Bargaining Deals in The New World

 

 President Donald Trump signs the One Big               Beautiful Bill into law on 4 July, 2025

Bargaining Deals in The New World

Deepak Razdan

Saturday, 5 July, 2025

US President Donald Trump’s 90-day deadline for trade tariff deals ends soon. The time-span till 9th July was expected to yield a deal a day. That has not happened. The New World wants to push ahead, the Old World goes slow.

The US has so far reached agreements with the United Kingdom, Vietnam and China. Canada and the European Union (EU) had often talked of countermeasures if there were heavy US tariffs on their goods.

Mr Trump warned the two they could face really tough tariffs, if they did not behave. The two show no signs of weakness. Besides, trade deals must involve hard bargaining.

In the past some days and weeks, Mr Trump’s Administration had heavy business. It was campaigning hard to secure Congressional approval for his ‘One Big Beautiful Bill.’

The Bill received the US House mandate in a narrow 218-214 vote on Thursday and became a law with his signature.

The US President had other major engagements, too, during the 90-day period, like the bombing of suspected nuclear weapon sites in Iran, although officials continued talks with a large number of countries for the trade agreements.

There was also unstoppable Israel bombing of Gaza which received international attention because of the large number of casualties during food distribution programmes.

The G7 and NATO Summits were also held during the three-month period and required Mr Trump’s personal attention in the exchange of views among powerful nations on various economic and security issues.

The trade deals however remained under his focus as he believed they could help him earn billions of dollars for the welfare of US citizens. It is for this he often warned Canada and the 27-nation European Union against opposing the US tariff rates.

The situation has not changed much since the 2nd April this year, which Mr Trump called the Liberation Day while announcing the US trade tariffs. The absence of the trade deals has generated business uncertainties across the globe.

Mr Trump complained the world had followed restrictive trade practices to exploit the US economy and now it must suffer the tariffs fixed by the US, if it wanted trade with the world’s largest economy.

For Canadians, the high US tariff levels meant a big blow to their manufacturing sector. They decided to fight back and instead of surrendering to the US, resolved to strengthen their economy, raise domestic production and prevent job losses.

A new wave of patriotism struck the whole nation. Canadian Prime Minister Mark Carney met world leaders, visited France and the UK, hosted the G7 and rebuilt relations with major economies.

On Canada Day, the 1st July, Prime Minister Carney declared “In a more divided and dangerous world, Canadians are uniting.”

He said “Together, we will build one Canadian economy -- connected by major projects, powered by Canadian energy, transformed by Canadian technology, and crafted by Canadian workers.”

This was no routine national day resolve by a democratic government. Canada realized it had to learn to live without US support and therefore must work hard and build a strong economy.

In the Canada Day message, Mr Carney talked of removal of federal and provincial barriers and said “Together, we’re breaking down barriers across the country so you can buy Canadian everywhere and work anywhere.”

He even talked of making armed forces stronger. “Together, we’ll rebuild, rearm, and reinvest in our Armed Forces – because Canadian leadership is defined not only by the strength of our values, but also by the value of our strength,” he said.

The US trade deal with the UK is really a deal between two close World War II allies. A baseline 10 per cent US tariff stays, although the two nations have plenty of understanding between them.

The deal with China had its own reasons. The US found it hard to keep distance from China. The Chinese inputs like rare earths and chips were in great demand from US manufacturers and a deal had to be reached with China somehow.

The deal with China is just a six month break in the trade war and the US tariff remains 30 per cent for China.

The deal with Vietnam prescribes 20 per cent US tariff on Vietnam goods and warns it could go up to 40 per cent if Chinese inputs in a product go beyond a limit. Vietnam has agreed for zero tariff for US goods, giving the US a free access to its market.

The EU wants US help under the NATO agreement to keep away the Russian threat to its security. But it is not willing to sacrifice its trading interests under any deal with the US.

The EU will not accept itself bracketed with the UK, it has indicated. Certainly, a 27-nation group cannot accept a deal being thrust upon it. It expects the US to go slow in pursuing its goals. Nations want to enter into deals on the basis of mutual respect.

Under pressure from the US, the EU and Canada held a Summit on 23rd June and looked for alternatives to the US in trade, like many other major economies.

The Summit attended by the Canadian Prime Minister hailed the success of the EU-Canada Comprehensive and Economic Trade Agreement (CETA), which has led to an increase of 65 per cent in bilateral trade in goods since its provisional entry into application.

European Commission President Ursula von der Leyen said “CETA stands as strong symbol of the power of free and fair trade. I must say, 98 per cent of our tariff lines are at zero. I repeat it: zero.”

The US pressures for early trade deals have made the EU and Canada cross the Atlantic and join hands for commercial relations.

President von der Leyen said “Together, we will define where our cooperation can have the most value added, and where we should channel joint investments.”

“It will be good for our industries; it will be good for our people; and it will be good for transatlantic security, too,” she said.

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