With panic spreading in markets across the globe, world leaders raced over the weekend to make offers to US President Donald Trump to lower tariffs across the board.
The problem, however, is that it is unclear what exactly Trump would find acceptable – or if he even wants to make deals at all. Trump set a high bar on Sunday night, telling reporters that any agreements would need to eliminate bilateral trade deficits.
“To me, a deficit is a loss,” Trump told reporters on Air Force One. “We’re going to have surpluses or, at worst, we’re going to be breaking even.”
The lack of clarity over Trump’s demands is adding to frustration across the capitals hardest hit by his “Liberation Day” levies, which are set to take effect on Wednesday. With tariff levels set according to deficits, rather than actual reciprocal rates, governments are in the dark about what specifically they can do to avoid getting hammered.
The problem for all governments is that nothing they do can change the outcome of Trump’s formula for calculating the tariffs, according to Deborah Elms, head of trade policy at the Hinrich Foundation.