Countries scramble to reach deal before Trump’s deadline

WASHINGTON

A week before U.S. President Donald Trump reimposes steep tariffs on dozens of economies, including the EU and Japan, many are still scrambling to reach a deal that would protect them from the worst.

The tariffs taking effect July 9 are part of a package Trump imposed in April citing a lack of "reciprocity" in trading ties.

He slapped a 10 percent levy on most partners, with higher customized rates to kick in later in countries the United States has major trade deficits with.

But these were halted until July to allow room for negotiations.

Analysts expect countries will encounter one of three outcomes: They could reach a framework for an agreement; receive an extended pause on higher tariffs; or see levies surge.

"There will be a group of deals that we will land before July 9," said Treasury Secretary Scott Bessent last week on CNBC.

Policymakers have not named countries in this group, although Bessent maintains that Washington has been focused on striking deals with about 18 key partners.

"Vietnam, India and Taiwan remain promising candidates for a deal," Asia Society Policy Institute (ASPI) vice president Wendy Cutler told AFP.

Josh Lipsky, international economics chair at the Atlantic Council, cited Indian negotiators' extension of their U.S. trip recently in noting that it "seems like a frontrunner."

"Japan was in that category, but things have set back a little," Lipsky said, referring to Trump's criticism on June 30 over what the president called Japan's reluctance to accept U.S. rice exports.

The deals, however, will unlikely be full-fledged trade pacts, analysts said, citing complexities in negotiating such agreements.

Since April, Washington has only announced a pact with Britain and a deal to temporarily lower tit-for-tat duties with China.

Bessent has also said that countries "negotiating in good faith" can have their tariffs remain at the 10 percent baseline.

But extensions of the pause on higher rates would depend on Trump, he added.

Lipsky expects many countries to fall into this bucket, receiving an extended halt on higher tariffs that could last until Labor Day, which falls on Sept. 1.

Bessent earlier said that Washington could wrap up its agenda for trade deals by Labor Day, a signal that more agreements could be concluded but with talks likely to extend past July.

For countries that the United States finds "recalcitrant," however, tariffs could spring back to the higher levels Trump previously announced, Bessent has warned.

These range from 11 percent to 50 percent.

Lipsky believes the European Union is at risk of having tariffs snap back to steeper levels too, to the 20 percent unveiled in April or the 50 percent Trump more recently threatened.

An area of tension could be Europe's approach to digital regulation.

This week, EU trade chief Maros Sefcovic is in Washington in a push to seal a trade deal, with the EU commission having received early drafts of proposals that officials are working on.