Trump's trade deals are stalling out at the worst possible time

CNN

3 hours ago

With just a week and a half remaining of a 90-day pause on President Donald Trump's 'Liberation Day' tariffs, the White House is running out of time to negotiate its long-promised trade deals that could bring some certainty to an increasingly uneasy economy.
But with just two trade frameworks inked and dozens to go before the July 9 deadline, that timeframe appears increasingly unlikely — just as America's economy might be taking a turn for the worse.
For months, the Trump administration has said deals are imminent, working with 18 key partners to lower trade barriers while hundreds of other countries wait in line to get out from under the burden of higher tariffs. But the timeframe continues to shift.
'I've made all the deals,' Trump said in a Time interview in late April, saying trade negotiations with foreign partners were nearly complete. 'I've made 200 deals.'
More than two weeks later, Trump acknowledged that hundreds or even dozens of deals aren't possible on such a short timeframe — a point he reiterated Friday at a press briefing at the White House.
'You know, we have 200 countries,' Trump said. 'We can't do that. So at a certain point, over the next week and a half or so, or maybe before, we're going to send out a letter. We talked to many of the countries, and we're just going to tell them what they have to pay to do business in the United States. And it's going to go very quickly.'
That notion of establishing new tariffs for countries that can't or won't reach a deal with the United States has been floating around for over two months, but the timeline keeps getting pushed back. On April 23, Trump said his administration would 'set the tariff' for countries that fail to negotiate new terms in the following few weeks. On May 16, Trump said that 'at a certain point, over the next two to three weeks … we'll be telling people what they'll be paying to do business in the United States.'
Meanwhile, the United States remains in active negotiations with its key trading partners. But those deals have been promised for months, too, with little to show for it. On June 11, Commerce Secretary Howard Lutnick said a flood of deals was coming.
'You're going to see deal after deal, they're going to start coming next week and the week after and the week after. We've got them in the hopper,' he told CNBC. On Thursday, Lutnick told Bloomberg 10 deals would be announced imminently.
But White House press secretary Karoline Leavitt also said Thursday that 'the deadline is not critical,' a point that Treasury Secretary Scott Bessent emphasized to Fox Business on Friday: Bessent said he thinks trade negotiations could be 'wrapped up' by Labor Day, providing a more relaxed framework for inking deals than the previously prescribed July 9 deadline.
Meanwhile, Trump made clear Friday that trade policy could continue to grow more aggressive. In a social media message Friday, he said that the United States was pulling out of trade talks with Canada because of its digital services tax and that the administration would set a new tariff for its northern neighbor within the next week.
And Bessent told CNBC Friday that about 20 countries could return to their 'Liberation Day' tariff rate starting on July 9, while others would receive longer windows to negotiate. He didn't name the countries that would receive the higher levies, but some nations' tariffs were set as high as 50% before Trump hit pause.
'The idea that uncertainty will be resolved early this summer appears to be completely dead,' Justin Wolfers, an economics professor at the University of Michigan, told CNN. 'This means tariff aggression is not dead. That's probably not super surprising but some of us allowed ourselves moments of optimism.'
The problem with the perpetually pushed-back tariff timetable is that the economy could really use some deals right about now.
After several months of strong economic news but incredibly weak consumer sentiment, America is starting to see those trends reverse: The vibes are on the rebound, but evidence is mounting that the economy is getting worse.
Consumer sentiment climbed 16% this month, the University of Michigan said in its latest survey released Friday. Although consumer sentiment remains weak, the stock market is at an all-time high, which could give Americans a confidence boost.
But that's not translating into spending. Consumer spending unexpectedly fell in May for the first time since January, the Commerce Department reported Friday. In real terms, consumer spending has now fallen so far in 2025.
Inflation is ticking higher, job growth is slowing and retail sales are sinking. That's a concern, because consumer spending makes up two-thirds of America's economy.
'Households are anxious about what tariff-induced price hikes will do to their spending power, while concerns about the robustness of the jobs market are on the rise,' said James Knightley, chief US economist for ING, in a note to clients Friday. 'Equity markets have recovered and are at all-time highs, but house prices nationally are starting to come under downward pressure.'
Many mainstream economists argue that the low inflation of the spring that helped boost consumer sentiment represents a calm before the summer storm, when they expect prices to rise as companies finish selling off inventories of products they had brought to the United States before Trump imposed tariffs. Friday's inflation report showed that the changeover to higher-tariff goods may have already begun to happen.
'Higher prices from tariffs may be starting to work their way through the economy,' said Robert Ruggirello, chief investment officer at Brave Eagle Wealth Management.
Although tax cuts from Trump's sweeping domestic policy agenda could help mitigate higher prices from tariffs, Trump's trade war continues to risk retaliation from American's key trading partners. Higher tariffs from foreign countries could slow the US economy, risking a recession.
'Trading partners taking retaliatory action could have a lasting impact on US output and, accordingly, public finances,' said Michel Nies, an economist at Citi.
That's why trade deals are so urgent: America's economy remains strong, but cracks are forming. Tariffs are a big reason why. More delays will generate more uncertainty. And those good vibes could turn bad pretty quickly.
CNN's Matt Egan contributed to this report.