Trump’s rendition of ‘The Confrontation’ redeems Crowe; Dollar swoons

(Originally published June 13 in “What in the World“) Trump just can’t help chewing the scenery.

U.S. President Donald Trump’s latest off-the-cuff suggestion that his administration might override negotiations with U.S. trading partners and instead send a letter dictating tariffs on U.S. imports of their products sent the dollar to a three-year low. “At a certain point, we’re just going to send letters out…saying, ‘This is the deal. You can take it, or you can leave it,’” Trump told reporters Wednesday evening as he headed into a performance of “Les Misérables” at the John F. Kennedy Center for the Performing Arts. “So at a certain point we’ll do that. We’re not quite ready.”

A benchmark index of the dollar’s value against other major currencies was recently trading at its lowest since Feb. 2022. The dollar is also being pulled lower by rising expectations that muted inflation and weakening employment data will prompt the U.S. Federal Reserve to cut interest rates.

With the July 8 deadline for reaching bilateral deals in Trump’s 90-day pause on “reciprocal” tariffs fast approaching, the U.S. has reached deals with only one country, the United Kingdom, and that’s one with which the U.S. enjoys a trade surplus. With China, Trump has only managed a tentative cease-fire.

China and the U.S. emerged from trade talks in London earlier this week with what they called a framework for extending the 90-day suspension of tit-for-tat tariffs they announced in early May. The suspension is due to lapse in August. But it appeared in jeopardy last week after Trump accused China of having “totally violated” the Geneva agreement and Beijing responded by accusing Washington of “seriously violating” the agreement.

Trump’s threat may have been intended to put negotiators’ feet to the fire, but a weaker dollar makes imported goodies more expensive, and consumers have already been bracing for the worst. There is evidence that U.S. customers have, for example, already started shunning China-made goods to avoid tariffs. China’s exports to the U.S. in May dropped 34% compared to the same month of 2024, according to the Financial Times, citing official Chinese data. That follows a report by The New York Times, using a Moody’s analysis of official U.S. data, that falling purchases in April by U.S. consumers of cell phones from China helped to slash the U.S. trade deficit.

Trump’s existing tariffs, meanwhile, will stand until at least August. A federal appeals court on Tuesday extended its pause on a trade court’s ruling declaring Trump’s reciprocal tariffs illegal and ordering they be lifted. The U.S. Court of Appeals for the Federal Circuit in Washington, D.C., was granting a request for an extension by the Trump Administration and said it would hear arguments in the case July 31. The loser is likely to then appeal to the Supreme Court.

The Court of International Trade in New York’s ruling last month threw Trump’s trade negotiations into disarray and intensified the confusion facing companies trying to determine what tariffs they’ll face from which countries when.

As explained in this space at the time:

The trade court ruling said Trump had overstepped his authority in basing tariffs on the International Emergency Economic Powers Act of 1977. The court ruled that the U.S. trade deficit doesn’t constitute the kind of national emergency described by the Act to justify conferring authority to the president normally held by Congress. The court also ruled that the Act does not give Trump unbounded authority to impose tariffs.

If the ruling is upheld, it stands to reverse tariffs that used the IEEPA as their legal basis. That would knock what analysts at Goldman Sachs estimate is 6.7 percentage points off the total effective tariff rate Trump has imposed since taking office, including the 10% baseline of his “reciprocal tariffs,” his 20% additional tariff on imports from China, and his 25% tariff on imports from Canada and Mexico that don’t comply with the United States-Mexico-Canada Agreement. But tariffs on aluminum, steel and cars would remain, as they were based on Section 232 of the national security statute and not the IEEPA.

Even if the appeals court upholds the trade court ruling, however, Trump is likely to find other legal avenues for imposing tariffs. White House trade adviser Peter Navarro said the White House could use powers provided under Section 301 of the unfair trade practices statute, Section 232 of the national security statute, Section 338 of the 1930 Tariff Act of 1930, or Section 122 of the 1974 Trade Act.

The U.S.-China truce doesn’t affect Apple’s China-made iPhones, iPads, and MacBooks. That’s because Trump already exempted them from the reciprocal tariffs. But they’re still hit by the minimum 10% tariff on all imports and the additional 20% tariff Trump slapped on all imports from China for its alleged role in exporting fentanyl components to the U.S.