A New Chapter in Negotiation: Insights from Trump's Initial Trade Agreement

(Bloomberg) — If you’re a global leader trying to figure out how to deal with donald Trump, his recent trade agreement with the UK might give you some hints about his negotiating style. The declaration made in the Oval Office shows that Trump is open to celebrating progress,even if it’s not a complete deal yet—this can help him gain political favor back home. Analysts suggest that while American tariffs can be negotiated down, this may not serve as a solid model for future agreements.

Deborah Elms from the Hinrich Foundation in Singapore points out that if you thought a comprehensive deal had to be wrapped up quickly, think again. “The UK example shows you can have just an outline of an agreement,” she said.

Trump hailed this framework as a significant achievement, claiming it would streamline US goods thru UK customs and lower barriers on “billions” worth of exports. The British side announced plans to reduce car tariffs to 10% and eliminate metal tariffs altogether. However, many details are still up for discussion in the coming weeks.

This uncertainty means we should tread carefully when drawing conclusions. Trump’s desire to maintain certain proposed tariffs and specific exemptions raises questions about what this really means for other countries looking at similar negotiations.

for nations like japan or those in the European Union facing their own trade talks with the US, this situation may not provide much guidance since they have different economic dynamics at play. Hiroshi Namioka from T&D Asset Management in Tokyo cautioned against being overly optimistic about the US-UK announcement: “The US has no trade deficit with Britain; thus reaching an agreement was simpler.”

Countries such as Japan and South Korea are eager but finding it tough to make headway on their discussions with Washington despite having significant trade surpluses. Commerce Secretary Howard Lutnick mentioned that talks with these nations are dragging on longer than expected while India could soon join negotiations—but there’s still work ahead.

The EU’s efforts also seem slow-moving due partly to its size; Sam Lowe from Flint Global noted that unlike smaller economies like the UK which lack retaliation options, Europe has more leverage through potential tariffs but will likely take longer to finalize any deals.

One aspect of interest is how tariff reductions on British cars—from 27.5% down to 10% for 100k vehicles—will impact auto manufacturing hubs globally as Japanese and Korean car exports dwarf those from Britain by over tenfold and represent around one-third of their sales into America.

While there’s hope among Japanese officials regarding lowering hefty levies on their vehicles, they’re pushing hard for full removal rather than partial cuts. Japan’s chief negotiator Ryosei Akazawa stated they’ll keep advocating against these tariff measures imposed by Washington.Similarly, South Korea might find itself needing concessions—like increasing imports of American liquefied natural gas—to secure better terms regarding auto tariffs according to Bloomberg economics’ hyosung Kwon.

Some analysts believe that Trump’s baseline tariff rate of 10% is pretty much set across all countries right now; thus discussions below this level may not yield fruitful results anytime soon according to Elms at Hinrich Foundation.

Interestingly enough though, there was some success where UK managed zeroing out steel and aluminum tariffs previously set at 25%, part of what was termed “a new trading union.” It remains unclear how this will affect other countries facing similar metal duties imposed by the US government.

Though, little clarity emerged concerning non-tariff barriers such as regulations or subsidies which have been highlighted by U.S officials before; notably absent were any mentions related specifically towards China despite ongoing pressures aimed at Beijing’s practices—a topic expectedly under discussion during upcoming meetings between U.S and Chinese representatives scheduled in Switzerland shortly after these announcements were made public.