The Trump administration is reportedly lowering its aspirations for comprehensive reciprocal deals. Instead, it is favoring narrower agreements to avoid the reimposition of U.S. tariffs.
What Happened: The US is now seeking phased deals with key countries, with the aim of reaching agreements by July 9, reported the Financial Times on Tuesday. This shift in strategy is a departure from the White House’s initial plan to secure 90 trade deals during the 90-day pause in reciprocal tariffs announced by President Donald Trump in April.
Under the new plan, countries that agree to these narrower deals would avoid the more severe reciprocal tariffs, but would still be subject to the existing 10% levy while discussions on more contentious issues continue. The administration is also weighing the option of introducing tariffs on key industries.
Despite this, the negotiations remain complex, and the administration is still contemplating imposing tariffs on crucial sectors. This two-pronged strategy—combining the threat of new tariffs with a willingness to strike deals—highlights the difficulties negotiators encounter with Trump, who often leverages trade to extract concessions from other nations.
Despite this change in approach, the U.S. has only managed to secure a trade pact with the U.K. and a tentative truce with China. The U.S. Commerce Department has launched national security investigations into a range of products, including copper, lumber, aerospace components, pharmaceuticals, semiconductors, and critical minerals.
Why It Matters: This shift in the U.S. trade strategy comes on the heels of President Trump’s announcement that he will bypass individual trade agreements and set new tariff rates unilaterally for various trading partners through letters.
Trump’s preference for this method was voiced on Fox News’ “Sunday Morning Futures,” where he stated, “We made deals, but I’d rather just send them a letter, a very fair letter, saying ‘congratulations, we’re going to allow you to trade in the United States of America, you’re going to pay a 25% tariff, or 20%, or 40 or 50%.”
Meanwhile, French President Emmanuel Macron has criticized the use of tariffs as “blackmail” instruments by powerful nations, without directly naming Trump or the United States. His comments came as the European Union continues negotiations with the U.S. before the July 9 deadline.
Despite the uncertainty surrounding the upcoming tariff deadline, ETF investors seem to be maintaining their composure. While Trump’s return to tariff diplomacy has reignited diplomatic turmoil and corporate jitters, ETF performances have been surprisingly resilient.
Over the past six months, country-specific ETFs that are linked to halted negotiations, KraneShares CSI China Internet ETF (NYSE:KWEB) surged 19.53%, iShares MSCI India ETF (BATS:INDA) rose 4.27% while Global X FTSE Southeast Asia ETF (NYSE:ASEA), climbed 2.13%.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
