I was told there would be deals

Tariff fever has gripped the White House again.

Trade advisor and longtime tariff stand Peter Navarro is back on CNBC. The tariff revenues are coming in and really helping this country.
President Trump is sending Dear Mr. Japan letters to world leaders, telling them that new tariffs are coming on August 1st.
I have the signed letters that went out to both South Korea and Japan today. And there will be approximately 12 other countries that will receive notifications and letters directly from the president of the United States.
It's been exactly 90 days since Trump ordered us on Truth Social to be cool as the stock market twerked wildly following the shocking announcement that he would levy tariffs on every country and also on some uninhabited islands near Antarctica. Everything is going to work out, he wrote.
Then, like less than four hours later, he paused the tariffs and said he was ready to make some deals. What deals he made? Coming up on Today Explained.
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My name is Amy Williams, and I'm the U.S. trade correspondent

for the Financial Times in our Washington, D.C. bureau.

All right, so you will recall that back in April,

President Trump announced his Liberation Day.

Massive new tariffs on just about every country.

Yeah.

The stuff... D.C.
Bureau. All right.
So you will recall that back in April, President Trump announces Liberation Day, massive new tariffs on just about every country. The stock market tanked.
It was complete chaos. And so President Trump pauses the tariffs while everyone begins to negotiate.
And his trade advisor, Peter Navarro, who's kind of a bombastic guy, says, we are going to do 90 deals in 90 days. Today is day 90.
Are all the deals done? Definitely not. We do not have 90 deals.
We have around three Trump-style deals. So, normally trade agreements, proper free trade agreements, tens of chapters, hundreds of pages, super comprehensive, take years to negotiate.
And they're signed off in the US. Congress approves them.
It's a whole thing. What we've seen from Trump is three much smaller agreements, one with the UK, which is a couple of pages long and has in it promises that the two sides will keep talking.
So it's more of a snapshot than a final agreement. The special relationship and external bond, it's really an external and an internal bond between our two countries will soon be stronger than ever before.
We have a truth social post in which Donald Trump promises to only put tariffs of 20% on imports from Vietnam. It is my opinion that SUV, or as it is sometimes referred to, large engine vehicle, which does so well in the United States, will be a wonderful addition to the various product lines within Vietnam.
But we don't have anything that looks like a written text or an agreement, anything that might look like a proper trade agreement. And then we have something that could be more fairly called a ceasefire or a truce with China.
So both sides ratcheted up tariffs to really, really high levels after April 2nd. And they've both kind of backed away from that.
Thank you for your attention to this matter. And Trump is calling that a deal.
But it's not really anything that looks like a free trade deal as everyone else understands it. Okay, so the administration didn't get nothing done.
But it didn't get as much as maybe it promised or we expected. What's the holdup? Why not more of these skeleton deals? I think countries are digging their heels in and they don't want to be pushed around.
So Donald Trump and the U.S. obviously have quite a lot of leverage.
They have these big tariff threats, which no country wants to face. But the demands that are being made in some cases are quite difficult for other countries to deal with.
Other countries have their own rules and regulations. They have their own tax laws.
Sometimes Donald Trump has been asking other countries to change their domestic tax laws, which are, you know, sovereign matters for those governments. So the example, the main example would be the European Union's value-added tax.
Donald Trump doesn't like that. But it's quite difficult for the European Union to go to member states and change tax law just because Donald Trump's threatening tariffs.
And then other countries have politically sensitive products. So Japan, its rice farmers are a politically sensitive issue, and they're a very politically powerful constituency in Japan.
So Donald Trump wants Japan to buy more rice. Writing on social media, the president singled out rice as a sticking point.
He said Japan's refusal to import American-grown rice was a sign that countries had become spoiled with respect to the US. Dear Mr Japan, here's the story.
You're going to pay a 25% tariff. So there are lots of different political dynamics that are different in every trade deal.
And it doesn't always mean that there's an easy path forward or that these talks are easy for other countries when they're faced with U.S. trade negotiators.
Okay, so instead of this being like a firm deadline, it's more that things continue to evolve after 90 days. So what's been happening this week? Essentially what we're seeing, and I think how it's fair to frame this, is an extension of the deadline.
So Donald Trump has posted a handful of letters onto Truth Social, and he has reportedly actually sent these letters, and foreign governments have confirmed that they've received letters from the Trump administration. And they essentially say, We have had years to discuss our trading relationship with, Insert country name here.
and have concluded that we must move away from these long term and very persistent trade deficits. And the tariff number that the countries have received quite closely matches what Trump already announced on April 2nd.
So it's a slightly different number to the reciprocal tariff, as he calls it, that he announced on April 2nd, but normally just one to two percentage points different. So it feels a bit like he's kind of re-upping the threat.
And he said this time that this tariff would come on on August 1st. So that's about three and a half weeks from today.
So it just gives countries a bit more time to potentially close one of these Trumpian deals. And so these countries threatened with tariffs, they really are making an effort to make the deals.
They're not saying we're fed up with this. We've had enough.
President Trump, go kick rocks. We're done.
I think it varies. I think from what I'm hearing, most countries are seriously trying to make deals with the US.
There are a few countries that are mulling over retaliating. The European Union has been working very hard to get a deal, but it's also been quietly on a separate track working on a retaliation package.
Canada has retaliated with its own tariffs on US goods, but it is also working quite hard to get a deal. It doesn't want to be in a trade war.
Well, Canadian Prime Minister Mark Carney says trade talks between his country and the U.S. have resumed after his government scrap plans to introduce attacks targeting U.S.
tech firms that was supposed to come into effect today. Carney's approach? Emphasize how Canada can help the White House on China,

on balance of trade issues, on protections for workers and on border security. And then China is a separate issue.
I think China is sort of interested in talking to the U.S. It has been talking to the U.S., but it won't be pushed around either.
Yesterday, President Trump also announces tariffs on copper and copper stocks seem to go wild. Can you talk a bit about what's happening with these sector specific tariffs? How did that become a thing when before we were only talking about countries? Yes.
So the sector specific tariffs are done under a slightly different process known as a section 232 investigation, which sounds quite nerdy, but it's essentially a relatively arcane piece of US trade law that allows the US to put tariffs on particular sectors if it finds that importing too much of things in that sector poses a national security risk to the US. So we have a few of these different probes going on, and some have already been completed.
So we've already seen tariffs of 25% on autos and auto parts. That was done under this process.
We've seen tariffs of now 50% on steel and aluminum imports. That was done under this process.
And there are ongoing probes. So copper is one that is ongoing.
And Trump previewed this 50% tariff yesterday as the outcome of this probe. We have another one into pharmaceuticals, medical drugs.
We have another one into chips and chip making equipment. So these things are ongoing.
They're happening in the commerce department and officials there will be looking at trade data and trying to work out what kind of tariffs and what kind of remedy they think is appropriate to try and protect US industries in these critical sectors. But I do think it's fair to say that we haven't quite seen the economic effects of these tariffs play out in full yet.
There's so much uncertainty that at some point the uncertainty becomes the new constant thing. And so companies don't know what to react to.
They have nothing to react to, but that becomes their new reality. And they have to just go forward not knowing what's happening.

She's Amy Williams. She's covering trade for the Financial Times.
Coming up, a friend of the show's wild tweet has us rethinking it all. What if the economy is good, actually? Actually.

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my name is Talman Joseph Smith, and I'm an economics reporter for The New York Times. Last week, you tweeted something that was so deep.
You wrote, quote, You can, for all the reasons, dislike President Trump. But based on the data alone, this is still a solid, if slow, back on track post-COVID-flation economy.
Wow, man. What did you mean? I was trying to keep it real.
Obviously, many people across the country do not like the president, I think, for understandable reasons. But my job as a reporter is to just, you know, know call it how I see it even if some people think I'm a half-blind ref it's it's it's my job and so when I look at the field of play I see 4.1 percent unemployment which is historically low still I see GDP which was very funky last quarter the first quarter of the year for reasons that I'm sure we'll talk about.
But for this quarter, Q2, it's 2.5 percent is sort of the expectation right now. And so looking at that, that's actually an OK economy.
I think some of this is striking because of what the expert class told us to expect. So let's go back to Liberation Day, right? This is early April.
President Trump makes his announcement. And I recall doing an episode about how things were going to get more expensive.
We would see inflation as a result of the tariffs. I mean, chances are they will affect the American economy pretty negatively.
And chances are they will affect people's wallets really negatively. The president did pull back on some of the tariffs, but not all of them.
But all of that big expense that we were expecting, everything's going to cost more, that does not seem to have happened. Right.
So there's a question of what you're getting at, which is that we're not seeing the worst of those predictions come true. And there's the possibility and the prediction, among some still in that expert class, that we've not gotten those negative externalities yet and that they are on the way.
So let's break this down in two ways. First, let's talk about why many experts are still holding to their earlier calls.
If you look at the first quarter of economic output in America, you actually saw in the data just historic, somewhat unprecedented inflows in imports because businesses across the country were racing to get ahead of the tariff deadline and stocking up their inventories of things that they need, doing that ahead of time at the lower import duty rates. And these experts, economists, you know, who are very well credentialed are still looking at this and they say, OK, so we're actually in this limbo period where once Once they sell down that inventory, they're going to have to deal with higher tariffs

and then... looking at this and they say, okay, so we're actually in this limbo period where once they sell down that inventory, they're going to have to deal with higher tariffs.
And that is when we will see either later this summer or in early fall, so on, that's when we'll see a hit to consumers. Okay.
Now, there is an opposing view that week by week is getting more credence. And that's the idea that when you think about cost of goods sold, cost of goods sold is actually this sort of diffuse thing.
It's not just shipping costs, right? Besides shipping and handling, there's labor, there's materials, there's the overhead that manufacturers face. And all of those, depending on what type of manufacturer you are or what type of retail store you are, could be bigger factors in shaping final prices that we see either online or at the store than just those shipping costs, which tariffs absolutely do play a role in.
And then beyond that, there is this question of who pays for the cost of the tariff. A tariff is a tax on a foreign country.
That's the way it is, whether you like it or not. A lot of people like to say, oh, it's a tax on us.
No, no, no. It's a tax on a foreign country.
In the most direct sense, critics of President Trump were absolutely right when they said he is trying to hide the fact that importers, American businesses generally, import the goods and then at customs, it faces a tariff. So they pay it.
But it seems like retailers have been effective in getting not just themselves as the importers, but the exporters, the exporting company and consumers to split the costs. And so far, and we can see it in about two to three months of price data, the hit to consumers has been minimal.
Another piece of this equation is jobs. And again, I'll give you the line at the time.
It was like the prices are going to go up, the companies, the small businesses are going to falter, there will be layoffs, and the United States will see really bad job numbers. What's actually happening with employment right now? It's fine.
It's fine. It's fine.
Yeah, like, yeah, you could really say it with like an exasperated sigh. The three-month moving average of job growth is about 150,000.
And when you look in those numbers, it's not the sort of underlying job growth that gets economists excited. It's not tech.
It's not a boom in construction hiring or in white-collar jobs or in sort of mid-level jobs that are great stepping stones for people's careers. It's generally lower-paying jobs.
So that's not the most exciting type of job growth, but it is job growth. And it's not too different, actually, than the sort of job growth that we were seeing under President Biden and Vice President Harris towards especially the back end of 2024.
Come on. So we're kind of just in a holding pattern.
We also heard dire predictions about what was going to happen to the labor market if President Trump's planned deportations, like took workers out of factories, out of fields, out of homes. They make up 33 percent of the state's farm workers and 26 percent of its construction laborers.
Many experts warn that a deportation of such scale could be devastating to the American economy. Are we seeing any knock-on effects in the labor market from the president's actions on immigration? I'd say yes and no, because there are isolated cases, and there's been great reporting on those, for now, somewhat isolated cases.
But overall, we've not seen a macro impact. Now, this really is a but-wait-and-see one, this one especially.
There are well over 10 million people who are undocumented in this country, and most of them work. And so if we do see mass deportation, there are various models, but we actually don't know what this would look like in practice.
And there's a secondary question of then how that would impact prices or not. But I think it's important to think of that issue if you're going to criticize it, first and foremost, on its own terms as immigration policy or as a humanitarian or not humanitarian at all thing to do.
If you're going to criticize the president,

I really wouldn't count on hyperinflation

and construction or grocery prices to sort of bail you out

because I still don't think that that's a surety.

Obviously, the other big data point here is the stock market,

which I am told, can you confirm this, is not the economy?

It's not the economy.

It's connected to the economy, but it's not the economy.

Okay, So in April, we get the announcement of Liberation Day. The markets go absolutely wild.
Pundits who don't like President Trump are like, this is it. It's over.
It's never going to go back up. I mean, it really, there really was a lot of hysterical thinking at the time, including on my part.
And then Trump pulls back on some of the tariffs. The stock market goes up, up, up, up.
It recently hits a record high. Then the president says, OK, I'm going to put more tariffs now on our on Asian countries, South Korea, Japan, some of our allies.
We got this August 1st deadline. The market starts to tick down again.

But ultimately, Tal, for the past couple months, it really does seem like nothing bad is happening in the market. It goes down and the president says, OK, I'm switching gears.
And then it goes right back up. What do we make of this? So I want to start with the defense of the hysteria, The defensive view.

Because the level of you,

because the level of tariffs that President Trump first announced on Liberation Day, right, in the Rose Garden with the big cardboard sign. I'd like to see the chart.
If you have it, could you bring it up, Howard? And this, I mean, it was an absolutely chaotic moment. You know, I'm in the newsroom in April, and I'm taking my iPhone next to my colleague Ben Castleman, and I'm zooming in on the TV screen with the iPhone so that I can, like, with the zoom, see the percentage on, you know, on countries in the Balkans, right? I think you can, for the most part, see it.
Those with good eyes, with bad eyes. It was global.
The rates were so high that in many cases it would have effectively embargoed trade. I mean, it was objectively crazy.
And there are not many things in news reporting that you can fairly call objectively crazy, but it was, which is why the hedge backed down. There was relief when it became clear that it was just the sort of step one or step two in what continues to be a very high stakes tariff battle or trade war, whatever you want to call it.
And with that in mind, markets began to price in that you can't really take President Trump's sort of initial or even follow up threats seriously. Mr.
President, Wall Street analysts have coined a new term called the taco trade. They're saying Trump always chickens out on tariff threats, and that's why markets are higher this week.
What's your response to that? I kick out. Chicken out.
The thing to do is to keep calm, carry on, and focus on corporate earnings growth. Based on how corporate America has been performing outside of politics for the past few years, they continue to be very, very good at making lots and lots of money quarter over quarter, year over year.
In the meantime, it's yet another wait and see aspect of 2025. Are you growing more skeptical of President Trump's naysayers than maybe you would have been six months ago? It's not that I'm skeptical of the naysayers.
It's just, you know, I think that they're like we talked about at the top. There are lots of things that are liable to critique that this president is doing.
But bad policy doesn't necessarily mean a recession. Bad policy doesn't mean necessarily the creation of a crisis.
It could exacerbate a crisis, but bad policy does not always lead to doom. sometimes, especially in a country this large with an economy this big and diverse, bad policy just contributes to a muddling along.

And so we should keep in mind predicts we'll muddle along.

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