By Dr. Adam Yousef
The author is the head of Economics at the Greater London Authority and Policy Fellow at the University of Cambridge.
ISTANBUL (AA) - On Aug. 7, US President Donald Trump's new tariffs on imports from dozens of countries took effect.
Prior to that, the Trump administration concluded several agreements with various partners, including the European Union, the UK and Japan. Those agreements raise several questions:
- Why were they agreed?
- What did the parties seek to gain?
- Could they be realistically fulfilled?
- Will they avert future tariffs and economic discord?
-The need to compromise
In an earlier article for Anadolu, I highlighted the fact that as the Trump administration escalated its tariff rhetoric, some countries either started increasing their holdings of US Treasury Bonds (with the intention of later selling them), or threatened to sell their existing holdings. With a mounting national debt that exceeds $37 trillion, an impending economic slowdown, and the risk of higher inflation, the US finds itself in a precarious situation. In addition, there is a domestic political context in which the Trump administration is underperforming in the polls, and an international context characterized by increased polarization amidst continuing wars in Europe and the Middle East.
Meanwhile, other countries are keen to mitigate the effect of US tariffs on their exports, given that their growth prospects are relatively subdued and the US remains the world’s largest importer. Countries such as Vietnam, Indonesia and China have based their growth strategies on exporting manufacturing products, and they have been targeted by the Trump administration as it seeks to reshore manufacturing. Meanwhile, European countries seek to reduce the effect of tariffs on specific sectors (e.g., automobiles and steel) that the US considers vital to its national interests, while other partners seek US support to grow their nascent activity in frontier industries (e.g., the United Arab Emirates (UAE)). All this made it timely and necessary for all parties to reach agreements and restore much-needed stability.
-Beyond trade, tariffs
We still do not have the full details behind the announcements. Nevertheless, scrutinizing the announcements, one would be amazed by the magnitude and scope.
For example:
- The agreement with the UAE secured $200 billion in commercial deals for the US, covering aerospace, aluminum, energy and artificial intelligence (AI).
- The agreement with the EU commits it to the purchase of $750 billion in US energy exports and to invest $600 billion in the US by 2028.
- The agreement with Japan commits it to investing $550 billion in key US industries, including energy, semiconductors, critical mineral mining and pharmaceuticals.
The announcements cover more than just tariffs. They are better described as economic cooperation agreements since they address non-tariff barriers, investment, and comprehensive sector-specific collaboration. This reflects the Trump administration’s strategic take on economic relations with countries -- allies or rivals. Tariffs and trade policy are part of a broader toolkit used to secure political, economic and industrial advantages for the US. Furthermore, the Trump administration has retained tariff rates on those countries that are higher than those in place before March 2025 -- UAE: 10%, Japan: 15%, the EU: 15%. In other words, the agreements did not lead to tariff-free trade.
Another thing to highlight is the incredible numbers announced. For example, Japan's $550 billion commitment represents approximately 14% of its annual gross domestic product and 32% of all assets under management of its Government Pension Investment Fund, which is the largest pool of retirement savings in the world. The figures are too large to be realistically fulfilled, and the same applies to some of the other announcements made.
It underscores that the numbers should not be viewed as the primary focus of the agreements. From the US perspective, the agreements with the Gulf countries reinforced existing economic and security partnerships while countering China’s political, military and economic rapprochement with those states. In contrast, the agreement with the EU aimed to deepen European reliance on US energy imports while preserving access to the EU’s single market and retaining protections for US companies via the 15% tariff.
From the perspective of the other countries, a common denominator was to secure US cooperation -- political, military and economic -- while reducing the tariff rates on their exports.
-Looking to the future
With this in mind, are the agreements likely to survive? While it is virtually impossible to predict the future, one could envisage a scenario where the signatories opt to amend or replace them.
For example, the US-EU agreement has already been significantly criticized by leading French and German politicians, while recent surveys of US consumers reveal their displeasure with current US trade policy.
We have already seen the first Trump administration replace a previous agreement with Mexico and Canada (NAFTA) with another (USMCA). Therefore, the agreements are unlikely to serve as permanent accords and bulwarks against future tariffs. In an era of growing economic nationalism and geostrategic rivalry, discord perennially remains a possibility.
*Opinions expressed in this article are the author's own and do not necessarily reflect Anadolu's editorial policy.