Will Trump stand firm on his tariff deadlines?

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0:30Anthony Zurcher:allies since the 1950s. But this week, Trump announced that the US will substantially reduce joint military exercises with South Korea. He cited his very good relationship with North Korea's Kim Jong-un. For more, check out the global story on BBC.com or wherever you get your podcasts. Hello, AmeriCasters. I've got a question for you. What do you really think about AmeriCast? The team at the worldwide headquarters are doing some research to find out what you like and indeed what you don't like. So if you want to help shape the future of the podcast, you can answer some questions. The link is in the description.

1:07Anthony Zurcher:And if you want to type it into your browser, you can do that as well. It's bit.ly, that is bit.ly, and then forward slash AmeriCastFeedback, all one word. bit.ly forward slash AmeriCastFeedback, all one word. But now, though, time for another episode.

1:28All right.

1:29Anthony Zurcher:Today's episode is all about deadlines. Donald Trump loves them. Journalists hate them. Oh, how he hates them. Sarah, I've got a deadline for you. You've got 30 seconds to explain what today's podcast is really about. I got my phone here and ready, set, go. OK, we're going to be talking about tariffs and trade deals because coming up on Friday is the deadline for most countries to have reached a trade deal or to be subjected to quite high import tariffs. The 12th of August is another coming deadline. And that's the end of the 90 day truce between the US and China on trade. We're also going to be talking about the European and American trade deal.

2:12who came out on top of that, and asking, have we all changed our minds on whether tariffs are a good or a bad thing for the economy? How did I do?

2:19Anthony Zurcher:31 seconds. All right, so you're pretty close to your deadline there. I think, like a good journalist, we know when we can budget a little bit. Welcome to AmeriCast. AmeriCast. AmeriCast from BBC News. You're gambling with the lives of millions of people. You're gambling with World War III. President Trump's message is very simple. we are done being taken advantage of. Mr. President, in the name of our God, have mercy upon the people who are scared now. Are you supportive of these onesies? I'm supportive of vaccines. What is happening? Like, this is not America. This is a terrible nightmare. This is what victory feels like.

3:00Yeah!

3:10Hello, it's Sarah here, and I'm actually in Edinburgh, Edinburgh, Scotland.

3:15Anthony Zurcher:Back on your home turf. It's Anthony, still here in Washington, D.C. And we have with us Erin Delmore, who is one of the BBC's business correspondents in New York, who's going to help us understand all these tariffs and trade deals. Welcome to AmeriCast, Erin. Thank you so much. Glad to be here. And I'm also on my home turf. Before we get on with all of the tariffs we have to talk about, it's a beautiful sunny day here in Edinburgh, which you can rarely say, but it's not too hot. It never is. What's it like in New York? You've got a heat wave, yeah? Oh, it's terrible. It's so humid. And I love some sunshine.

3:51You know, I used to joke that hot parked car was my favorite temperature, but this is becoming oppressive.

3:57Anthony Zurcher:Yeah, you know, try a turn in Texas, Aaron, and then you'll know what hot is. But it has been hot here in D.C. too. And when I was down in South Carolina this last weekend, I think the heat index with the humidity was around 115 degrees. So, yeah, it's not pleasant. It is not pleasant on the East Coast. You're lucky, Sarah, to be in cooler climes. It is about three o 'clock in the afternoon on Wednesday, the 30th of July. So it's about 10 o 'clock in the morning for Anthony and Erin. I'm giving you that time check just in case things change, because we're all about dates and deadlines on this episode.

4:33We're talking about the global tariffs that Donald Trump says will come into force on Friday, the 1st of August. And then we've got different dates for the EU, for China, all sorts of moving targets when it comes to who's going to have to pay what. Let's start with what's going to happen first. and that is every country that has not done some kind of separate trade deal with the United States will be subject to an as yet unnamed level of tariff for all of their goods that are being imported into the United States. Anthony, you probably heard him teasing us about this from one of the press conferences he did from Turnberry's golf course in Scotland where he said it might be 15%, it might be 20%, it'll be something like that, I'm not going to tell you the number now.

5:19Do we have a better idea yet of what's going to happen to any nation that hasn't signed a trade deal?

5:24Anthony Zurcher:Well, we just got breaking news recently here this morning, and that is India has had its tariff level set. And that is at 25 percent, which is higher than some of the other recent announcements, including the EU and Japan and others. So I think we're going to see probably see in the next couple of days. And Aaron, correct me if I'm wrong. We're going to see a kind of a dribble out maybe of some of these countries that haven't been able to strike a deal. than Trump unilaterally announcing what the tariffs are going to be. But he gave us a ballpark. I don't think he's firmed it up in general. You know, there are so many different countries, and it's going to be difficult for him to get through all of them unless he just comes out with one big announcement, I guess, for everyone left at the end.

6:08Yeah, you know, on the one hand, it's a bit of a heavy negotiating tactic by President Trump to be able to come out and tell countries what their tariff rates are going to be come Friday, August 1st. That's the deadline that was set when this 90-day pause went into effect. after April, after those Liberation Day reciprocal tariffs. But at the same time, the administration promised 90 deals in 90 days. We don't have that yet. And they are keen to be making deals here. And I think the closest clue we have as to what could happen comes from Treasury Secretary Scott Besant. And he said that on August 1st, excuse me, for the countries that haven't reached a deal yet, tariff rates would pop back up, perhaps near where they were set by President Trump in April.

6:48But he also said he didn't think it was much of a concern. He said, okay if tariff rates are a bit higher than usual for days or weeks, maybe a small number of months. It's okay as long as countries are continuing to talk to the U.S., continuing to negotiate in good faith. So that's a little bit of a soft landing, I think, for the U.S. to say that as long as negotiations are ongoing, there could be some relief in sight for these countries, a real kind of softening of the position there. So when I was speaking to Davina Gupta, she's one of our India correspondents about the deal that Anthony just mentioned, she was telling me that a lot of business leaders are meeting this as, you know, characterizing it as being a bit of bluster from President Trump, because they haven't seen him land where he says he intends to land on a lot of these tariff rates.

7:32And that was the word she used, some blustering. And it really makes you think about how reactions will be met if the administration imposes a higher tariff rate, but then says, well, don't worry, we'll keep the talks going. Yeah, because that's what the American market say, isn't it? That Trump always chickens out and never actually imposes the higher tariff rates that he's been threatening. But I think, is it not the case that a lot of countries could legitimately complain that they have been trying to negotiate a trade deal with the United States to avoid higher tariffs? And that, frankly, people are just not picking up the phone, that it is far too much for the administration to be able to try to negotiate 90 deals all at the same time.

8:06It's not possible. And therefore, there's quite a long queue of people who want to talk about some kind of mutually beneficial trade deal. And they just haven't had a hearing yet. It's part of why a lot of these deals aren't really trade deals so much as they're trade frameworks or preliminary agreements. Trade deals take years to negotiate. This is not something that you pick up the phone, have a two-hour conversation, regroup in a couple of days, and lock something in. They take years with tons of negotiators on both sides. And that's why what we've seen so far from countries like Japan, from countries, you know, the EU is a good example.

8:39These are frameworks. You know, the administration, I think, wants to see this set. But look at what's been happening in U.S. markets at the same time. Back in April, we were reporting that markets don't like uncertainty. That's a real truism of covering business everywhere, frankly, especially in the U.S. these days. We saw the stock markets tank after President Trump announced his April 2nd Liberation Day tariffs, and then we saw them recover. And then we saw markets notch record after record after record, showing that investors here really aren't worried about the uncertainty. They're not really put off by these threats of higher tariffs on imports into the U.S.

9:14that President Trump is threatened. Markets here are doing OK. And so I think that takes a little wind out of the sails for the Trump administration to want to lock in all of these deals so rapidly.

9:23Anthony Zurcher:Yeah, I'm just pulling up a stock ticker right now and the markets are doing just fine. Do you think that's a reflection of the fact that that they don't believe this, that this is another taco being served up on on August 1st? Or do you think at some point when these things start taking a bite and the economy starts struggling maybe and prices start going up, that is when finally you're going to see more of a stock market swoon like we did back in April. Yeah, it's the big question. And I can give you some of my thoughts that guide how I see it, right? We have some preliminary data out just this morning about second quarter GDP, which was really strong.

10:00But there's an argument here that it's buoyed by what we call front loading. And that's U.S. importers bringing goods into the U.S. to try to get ahead of tariffs, to try to get those imported before some of the bigger tariffs take effect and they have to pay more to import those goods. Again, a reminder, tariffs are a tax on imports. They're paid by the importer. So a tariff on goods coming into the U.S., exported by other countries, are paid by importers in the U.S. And they will, economists say, very nearly always pass those costs on to consumers in the form of higher prices. We've all been listening to economists predicting, and you probably more than the rest of us, predicting for months that this was going to introduce inflation into the United States.

10:40It would put prices up because, as you say, importers have to pay these tariffs. The idea is that they would pass at least some, if not all of it, onto the consumer, and that would be inflationary. That hasn't happened yet. I mean, I haven't noticed it going to the shops in America, that prices have gone up. Indexes don't show us that it's gone up. Is it possible that actually, you know, these tariffs will be less harmful than traditional economists, Warren, and to a certain extent, Donald Trump is right about this? Well, we should look at what Donald Trump is aiming to do with these tariffs as a whole.

11:12The way that we've been studying his moves here, it looks like he has a couple of different aims, right? One of them, he says, is to get the US its fair due. He thinks the US is being ripped off. He thinks the US should have greater market access in parts of the world, that non-tariff barriers to trade should come down, and that the US should be able to import, to have their exports, put out at more advantageous tariff rates, right? That's one goal he has. But another goal he has is to increase production and manufacturing in the United States. So, Sarah, it's hard to measure because it takes years to build up a production facility here in the U.S., but it's something that I'm looking at in these trade frameworks that are being negotiated.

11:49You know, when we see the EU promise to put X billions of dollars into the U.S. on investment and to buy X hundreds of billions in U.S. energy. Those are all things President Trump wants as well, because they bolster the U.S. economy in a very different way.

12:04Anthony Zurcher:And we have to remember the political time frame that is most relevant here in America. And that is that we've got midterm elections, congressional elections a year from November. So while we may not be feeling the effects of tariffs now, if it does start to take a bite by, say, summer of next year, where all of these things, the front loading kind of plays itself out, prices start to go up. That could be a real political headache for Donald Trump. And this is actually kind of a problem that Joe Biden faced during his administration as well. The benefits, the increased manufacturing, the reshoring, all of this that could translate to jobs, which could be more stable for these communities all over the country that maybe lost manufacturing jobs.

12:45Anthony Zurcher:That takes, as you mentioned, Aaron, years to be felt. So we could be a year from now staring at the midterm elections, prices are up, The jobs haven't really shown up yet. And that could be, I think, a real problem for Donald Trump and one that costs the Republican Party at the ballot box. The other deadline that's coming up, of course, is for tariffs between the US and China. They're not subject to this 1st of August deadline. They've got a slightly separate one on the 12th of August. And that came about because tariffs with China were ratcheted up, I mean, way above 100%, weren't they, Aaron, at one point.

13:20And then it was all getting terribly heated. And Donald Trump announced a 90 day pause. But if a deal is not done by the 12th of August, then potentially they could go sky high again. What are the chances, do you think, Erin, that there will be a U.S.-China deal by the middle of next month? So a couple of different benchmarks, right? There could be a deal. Certainly a lot of people would find that very welcoming. But more likely and where they've set the bar for negotiations is an extension of the 90-day pause, the 90-day truce, so to speak. That is a really low bar. And it's probably set that way on purpose.

13:53You know, it does seem achievable. Now, we did actually have the Chinese negotiators come out and say at the end of the meeting in Stockholm, they had agreed to extend the 90-day pause. And then we heard the U.S. delegation come out with Scott Bessent saying, nope, not yet. That's up to President Trump. And that really is a way that his top economic advisors tend to speak in general. They tend to talk about progress, how well things are going, but they do not make decisions. And they are very clear to say, especially to media and in press conferences, President Trump makes the final call. That's exactly where we're at right now on the Chinese talks.

14:26Anthony Zurcher:There's also geopolitical concerns here. It's not just about trade with China. Obviously, the United States and China have larger security questions that they have to deal with. And Donald Trump talked about a little bit about meeting with Xi Jinping at some point later this year, where all of this will be hashed out and discussed. He seems to want to go to China, seems to want to sit down with them. Here's what he said on Air Force One about it. When can we expect that? Oh, he wants to meet, and I look forward to the meeting too, but I would say before the end of the year. I mean, just to go full circle, so we had a very good meeting today.

15:06Anthony Zurcher:If you would have asked me the question yesterday, no, it wasn't looking too good. I would have said, maybe I might have said nothing, but I might have also said it wasn't going too good. I just heard from Scott that the meeting went very well today. That's kind of the thing here. For all the tough talk between the US and China, Donald Trump, who really values personal relationships with foreign leaders, he seems to like Xi Jinping. He's met with them before. They've gotten along. That means something with Trump. And that could be an exit ramp, perhaps, for the US-China negotiations. I'm really fascinated by how important it is for the US economy to get a deal done with China and not allow these tariffs to ramp up past 100 % again.

15:52Because the perception is that China's the workshop that makes all of the cheap consumer goods that are imported into countries like the United States. And that if those goods, if the prices went through the roof, that's where it would really, really be felt by your average voter. Is that still true? It still is the big one. And I say still, because in President Trump's first term, he made clear that he wanted to see the U.S. doing less business with China. And so you saw a lot of companies move their production facilities from China to, you know, we could talk about textiles, countries like Vietnam, Bangladesh, Thailand, Malaysia.

16:27That move was already taking place. But don't get me wrong, so much production still happens in China. And when you talk to American voters, you know, big purchases tend to have a different feeling than when you see small purchases go up. and American consumers buy a lot of cheaper goods. You know, we've seen fast shipping with Amazon and a lot of quick, you know, small purchases. We've seen fast fashion really take off, much of which is manufactured in that part of the world as well. It would be an impact that's felt acutely by a lot of Americans, especially a lot of lower income Americans who don't really have the means to be able to see prices rise and still sustain their quality of life here.

17:06I tell you, there's a lot of teenagers in the United States, all the ones I meet, terribly anxious about this because they're worried about not being able to buy clothing from Sheen. And children of friends of mine, you go around to their house and suddenly you've got teenagers asking you what the prospects of a US-China trade deal are, which is not the normal conversation you expect from 16-year-old girls, but they're avidly watching this, worried about if the next Sheen package is going to go up in price. Another story dominating the news bulletins today, and that is the massive 8.8 earthquake that was off the Russian coast.

17:38And it's triggered tsunami warnings across the Pacific, including in the United States itself, in Hawaii and California.

17:46Anthony Zurcher:So our friends at Newscast are going to be covering this in depth. They actually talked to an expert, Dr. Rebecca Bell from Imperial College London, who will explain how a tsunami forms and why this one sent such big alarm bells with a huge earthquake like this, but then maybe how it did not lead to the kind of damage that some were afraid of. In order to have a tsunami, you need to have some kind of disruption of the seabed. So if the seabed moves, it moves the water column above it. So if you do have an earthquake which ruptures very shallow depths, some earthquakes may even rupture completely to the seabed.

18:25That means that the overriding plate and any relief, you know, any seabed relief on it will also get moved. So the movement...

18:33Anthony Zurcher:Relief as in like... Lumps and bumps. Yeah, mountains under the sea. Exactly, mumps and bumps on the seabed. When those get moved, they disrupt the water column above it, and then that kind of collapse of water then creates our tsunami waves, which will propagate, you know, in all directions, a bit like dropping a stone in a pond. And as always, you can find that podcast on BBC Sound or wherever you get your podcasts. Now, Anthony, Erin, there is one trade deal that was sealed very recently, isn't there, between the EU and the US, and that was done at Trump's Turnberry Golf Course at the weekend when I was there trailing around after him.

19:08This is what Donald Trump had to say when he announced that the deal had been done when he was sitting beside the European Commission President Ursula von der Leyen.