Trade distortion and protectionism
Worlds Apart: US tariffs struggle with big asks and too little time
Published 20 May 2025
As bilateral tariff negotiations have bogged down, President Trump says he will be sending out letters to countries in weeks imposing new "reciprocal" tariffs on the world. This, Trump believes, will solve the US problem of trying to make deals with too many countries and not enough time to deliver results.
President Donald Trump promised "liberation" on April 2 from the oppressive and unfair trade actions of foreign partners. In releasing his unilateral set of global tariff increases, he said he was rebalancing trade flows. The consequences of this decision have been significant with mounting economic data showing costs rising, particularly for companies and consumers in the United States.1
Trump has certainly achieved his objective of delivering a new trade landscape. The initial market reaction to Trump’s tariff escalation was uniformly and strongly negative. Trump was forced to pause much of his tariff rate hikes to allow time for renegotiation of terms.
The planned 90-day window for discussions has reached the halfway point. Thus far, only two "deals" have been announced, with the UK and China.2 Neither represents a completed agreement, but are perhaps better seen as a start of a longer negotiating process.
Given the extraordinary number of tariff announcements, threats, pauses, and changes in positions, which the Washington Post estimated at 50 policy changes in just over 100 days in office,3 it is worthwhile to recap the current state of tariff policies by the US, obstacles to getting deals in place, as well as other actions being taken by trading partners.
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There are two sets of globally applied tariffs currently in force. First, every country is currently subject to a 10% across-the-board "reciprocal" tariff rate. This applies even to countries with existing free trade agreements and remains for the UK and China in the wake of their "deals."
Any "reciprocal" tariff level above 10% which was imposed on April 2 is currently suspended, such as the 39% "reciprocal" tariff for Cambodia or 36% for Vietnam. These higher tariffs were announced for 60 countries and are the subject of ongoing discussions with Washington.
Second, every country is also being hit with new Section 232 tariffs invoked for national security reasons. These are currently applied at 25% to all products of steel, aluminum, and products made with these metals, meaning anything ranging from kitchen utensils to tennis rackets. They are also in force at 25% for all autos and auto parts.
There is a long and growing list of other sectors in line for Section 232 tariff rate hikes in the near term. This includes semiconductors with a very long list of applicable products ranging from phones to laptops to storage devices. The potential application of Section 232 tariffs to pharmaceuticals could be equally expansive, capturing not just drugs but medical devices or nutritional products like specialty infant formulas. Also in the pipeline are investigations on lumber, copper, heavy trucks, critical minerals, and space products.
The first Section 232 sectors received tariff rate changes of 25%. However, subsequent sectors could have tariff increases higher or lower than existing sectoral levels. While national security cases used to follow clear timelines for investigations with opportunities for input and a window between announcement of the results and the implementation of any planned tariff levies, this is no longer the case for recent cases invoked by the Trump administration, which can now be announced and applied in short order.
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At this point, Section 232 tariffs are not a part of any bilateral negotiation with Washington. The talks are meant to discuss only "reciprocal" tariff levels.
Many of the US trade partners most affected by tariff policies are in Asia. Export-led economies are at high risk in an increasingly protectionist world. Tariffs were the focus of intense discussions last week in Korea as part of the Asia Pacific Economic Cooperation (APEC) meetings which featured bilateral sideline sessions with the US Trade Representative.4
Although some expected announcements of additional deals over the weekend, none have been forthcoming. Trade partners have been struggling with how to best craft trade arrangements that fit the new bilateral trade landscape that Trump wants to create.
Several things are making talks particularly challenging. First, Trump’s team is currently insisting that Section 232 tariffs are not on the agenda. For many Asian partners, this is a serious obstacle to conclusion of any deal, notably Japan.5 Without the prospect of tariff relief on key sectors and with a long list of potential new sectors getting captured under higher tariffs on ostensible national security grounds, some governments have not been keen to sign off on any trade arrangement.
Second, "reciprocal" tariffs are not being completely unwound. The 10% floor appears to be non-negotiable, leaving trade partners asking if concessions will be worth a potentially modest level of tariff relief.
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Third, trade partners are increasingly skeptical about the value of any agreement reached with this administration. After all, the 10% tariff floor applies even to parties that already had a legally binding trade agreement in place. If a free trade agreement (FTA) didn’t shield countries from tariff changes, what is the likelihood that any new "deal" will do so in the future?
Fourth, countries are being asked to address "transshipment." The US use of the term seems to be very broad, capturing both illegal relabeling of goods destined for the US and legitimate trade and export activities. In both cases, the demand of the US to increase scrutiny of exports to America will put significant pressure on trade partners which typically do not inspect all goods bound for export.
Finally, the list of "asks" by the US is long and difficult. Most notably for Asia, it includes commitments to squeeze down on the levels of Chinese content. Given the deep levels of supply chain connectedness in Asia and extensive investments across the region, these are very challenging requests.
As talks have bogged down, Trump announced that he would be sending out letters to countries within a matter of weeks giving them new "reciprocal" tariff rates.6 This will solve the US problem of working on deals with too many countries and not enough time to deliver results.
But US Treasury Secretary Scott Bessent also informed trade partners that a failure to take negotiations seriously would result in tariff levels being snapped back to the full "reciprocal" rates. In the same interview, he also noted that many countries will be given “regional” tariff figures, presumably in the letters that will be arriving shortly.7 At the moment it is unclear when these new tariff levels might be applied — at the end of the 90-day tariff pause or before?
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As the past few days alone have illustrated, trade and tariff policy have gotten extremely complicated with changes announced, implemented, and paused. Working with the US has never been easy, but the high levels of uncertainty are making it hard for trade partners to figure out how much or how little to offer.
About the only thing that can be said with certainty is that Trump has achieved his objective in forcing a rethink of global trade patterns. He’s accomplished that in remarkably short order as well, with continuing trade and tariff changes likely to be in the news for weeks, months, or even years to come.
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[1] https://taxfoundation.org/research/all/federal/trump-tariffs-trade-war/
[2] For more details on the UK-US agreement, see https://www.brookings.edu/articles/what-does-the-us-uk-deal-mean-for-trumps-trade-agenda/ For more on the US-China agreement, see https://www.hinrichfoundation.com/research/article/us-china/major-u-turn-on-us-china-tariffs/
[3] https://www.washingtonpost.com/business/2025/05/14/trump-tariffs-china-trade/
[4] For information on the APEC meetings, see https://www.korea.net/NewsFocus/policies/view?articleId=271598
[5] See https://on.ft.com/43ohADo
[6] https://www.politico.com/news/2025/05/16/trump-says-us-will-set-new-tariff-rates-for-countries-skirting-negotiations-00353370
[7] https://edition.cnn.com/2025/05/18/business/scott-bessent-trump-tariffs-china
© The Hinrich Foundation. See our website Terms and conditions for our copyright and reprint policy. All statements of fact and the views, conclusions and recommendations expressed in this publication are the sole responsibility of the author(s).
Author
Deborah Elms
Dr. Elms is Head of Trade Policy at the Hinrich Foundation in Singapore. Prior to joining the Foundation, she was the Executive Director and Founder of the Asian Trade Centre (ATC). She was also President of the Asia Business Trade Association (ABTA) and the Board Director of the Asian Trade Centre Foundation (ATCF).
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