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Trump's trade war may seem to be going well, but there are still obstacles.

The U.S. president Donald Trump seems to be winning his trade war, which he launched after returning to the White House, in January. He has imposed double-digit tariffs on almost all imports and reduced the trade deficit.

There are still many obstacles to overcome, such as whether U.S. trade partners will fulfill their commitments for investment and purchases of goods, whether tariffs will increase inflation or slow demand and growth and whether courts will allow him to continue with his ad hoc levies.

On the day of the inauguration, U.S. tariffs were effective at around 2.5%. Since then, it has risen to between 17% to 19% according to various estimates. The Atlantic Council predicts it will be closer to 20% than ever before, as higher duties take effect on Thursday.

Trading partners have mostly avoided retaliatory duties, saving the global economy a painful trade war. Data released on Tuesday revealed a 16 percent decrease in the U.S. Trade Deficit in June. The U.S. Trade Gap with China was the smallest it has been in over 21 years.

The American consumer has proven to be stronger than expected. However, recent data indicates that tariffs have already affected jobs, inflation, and growth.

What does winning really mean? Josh Lipsky is the director of economic studies at Atlantic Council. "He is raising tariffs against the rest of world, and avoiding a trade war much easier than he expected. But the bigger question to ask is what impact this has on the U.S. economy."

Michael Strain, the head of economic studies at conservative American Enterprise Institute said that Trump's geopolitical wins could be hollow.

He said that while Trump is winning in a geopolitical context, he was losing the economic war. "What we see is that Trump is more willing than other nations to cause economic harm to Americans. "I think that's losing."

Kelly Ann Shaw, a former White House trade advisor during Trump's initial term and now a partner with Akin Gump Strauss Hauer & Feld said a strong economy and stock prices near record highs "support a tariff strategy that is more aggressive."

It will take some time for Trump's policies, including his tariffs, tax reductions, deregulation, and energy-boosting policies, to be implemented.

She added, "I believe history will judge his policies. But he's the first president I have known to make significant changes to the global trade system."

DEALS SO FAAR

Trump has signed eight framework agreements that include the European Union (EU), Japan, Britain, South Korea and Vietnam. They also include Indonesia, Pakistan, the Philippines, Pakistan, Indonesia, the Philippines, the Philippines, the Philippines, the Philippines, the Philippines, the Philippines, the Philippines, the Philippines, the Philippines, the Philippines, the United States, the Philippines, the Philippines, the Philippines, the Philippines, the Philippines, the Philippines, the Philippines, the Philippines, the Philippines, the UK, the Philippines, the Philippines, the Philippines, the Philippines,

This is far below the "90 deals within 90 days" that administration officials had proclaimed in April. However, they still account for about 40% of U.S. commerce flows. Add in China which is currently subject to a 30% tariff on its products but will likely be granted another reprieve before the August 12 deadline. This would bring that figure up to 54%.

Trump's tariffs have not been consistent, despite the deals.

He increased the pressure on India on Wednesday, increasing new tariffs from 25% to 50% because it imports oil from Russia. After Trump complained that Brazil was prosecuting former leader Jairbolsonaro, an ally of Trump, the same tariff rate will be applied to goods from Brazil. After a phone call between Trump and the leader of Switzerland that shattered a previous deal, Trump is now imposing 39% tariffs on goods from Switzerland.

Ryan Majerus is a trade lawyer with experience in the Trump and Biden administrations. He said that the announcements so far have failed to address the "longstanding and politically entrenched issues" of U.S. trade policymakers.

He also pointed out that there are no specific mechanisms to enforce the large investments, such as the $550 billion announced for Japan and the $600 billion for EU.

PROMISES and RISKS

Critics criticized European Commission President Ursula von der Leyen for agreeing to a 15% tax during a surprise visit by Trump to Scotland in the last month. She received little back.

This deal disappointed winemakers and farmers who wanted a zero-to-zero tariff. Francois-Xavier Husard, the head of France's FNIL National Dairy Sector Federation, said that 15% was better than 30% but still would cost dairy farmers millions.

Von der Leyen made a symbolic commitment to invest $600 billion and buy $750 billion worth of strategic U.S. goods, according to European experts. Trade experts and analysts point out that Brussels cannot mandate EU companies and members to meet their pledges.

Officials in the United States insist that Trump has the right to impose new tariffs on goods if he feels like Japan, Europe or other countries are not fulfilling their obligations. It is unclear, however, how this would be enforced.

History offers us a warning. China's state-run economy never met the modest purchase agreements made under Trump’s Phase I U.S. China trade deal. It was difficult to hold it accountable for the Biden administration.

"All of this is not tested." "The EU, Japan and South Korea will have to figure out a way to operationalize it," Shaw said. "It is not just about government purchases." "It's about getting the private sector to invest, back loans or purchase certain commodities."

The main legal challenge to the tariffs Trump unilaterally imposed is the fact that they are based on a flawed premise. During oral arguments in appellate courts, his legal team was grilled over the novel use of 1977 International Emergency Economic Powers Act to justify his tariffs. This act has been used historically for sanctions or freezing assets against enemies. The Supreme Court will ultimately decide the issue, regardless of whether a ruling is made at any given time.

(source: Reuters)