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On April 9, 2025, in the face of U.S. stock and bond markets spiraling downward, U.S. bond yields increasing, the dollar tanking, consumer confidence sinking, and growing nervousness among congressional Republicans, President Donald Trump “paused” his steep reciprocal tariffs just hours after they kicked in at 12:01 a.m. that day.
Notwithstanding the pause, the Trump administration announced increases in reciprocal tariff rates on China from 34 percent to 125 percent after China predictably struck back with retaliatory tariffs of its own. This increased the minimum U.S. tariff rate on most imports from China to around 170 percent (including the 125 percent reciprocal tariff, 20 percent fentanyl tariff, and the 25 percent to 100 percent Section 301 tariffs under the Trump 1.0 and Biden administrations, although at a certain point, tariff rates become prohibitive and further increases become largely meaningless.
However, just a day later, the president announced temporary exemptions for imports of semiconductors, smartphones, computer monitors, and various electronic parts from China, although this quickly evaporated with a Federal Register notice announcing that the Administration had initiated Section 232 investigations of semiconductors and pharmaceuticals on April 1.
The pause will not help President Trump’s negotiating leverage, since his resolve to tough it out in the face of steep market declines, foreign retaliation, and eroding congressional support is now uncertain. However, it was a prudent and probably necessary step as reciprocal tariffs were starting to affect retail prices in the United States; retaliatory tariffs from China and Canada were starting to hit; stiff EU tariffs were about to go into effect; and political support from congressional Republicans was starting to (at least privately) erode.
The pause also weakens incentives for U.S. and foreign firms to move manufacturing to the United States, since it prolongs the uncertainty as to whether firms would benefit from long-term tariff protection. A 10 percent baseline tariff is unlikely to be enough to trigger a “Golden Age” of new U.S. manufacturing and jobs, given the enormous switching costs most firms would incur and the time required to move production into the United States.
The question now is whether the president can negotiate enough “great deals” to justify permanently shelving the reciprocal tariffs in July and extricate himself from an increasingly challenging economic and political situation. While markets have resumed their downward spiral, investors, farmers, businesses, and consumers have pinned their hopes on negotiations with trading partners as a pathway for President Trump to ratchet back his tariffs. Unsuccessful negotiations risk further market volatility.
The administration has been optimistic. The president has said: “We’re doing very well with negotiations with all countries . . . we’ve got a lot of countries that want to make a deal. Frankly, they want to make a deal more than I do.” Secretary of the Treasury Scott Bessent claimed that deals could come “very quickly,” that about 70 countries have contacted the administration, and that the United States “can end up with some good deals.”
But the prospects for quick success depend heavily on what the Trump administration will demand. If the president is looking for a handful of tariff cuts or relatively limited commitments to buy more U.S. goods that don’t address unfair trade practices, deals could come into place very quickly. However, as a lobbyist who served in the first Trump White House noted, this would be a “humiliating” outcome for a president who has touted the “art of the deal” and vowed to bring home “great deals” through his tariffs.
On the other hand, negotiating “great deals” may not be as quick if the administration truly wants to address nontariff barriers (NTBs) to U.S. exports. So far, the administration has signaled interest in NTBs like quotas, trade-distorting industrial and agricultural subsidies, restrictive import licensing policies, industrial standards, nonscientific sanitary and phytosanitary (SPS) measures, currency manipulation, digital services taxes and restrictions, abuses of antitrust and antimonopoly laws, discriminatory government procurement practices, nonmarket industrial policies, subsidized state-owned enterprises, and climate restrictions. After Vietnam offered to eliminate its tariffs on U.S. goods, White House Trade Advisor Peter Navarro summarily rejected the offer, calling Vietnam the “poster child for nontariff cheating.”
If the goal is to eliminate the main trade-related barriers to U.S. exports, the impact of NTBs dwarfs that of tariffs. But focusing on NTBs in the Office of the U.S. Trade Representative’s National Trade Estimates (NTE) report will make negotiations vastly more difficult. Most of these barriers are longstanding; they have survived seven rounds of General Agreement on Tariffs and Trade and World Trade Organization (WTO) negotiations and, in some cases, free trade agreement (FTA) negotiations as well, because they were deemed politically untouchable by their governments. Many NTBs are also enshrined in legislation, which means any changes need to pass parliaments or legislatures, or in the European Union, approval through the Council of Ministers of the 27 member states and the European Parliament.
Many of the most entrenched barriers involve agricultural products, supported by politically powerful farming interests in many countries. Some governments protect farmers through high tariffs (e.g., Japan’s tariffs on rice imports). Others do it through SPS regulations that ostensibly concern plant and animal health or food safety but also limit imports. The United States has long complained that the European Union’s restrictions on hormone-treated beef, GMO soybeans and corn, pork treated with ractopamine, and chlorine-treated chicken lack any scientific basis. However, these measures have strong support from European farmers and, more importantly, the European public and are rooted in fundamentally different attitudes toward food safety as reflected in Europe’s “precautionary principle.” They will also be a top priority for U.S. farm groups.
The remaining high tariff regimes are typically found in developing countries but also reflect domestic political dynamics. India and South Africa, for example, have long protected their industrial and agricultural sectors through high tariffs as part of “import substitution” policies. After decades of tariff protection, these domestic industries would not survive long in their current form if tariffs on their U.S. competitors disappeared. India’s 750 million subsistence farmers have shown repeatedly that they are fully prepared to use their political power to oppose trade liberalization.
In contrast to commercial negotiations, which are mostly about money, these domestic political dynamics are a unique feature of international trade negotiations, which involve sovereign governments that are generally “inconveniently” answerable to voters. As a result, it helps to have officials with experience negotiating trade deals, like former USTR Robert Lighthizer in Trump 1.0. Secretary Bessent and Secretary Ludnick are leading the talks and are experienced Wall Street dealmakers, but neither appears to have experience with trade deals or congressional relations. USTR Greer has by far the most experience, having gone through the United States–Mexico–Canada Agreement and China Phase One trade deal negotiations.
In short, any deals involving NTBs could take time and involve difficult and protracted negotiations if the administration is truly serious about leveling the global playing field and ending foreign “cheating.” It is likely to take a lot longer than 90 days, as most governments would have to unwind long-standing regulatory regimes and face major political costs if they were to give them away.
A European official said that any negotiations will take a “huge” amount of time if the United States wants to get into NTBs, since these are “very difficult,” and particularly if the Trump administration wants Brussels to drop things like product standards, the Carbon Border Adjustment Mechanism, the Digital Markets Act, and restrictions on hormone-treated beef. As an official noted, the Trump administration has repeatedly complained about value-added taxes (VATs), but the “whole world” has VATs (170 countries), as it is a quick and easy way to raise revenues.
If the United States wants to go after Canada’s NTBs, Canada’s “supply management system” for dairy and cultural restrictions on U.S. media, both longstanding U.S. grievances, are likely at or near the top of any U.S. list. But these measures are also hugely politically sensitive in Canada.
In addition to the difficulty of unwinding foreign NTBs, the Trump team is likely to face foreign demands, as the bigger and more powerful foreign governments may demand reciprocal U.S. concessions to save face and so they can portray any deal as win-win. The United States does not have entirely clean hands, as it also has some high tariffs (e.g., the 25 percent “Chicken Tax” on imported light trucks and SUVs, apparel, and footwear), dairy and sugar tariff-rate quotas, and restrictions on foreign ownership of U.S. television stations. Some of these measures are embedded in U.S. law and would require congressional approval in the face of what is likely to be strident stakeholder opposition, such as Detroit automakers and the United Auto Workers. China is likely to demand the removal of U.S. export controls on advanced technologies and the Section 301 tariffs, which are likely both nonstarters for Trump.
After seeing the Trump administration violate U.S. WTO and FTA obligations, including USMCA and Korea-U.S. Free Trade agreements negotiated in Trump 1.0, foreign governments are unlikely to enter into talks with a high degree of trust in U.S. commitments. At minimum, governments are likely to demand commitments from the administration not to impose additional tariffs, although it is not clear how much this would be worth.
The negotiations may also be complicated by the anger of some foreign governments about how they have been treated. A Canadian official said many Canadians were enraged by Trump’s tariffs, gibes about making Canada the “51st state,” and references to former Prime Minister Trudeau as “Governor Trudeau.”
Finally, governments may be wary of moving too quickly for tactical reasons. If a foreign government comes forward with concessions and looks like an easy mark, they may inadvertently embolden President Trump to demand more, as happened with Canada and Mexico. They could also look weak if they move too fast, and other trading partners get even better deals. Some may prefer to string out the negotiations for tactical reasons in an expectation that continued market declines and a potential U.S. recession could boost pressure on Trump.
One official said their government has reached out to the White House to schedule a meeting, but in the end, any deal was up to the U.S. side. The official said that the scope of the negotiations was still “ambiguous,” and it was unclear what the United States wants to discuss and whether the talks would be limited to reciprocal tariffs or also encompass Section 232. The official said his government is still considering how to respond, and every option is on the table. While the threat to reimpose steep reciprocal tariffs gives the president some leverage, it’s not clear how much, since the tariffs were already starting to look economically and politically unsustainable.
The challenge for the administration would get harder if foreign governments were to band together to gang up on the United States. So far, this hasn’t happened, although Canada reportedly reached out to the European Union to explore a coordinated response, which provoked a heated response from Trump. The Chinese press has claimed that Beijing reached an agreement to coordinate with Japan and South Korea on their responses to the U.S. tariffs, although Tokyo and Seoul have said it was a far more limited agreement to coordinate on high-level economic policy.
Of course, if the administration concludes that the tariffs were a gigantic mistake—an unlikely possibility—it could try to extricate itself. The administration could settle for token tariff cuts, which many countries can easily provide if there are U.S. items in their tariff schedules that they don’t care about or don’t make. The administration could also seek commitments to boost U.S. exports or reduce U.S. trade deficits, although China fell well short of its commitment to buy additional U.S. goods as part of the Phase One deal in the first Trump administration, buying only 58 percent of the $200 billion target. Such commitments would be even more difficult for market economies where the government has little control over private sector transactions. For now, the administration appears focused on preliminary agreements, such as “terms of reference,” “roadmaps,” or “memorandums of understanding,” that would leave the hard negotiations for down the road, but are unlikely to lead to near-term removal of the tariffs since it would eliminate the administration’s leverage, although the reciprocal tariffs could remain paused. Such agreements would have limited value, since the hard issues and real negotiations would be left for later, but would likely be taken positively by markets, which have proven extraordinarily gullible.
The administration reportedly is seeking commitments from U.S. trading partners to stop buying from China to reduce circumvention of U.S. tariffs through third countries. This is a legitimate concern, as Chinese companies set up assembly operations in third countries to avoid the Trump 1.0 tariffs. However, many U.S. trading partners have as much or more trade with China (e.g., South Korea, Australia, New Zealand, Brazil, South Africa, and Indonesia), and may not want to get caught in the middle of a U.S.-China trade war. Beijing has warned countries against deals that restrict trade with China in exchange for relief from U.S. tariffs, saying this would lead to retaliation. Finally, the haphazard way the U.S. tariffs are being rolled out has generated uncertainty so that many countries may hedge their bets on parting company with Beijing, with the United States looking less and less promising as a long-term trading partner and security ally.
In the end, the tariff measures are unlikely to significantly reduce the U.S. trade deficit or lead to a wave of new long-term investments in U.S. factories, given the uncertainty surrounding U.S. trade policy and the long horizon for recouping major investments in advanced manufacturing facilities. Most of the U.S. trade deficit results from the high value of the dollar and a longstanding imbalance between U.S. spending and saving rates. As the Peterson Institute noted in a report on U.S. external deficits, unfair trade practices are “not a significant cause.” If the administration is going to reduce the deficit, it must reduce the value of the dollar, either through its own policy mix or by working with U.S. trading partners to negotiate a new Plaza Accord or Smithsonian Agreement. Any decline would likely have the result of ceding some of the dollar’s role as a global reserve currency, with potential impacts on U.S. financial and bond markets.
In short, we do not know yet whether reciprocal tariffs can make America great. What we do know is that “great deals” may take longer than markets and some administration officials think and may have unintended and unpredictable economic and geopolitical fall-out.
Warren Maruyama is former USTR general counsel under President George W. Bush and former White House policy staffer under President George H.W. Bush. Meghan Anand is a practitioner of international trade and investment law. William A. Reinsch holds the Scholl Chair in International Business at the Center for Strategic and International Studies in Washington, D.C.
