Chickens Out." However, for those countries impacted by his tariff policies, some nations, including the UK, have chosen to accept a degree of certainty brought by partial agreements, as this certainty is preferable to the uncertainty of no agreement at all. So far, these countries have not retaliated against the U.S. Tariffs May Force U.S. Companies to Raise Prices on Imported Goods Meanwhile, the push and pull of this policy have led U.S. importers to worry about the heavy burden it may place on households. Matt Priest, president and CEO of the American Apparel and Footwear Association, stated, "While things may ease in the short term, tariffs will remain high in the coming weeks, which will lead to increased prices for our consumers. It is essential for us to fully understand this situation before making procurement decisions that are critical to our business." The likelihood of more policy adjustments is increasing, and the risks are becoming more severe. White House Press Secretary Karoline Leavitt attempted to defend the tariff letter policy on Monday, stating that countries should not view the additional time as a sign of a lack of resolve to implement these tariffs. U.S. government officials insist that the effective date for the new tax rates will be August 1, but to achieve this, the Customs and Border Protection agency needs to reprogram its computer systems accordingly—and this needs to be done a week or more in advance. Trump also faces a mid-August deadline for negotiations with China, at which point tariffs on Chinese goods could be raised again to 145%. The framework praised by Trump's trade representative Jamieson Greer, which was favorable to the U.S., quickly turned into a frustrating situation, as China has favorable countermeasures, such as rare earth supplies. Derek Scissors, a China expert at the American Enterprise Institute, stated, "This process will continue because Trump likes it this way. He enjoys showing off, likes to get attention, and he will achieve enough victories against smaller opponents to make it all seem worthwhile. But this approach does not work with China. 'We can temporarily set aside trade issues and make more small deals with smaller countries that will be nice to the U.S. to avoid trouble, but China will not do that." ’”