The Journal: Is Trump Winning His Trade War?

Episode Release Date: August 1, 2025
Hosted by: The Wall Street Journal & Spotify Studios
Hosts: Ryan Knutson and Jessica Mendoza
Produced by: Spotify and The Wall Street Journal

1. Introduction to the Trade Deadline

On August 1st, a pivotal moment in President Donald Trump's trade strategy loomed large. President Trump declared this date as the "final, final deadline" for nations to negotiate trade deals with the United States or face significant tariffs.

Jessica Mendoza [00:05]: "Today is August 1st, a day that's been looming over trade negotiations for weeks."

2. Implementation of Tariffs

Trump's administration enforced a 30% tariff on countries failing to secure trade deals by the deadline. This move was a cornerstone of his aggressive trade policy aimed at reducing the U.S. trade deficit.

Jessica Mendoza [00:24]: "The Aug. 1 deadline can be boiled down to make a trade deal with the United States or get hit with steep tariffs."

Greg Ip, The Wall Street Journal's chief economics commentator, highlighted the unprecedented nature of these tariffs.

Greg Ip [02:00]: "He has raised tariffs more than the Smoot Hawley Tariff Act in 1930... Historians are going to be writing about that one for a long time."

3. Secured Trade Agreements

Despite the administration's initial goal of securing 90 deals in 90 days, the reality fell short. However, significant agreements were achieved with several major economies:

• Thailand and Cambodia: Both nations secured trade agreements with the U.S.
• United Kingdom: A pivotal deal announced, strengthening post-Brexit trade ties.
• Japan and South Korea: Trump touted the agreement with Japan as one of the largest in history, alongside a crucial deal with South Korea.

Greg Ip [01:02]: "Is touting his trade agreement with Japan as one of the largest in history for a trade deal with the European Union."

Additionally, agreements were reached with Indonesia, the Philippines, Vietnam, and Pakistan, marking substantial progress in the summer trade negotiations.

Jessica Mendoza [05:38]: "Over the course of the summer, the US struck deals with Indonesia, the Philippines, Vietnam, and the UK."

4. Impact on Major Trading Partners

The European Union, Japan, and South Korea agreed to a 15% baseline tariff, a notable escalation from the previous average U.S. tariff of 2% on these nations. In return, these partners committed to investing hundreds of billions of dollars into the U.S. economy over the coming years.

Greg Ip [06:24]: "Because it could have been worse... Russia invaded Ukraine... and that whole period since then, Europe has become much more worried about its security."

5. Resistance from Key Players: Canada, Mexico, and China

Despite significant progress, formidable challenges remained with Mexico, Canada, and China:

• Mexico: No new trade deal was reached. President Trump extended existing 25% tariffs on certain Mexican goods for an additional 90 days.

  Jessica Mendoza [10:45]: "Mexico and Canada, the two countries the U.S. trades with the most, have yet to cut a trade deal from Mexico."

• Canada: Imposed a 35% tariff on goods not covered by the U.S.-Mexico-Canada Trade Agreement, affecting a minority of bilateral trade.

  Greg Ip [11:06]: "He's imposed a 35% tariff, but that only covers goods that are not Subject to the U.S. Mexico, Canada Trade Agreement."

• China: Despite aggressive tariffs totaling at least 145% earlier in the year, China remains uncooperative. Negotiations have led to a temporary truce, but underlying tensions persist.

  Greg Ip [12:00]: "They don't have what we call a deal. They don't have what we call a deal. They had another conversation a few days ago in Stockholm to talk about going further."

6. China's Strategic Leverage

China, recognized as a significant adversary, leveraged its economic clout by:

• Purchasing U.S. Goods: China remains a substantial buyer of American agriculture and manufactured products.
• Supplying Essential Materials: Providing rare earth metals crucial for electronics, renewable energy, and battery production.

These factors enabled China to negotiate concessions despite the strained relationship.

Greg Ip [12:18]: "China has come out of this perhaps better than you might have expected."

7. Legal Challenges to Tariffs

Trump's unilateral tariff imposition faced legal scrutiny, particularly regarding the International Emergency Economic Powers Act. Critics argue that the trade deficit does not constitute an "emergency" justifying such measures.

Greg Ip [14:21]: "He invoked an emergency, calling the trade deficit an emergency, and they're pointing out, well, the trade deficit's been around for 50 years. What kind of emergency lasts 50, 50 years?"

One significant case reached the U.S. Court of International Trade, which ruled against Trump's use of the act. The case is now pending an appeals court decision, with potential escalation to the Supreme Court.

8. Economic Implications

The imposition of tariffs has begun to ripple through the economy:

• Price Inflation: Certain categories have experienced rising prices due to the increased tariffs.
• Employment: Recent reports indicate weak employment figures, possibly reflecting diminished employer confidence amidst trade uncertainties.
• Market Reactions: On the trade deadline day, U.S. stock indexes dipped, European and Asian stocks fell, and the dollar weakened.

Greg Ip [16:10]: "We've seen probably some impact on the broad economy. We now know that employment in the last two or three months was extremely weak."

9. Future Outlook and Conclusion

While President Trump considers his approach victorious—imposing higher tariffs without triggering a counter-offensive—questions remain about the long-term sustainability and legality of this strategy.

Greg Ip [15:45]: "Trump won on the metric of success that Trump himself uses, which is the US Gets to Impose higher tariffs than they get to impose on the United States."

However, the broader economic and geopolitical repercussions are yet to fully materialize. The shift from mutually beneficial trade negotiations to unilateral tariff impositions signals a potential decline in global trade trust and cooperation.

Greg Ip [17:26]: "The glue that held the global economy together for the past 60 or 70 years was mutual benefit... Now, if we're going into a world where that's not true any longer and essentially the biggest person gets to set the rules, then it seems likely that there will be less trade, you know, there will be less trust."

As the situation evolves, especially with ongoing negotiations with China set to conclude around mid-August, the full impact of Trump's trade war strategy remains to be seen.

Additional reporting by Caitlin McKay. Produced by Kathryn Brewer, Pia Ghidkari, Carlos Garcia, and the rest of The Journal team.