Thursday, May 15, 2025

Global Nations Realign Strategies Following China-US Tariff Ceasefire

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China’s assertive approach during negotiations for a tariff ceasefire with the U.S. has made several nations believe they should adopt stronger stances in their own trade discussions with the Trump administration.

A week-long truce has provided a framework for the ongoing and challenging negotiations expected between Washington and Beijing. Despite this, China continues to face an effective average U.S. tariff close to 50%, considering both previous duties and the additional 30% rate that was consented to during discussions in Geneva, Switzerland.

However, U.S. President Donald Trump’s readiness to significantly reduce the initial 145% tariff on Chinese goods has taken governments from Seoul to Brussels aback. These administrations had thus far adhered to Washington’s plea for negotiations instead of responding with their own tariffs.

Following China’s aggressive negotiation strategies which secured them a beneficial—even if short-lived—agreement, countries opting for a more conciliatory and swift method are pondering if this is indeed the appropriate course of action.

This alters the negotiation dynamics," stated Stephen Olson, a previous US trade negotiator currently serving as a visiting senior fellow at ISEAS — Yusof Ishak Institute in Singapore. " numerous nations will examine the results from the Geneva talks and determine that Trump might be starting to recognize he may have overextended himself.

Left at 10% for now, with potential to increase later. bespoke rates will take effect unless agreements are signed or delays are approved beforehand 90-day suspension ends in July.

Although authorities are hesitant to openly indicate any toughening of their stance, indications suggest that bigger countries are starting to realize they possess greater leverage than initially believed and can consequently afford to decelerate the negotiation process.

The frontrunner of South Korea's presidency, Lee Jae-myung, stated that there is no urgency to quickly reach an initial deal during trade talks with the U.S., and he criticized the current transitional government for allegedly rushing into discussions with the Trump administration.

Last week, nearing the midpoint of the 90-day truce, Trump suggested that there isn't enough time to negotiate deals with roughly 150 nations eager for agreements. Consequently, the U.S. might impose higher tariffs unilaterally within the next two to three weeks.

Although Trump claimed that India was ready to reduce all tariffs on American products, the country’s External Affairs Minister Subrahmanyam Jaishankar informed journalists that trade discussions are still in progress and "it would be hasty to make any conclusions."

India’s Commerce Minister Piyush Goyal was scheduled to arrive in the US over the weekend for further negotiations.

“Many nations can take a lesson from China’s approach when dealing with President Trump: stay strong, keep your cool, and compel him to surrender,” stated Marko Papic, who serves as the chief strategist for GeoMacro at BCA Research.

Japan’s Rethink

Japan’s trade officials are set to travel to Washington later this week. Last week, Japanese Trade Minister Yoji Muto bypassed an adjacent regional conference in South Korea, even though U.S. Trade Representative Jamieson Greer was present there.

Lead negotiator Ryosei Akazawa, heading Japan’s tariff team, mentioned at the start of this month his desire to strike a deal with the US by June. However, according to recent domestic press coverage, a pact seems more probable in July, prior to an upcoming upper house election.

Officials in Tokyo are suggesting they would prefer to proceed cautiously instead of making significant compromises to reach an agreement swiftly.

"We will consider time constraints during discussions, however, we do not intend to compromise our nation's interests by getting too preoccupied with these limitations," stated Prime Minister Shigeru Ishiba in parliament on Monday.

The countries involved in discussions with the U.S. are asking themselves, "Why have I been waiting?" as stated by Alicia Garcia Herrero, Chief Economist for Asia-Pacific at Natixis. She explains that this agreement allows China to move ahead of others and does not seem to offer significant advantages for the U.S., making it particularly frustrating.

Even U.S. officials are indicating that negotiations will require more time. Commerce Secretary Howard Lutnick mentioned that discussions with Japan and South Korea will take time Treasury Secretary Scott Bessent stated last week that the European Union was plagued by lack of unity that was impeding talks.

"I believe the US and Europe might move somewhat more slowly," Bessent stated during a Saudi-US Investment Forum in Riyadh on Tuesday.

On Sunday, the Treasury Secretary expressed optimism regarding broader discussions, also stating that "the situation did not develop overnight."

"Except for a few cases, the nations have presented excellent proposals for us," Bessent stated during an interview on CNN. State of the Union They aim to reduce their tariffs, decrease their non-tariff barriers, some have been devaluing their currency, and providing subsidies to industries and workers.

EU Skepticism

According to individuals aware of the European Union's talks, officials in Brussels perceived the U.S.-China tariff announcements as maintaining high duties and offering minimal concessions across various areas.

The modest negotiating achievements for the U.S. and the absence of a definite conclusion during the 90-day extension reveal how restrained Trump’s desire is to continually increase pressure on Beijing, according to sources who spoke anonymously due to confidential discussions.

The trading environment is increasingly splintering," stated Valdis Dombrovkis, the European Commissioner for Economic Affairs, adding, "The agreements reached up until now do not fully resolve this issue. interview in London on Thursday, concerning the ceasefire of tariffs with China and a UK-US outline from a deal announced just days before.

In Latin America, where growing economies aim to maintain both Chinese financial support and their ability to export goods to the U.S. market, leaders are attempting to navigate a delicate balance as these major powers confront each other.

Visiting Beijing

The Brazilian President Luiz Inacio Lula da Silva, who had earlier stated negotiation occurred prior to any retaliation, on Wednesday brushed off worried that strengthening relations with China might lead to a adverse reaction from the US following his state visit to Beijing, where he signed over 30 accords.

President Gustavo Petro of Colombia, who was also visiting Beijing recently, signed on to China’s Belt and Road initiative in a bid to boost trade and investment for his country, even as his top diplomat stressed the US remains the nation’s main ally.

This agreement between the US and China might demonstrate to countries that even the Trump administration can be influenced by the domestic economic challenges resulting from tariffs.

"The economic distress is felt more quickly and widely across the U.S., and this agreement shows that the Trump administration recognizes this," stated Robert Subbaraman, who leads global market research at Nomura Holdings Inc.

However, only those countries possessing significant economic power and minimal dependence on trade with the U.S. might have the ability to take such action, asserts Bert Hofman, a professor at the National University of Singapore and a previous World Bank country director for China. "For most nations, being stern with the U.S. poses considerable risks," Hofman stated over the telephone.

A clear instance of this is Canada, as stated by Oxford Economics last week, which noted that the country had effectively suspended Nearly all of its duties on American products have been removed. However, over the weekend, Canada’s Finance Minister François-Philippe Champagne contradicted this claim, stating that the government maintained 25% counter-tariffs on tens of billions of dollars worth of U.S. merchandise.

He mentioned that as per social media, 70% of the counter-tariffs put into effect by Canada in March remain active until now. post On Saturday, the government announced they had "temporarily and publicly halted tariffs" on certain products for health and public safety reasons, according to him.

Nevertheless, since China’s influence endures due to being the global manufacturing hub, other nations might need to employ "more innovative forms of leverage," as Papic suggests.

Lacking Leverage

In the case of Vietnam, approximately one-third of its economy relies on trading with the U.S., which implies that without greater influence, they can only afford to adopt a stern stance in discussions.

Vietnam, one of the initial countries to propose buying more U.S. products like Boeing airplanes to help offset the trade imbalance, slammed Trump's tariffs last week were deemed "unreasonable."

If bigger countries wish to adopt a more adversarial stance, they might find some flexibility in services trade, according to Katrina Ell, who leads the Asia-Pacific economics division at Moody’s Analytics.

Data from Moody’s Analytics indicate that countries like the EU, Singapore, South Korea, and Japan run some of the largest services trade deficits with the U.S.

Given China's significant influence over the U.S., continuing with such a rigid approach isn't feasible," Ell stated via telephone. "It's crucial to remember this aspect of leverage and which country possesses it.

Related Reading:
Trump’s Agreements Present China as an Adversary and a Prized Asset, Muddling Messages Trump’s Tariff Break Pause at Midpoint Reveals Uneasy Globe: Eco Week Chile's Top Trade Official Remains Optimistic That U.S. Will Reduce Tariffs to Zero Again

--Assisted by Yoshiaki Nohara, Ruchi Bhatia, Alberto Nardelli, Skylar Woodhouse, and Malcolm Scott.

(Includes commentary from the Japanese leader in the 16th paragraph.)

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