Trade Deals Large and Small, Real and Unreal

Bessent announced a “framework” for a trade deal Trump and Xi can agree on this week in South Korea. There are few details, but we expect it will be a stand-down back to the so-called “reset” in May. The US will maintain large tariffs on Chinese imports; ship fees will be reduced or eliminated; China’s export control regime on rare earths will be shelved temporarily. Trump’s endgame is to engage the Western democracies in decoupling from China gradually. China’s approach is to avoid this with threats of sudden breaks that threaten recessions and electoral losses in the West. Europe is playing along, Canada is not – and Trump is punishing Canada. New trade deals with Malaysia and Cambodia appear, unlike the other larger ones previously announced, to be real. But they leave large US tariffs in place despite elimination of the counterparty nations’ tariffs. How is that “reciprocal”?