Washington [US], July 1: Despite controversy over rising domestic inflation risks, US President Donald Trump is pressuring other economies to reach trade deals with Washington.
AP yesterday (June 30) quoted President Trump emphasizing that he has no plans to extend the 90-day reciprocal tax suspension period with the parties after July 9. This is the "grace" period that he set on April 9.
Increase pressure
Accordingly, if by the deadline, any economy has not reached a trade agreement with the US, this country will apply the reciprocal tax rate that Mr. Trump announced. Speaking on the program "Sunday Morning Futures" of Fox News channel, the owner of the White House affirmed: "We will consider how a country treats us - are they good or not so good, some countries we do not care about, we will just send a high number (tax rate - NV)".
The announcement shows a significant change from before. As recently as June 27, speaking to the press, Mr. Trump still appeared "relaxed" when sharing that it was very difficult to make separate agreements with each country. And the White House set a goal of reaching 90 trade agreements in 90 days.
The US President is putting pressure on trade negotiations with many countries, even allies. According to Reuters, on June 27, Mr. Trump suddenly canceled trade negotiations with Canada because of the country's digital services tax policy aimed at US technology companies. The White House owner criticized it as a "blatant attack" and he would set up new tariffs on Canadian goods in the coming days. On June 29, just hours before the digital services tax was applied, Canada canceled this policy to find a way to resume trade negotiations with the US.
Similarly, the US is also in tension with Japan over trade negotiations, in which Washington has attached some provisions related to defense policy. Specifically, the US has requested that Japan increase its defense budget to 3.5% of GDP as a provision in the trade negotiations. Meanwhile, in May, the two sides agreed on this rate of 3%.
Another case is India, which was once thought to be close to a deal, but trade talks between Washington and New Delhi have hit a snag due to disagreements over import tariffs on auto parts, steel and agricultural goods. According to Reuters on June 26, citing sources from Indian officials, this fact has dashed hopes of reaching an agreement before the July 9 deadline for reciprocal tariffs.
As for China, the White House owner recently announced that the two sides have reached a trade agreement but did not provide details. Regarding this issue, President Trump revealed on the social network Truth Social on June 11 that China is still subject to a 55% tax, and has not lifted restrictions on rare earth exports to the US. In contrast, US goods are only taxed 10% by China.
Debate over inflation fears
Meanwhile, the US public is concerned that Mr. Trump's tax policy could cause goods prices to increase, leading to high inflation. The consumer price index in May increased at an annual rate of 2.4%, lower than economists expected. This helps President Trump and his supporters cite as evidence that tax policy does not affect inflation.
However, CBS quoted some economists as saying that the inflation data is not high in the short term because many US companies have taken measures to offset the impact of tariffs, such as placing more orders in advance during the "grace" period before the reciprocal tariffs are imposed, taking advantage of loopholes to delay or reduce tax payments. And so far, the goods imported in advance to deal with the tariffs have not been sold, so the goods sold in the US market have not been subject to high tariffs.
"Many businesses have been creative and savvy in using different means to cool prices in the short term," CBS quoted Gregory Daco, chief economist at EY-Parthenon, a consulting firm.
Analysts say that does not mean commodity prices cannot continue to rise in the long term, especially when the tax policy is fully applied.
Source: Thanh Nien Newspaper
