The US's 90-day tariff pause has failed, and the re-imposed unilateral tariffs will also fail

Editor's note: He Weiwen is a senior fellow of the Center for China and Globalization. The article reflects the author's opinions and not necessarily the views of CGTN.

US President Donald Trump announced different tariffs on 14 countries on July 7, two days before the 90-day tariff pause ends. They include the US's major trading partners  — Japan and South Korea, each hit with 25 percent tariffs, and 12 other countries, ranging from 25 percent on Malaysia, 30 percent on South Africa, 32 percent on Indonesia, 35 percent on Bangladesh and Serbia, 36 percent on Thailand and Cambodia, and up to 40 percent on Laos and Myanmar. The new tariffs will be effective from August 1, 2025, leaving another three weeks for them to yield more to the US, in exchange for possible tariff rate changes. This unilateral bullying has aroused discontent among all the 14 countries. Japan's Prime Minister Ishiba Shigeru quickly gave a tough response.

This unilateral tariff announcement has proved the total failure of the tariff talks during the 90-day pause. Completely contrary to what Trump boasted on April 2, that over 100 countries were anxiously queueing up to talk with and yield to the US, by July 7, Trump had only one framework trade agreement with Vietnam. The US-UK trade agreement, a result of BREXIT, is not a part of the reciprocal tariff talks. The US world-wide trade deficit, at $1.2 trillion in 2024, was almost completely from its 10 leading trading partners: EU, the Chinese mainland, Mexico, Canada, Japan, South Korea, China's Taiwan region, Vietnam, India and Malaysia. The talks with EU, Japan, Canada and Mexico and India are still in a deadlock, and the agreement framework with China was just the opposite to Trump's purpose — no yielding from China but the US scaling back.

Parallel to the failure of trade talks over the past 3 months, there is a more embarrassing failure for Donald Trump: The coercive worldwide unilateral tariff policy has also sparked a quick increase of the US global trade deficit — the very opposite of its stated objective. During the first five months of 2025, the total US global trade deficit swelled to $604.23 billion, over $150 billion higher than a year earlier. If annualized, the total US trade deficit in 2025 would exceed $1.44 trillion, 20 percent higher than 2024, which was already a historic high. Among the top 10 US trade deficit sources, its deficit with the EU increased by 48.5 percent to $137.31 billion, and deficit with Canada and Mexico combined increased by 15.2 percent, to $105.07 billion. It was a direct result of import surge due to tariff panic hitting $1.5 trillion in Jan-May 2025, up 15.4 percent, or a net increase of $200 billion from over a year ago. US exports, on the other hand, increased by only 5.3 percent during the same period. Ironically, facts have proved that the US unilateral worldwide tariff has encouraged imports and discouraged exports, the very opposite of what it pursues or claims.

Why the double failure?

Firstly, US tariffs are a blatant violation of WTO rules which are based on non-discrimination and equal treatment to all members. Tariffs are to be decided only through negotiations, unilateral tariffs are illegal.

Secondly, they are unequal, based on a high unilateral tariff set by the US, leaving the partner no choice but to yield. The time limit is also unequal. Instead of setting it up through equal consultation, the deadline is set by the US, leaving the partner no equal voice but to follow. The tariff levels are unequal; Vietnam has to offer zero tariff to US products while its products are subject to 20-40 percent tariffs.

Thirdly, it is not based on objective economics, but on Trump's domestic political needs. The US's trade deficits are only the logical results of the international division of labor and the global supply chain based on the former.

Hence, such kind of trade talks cannot produce any equal agreements and cannot help reduce US trade deficits.

Trump's latest announcement of unilateral tariffs on 14 countries, and more in the pipeline, gives the world a strong signal: Trump believes that he could not reach his aim through tariff suspensions and negotiations, and the only way is to impose unilateral coercive tariffs and reach coercive unequal trade agreements.

Having all that in mind, it has become clearer that the latest Trump moves are all grave challenges to the world economy and trade, and the worst danger to the multilateral trading system since the 1930s.

The world needs to be fully prepared for a grave economy downturn. Right after Trump announced "reciprocal tariffs" on April 2, the IMF scaled down its world economic growth projection to 2.8 percent for 2025, while the WTO scaled down its world trade growth projection to -0.2 percent, from a 3.3 percent growth in its January estimate. The World Bank has recently warned that 2025 could well see the worst economic performance in the next decade.

However, as it has failed for the past 90 days, the resumption of unilateral tariffs, no matter how powerful, will ultimately fail again.

Firstly, the US economy and families will suffer in particular. Trump's announcement of the 14 letters immediately triggered a Wall Street stock market fall, with the DJIA, S&P 500 and NASDAQ shedding by 0.79-0.94 percent, as tariffs are paid by the US importers, not the exporting countries. The US economy already suffered a GDP fall of 0.5 percent in Q1, 2025, with the PCE inflation rate at 3.7 percent. As a direct consequence of Trump's tariffs, the world's capital is leaving the US, forcing the US dollar index to shed 10.8 percent during H1 2025, the worst 6-month performance since 2009. With the unilateral tariffs coming into force from August 1, the scenario is set to deteriorate fast.

Secondly, the US's imports and exports are likely to fall or stagnate, with trade deficit hitting a new high. The zero tariffs on US products by its trading partners will not bring about a surge in US exports. USMCA stipulates zero tariffs on most of US products to Canada and Mexico. Still, the US trade deficits with them both have kept rising. USMCA stipulates that 40 percent of the automobile parts must be made in areas with the minimum wage higher than 16 dollars per hour, which are undoubtedly in the US. Nonetheless, the largest source of US auto parts imports remained Mexico in 2024, accounting for 22.5 percent of total US imports.

Thirdly, and most importantly, non-US trade is likely to grow at the cost of US related trade. As the US only imported 13.5 percent of the world merchandise trade in 2024, over 86 percent of world trade will still follow the WTO rules and thus continue to grow, while trade with the US is likely to stagnate. What's more, a new world trade pattern will likely emerge with the US sidelined. EU has recently proposed a free trade alliance with CPTPP members. The Global South countries are also enhancing cooperation among themselves. In that eventuality, the US will be the grave victim of tariffing the world and challenging multilateralism.