Trump’s Much-Hyped Trade Deals Fall Short of Expectations

As the mounting evidence shows that President Donald Trump’s tariffs have been a legal, economic, and fiscal misstep, their supporters have shifted their emphasis to foreign policy. True, the line goes, the tariffs pushed up prices without meaningfully altering the trade balance or reviving American manufacturing. Yet they nonetheless compelled dozens of governments to open their markets, to channel trillions of dollars into the United States, and to align with Washington on China and other geopolitical priorities.

Three developments from recent weeks reveal some of the flaws in this narrative:

This is the “foreign policy case for U.S. tariffs” in action, and it’s hardly unusual.

Arguably the centerpiece for Trump’s tariff regime was the 20-plus “trade deals” his team announced last year to great fanfare. Yet many of them have turned out to be little more than press releases, if that.

Several promised pacts never reached completion. The U.S.-India agreement, which USTR Jamieson Greer’s team described as “99 percent” done last June, remains on hold. Brazil secured tariffs instead of a deal after talks collapsed. South Africa’s talks are stalled. Kenya is restarting negotiations. Free‑trading New Zealand never yielded anything; Chile didn’t either. And, of course, Canada looms large in this list.

Other pacts were proclaimed completed but never actually took effect. Malaysia’s trade minister voided its October 2025 agreement after the Supreme Court’s ruling against Trump’s “emergency” tariffs in February. Indonesia signed its deal a day before the ruling, yet Jakarta now says it never entered into force. The frameworks with Vietnam, Taiwan, and Argentina remain unratified. The U.S. announced deals with the Philippines and Pakistan, but those governments never confirmed the same terms. Bangladesh signed its pact three days before a major national election, and the new government says it’s under review. Thailand’s October 2025 framework deal is still being implemented, and North Macedonia … who knows, man. 

Also in this category are my personal favorites, the U.S. “trade deals” with Saudi Arabia, the United Arab Emirates, and Qatar. These have no treaty text or signed framework (let alone formal approval by the governments’ advisory councils) and are instead simply White House fact sheets touting non-binding investment pledges worth an astonishing $4 trillion—almost twice the combined GDP of those nations in 2026 and far beyond anything they’ve previously invested here. History seems to be repeating: In 2017 the Saudis announced U.S. investments worth $350 billion ($110 billion of it “immediate”), yet Saudi direct investment rose by only $5 billion through 2024.

Four agreements have advanced beyond press statements, but weaknesses remain even here.

The U.K. The U.S.–U.K. “economic prosperity deal” was signed on May 8, 2025, yet remains incomplete. In July, the House of Commons Business and Trade Committee found that the EPD, the subsequent (and now paused) “technology prosperity deal,” and a December 2025 pharmaceutical deal are all legally non-binding since they weren’t enacted into law, though a few elements—expanded beef and ethanol quotas and pharmaceutical pricing—were implemented via secondary legislation. (In return, the U.S. gave the U.K. a lower 10 percent baseline tariff rate and preferential treatment for British aerospace, agriculture, pharmaceuticals, and automotive goods.) On non-tariff barriers (including regulatory standards) and digital trade, the committee’s report shows little progress, while services were never in the deal. Notably, the U.K.’s discriminatory digital services tax remains, prompting Trump to threaten new tariffs over it and similar European DSTs back in April. 

Japan. The U.S. carried out its July 2025 framework with Japan by executive order, while Japan never ratified anything. In fact, Japan told WTO members earlier this month that it has made no tariff concessions, and that the agreement is not legally binding. Instead, the arrangement—including $550 billion in promised Japanese spending and investment—is an “administrative understanding” that Japan can end at any time. Tokyo pledged to buy more American rice but told the WTO that procurement would still be via open tender, with no preference for any country and no extra quota allocation to the United States. Its promised defense purchases were already planned as part of its defense buildup program.

As we discussed last February, some new Japanese investments in the U.S. will occur under the tariff deal, with returns eventually tilting toward the United States. Yet progress has been slow; officials say only 1 to 2 percent of the $550 billion will become actual direct investment; and the flagship $40 billion nuclear project with Westinghouse has stalled. 

South Korea. After its National Assembly declined to ratify the full U.S.–South Korea agreement, Korea passed a special enabling law in March to unlock the $350 billion in new investment Seoul had pledged. As Trump’s North Korea antics suggest, the investments are proceeding slowly: Of the $350 billion, $150 billion is earmarked for shipbuilding but has yet to be spent, and the other $200 billion has never been announced. Earlier this month, Korean news reported that surprise U.S. demands for semiconductor-related investments have thrown Seoul’s first investment “into uncertainty.” 

The Korean market was already fairly open to U.S. exports and investment, thanks to the U.S.–Korea FTA—a ratified, comprehensive pact in force since 2012 (and that Trump’s tariffs flagrantly violate). Promised additional movement on intellectual property, digital trade, and non-tariff barriers—beyond KORUS—has also moved slowly. And Washington’s new irritation over alleged discrimination against the U.S. e‑commerce retailer Coupang illustrates what the deal’s digital language can actually accomplish. 

The European Union. The EU deal stands as perhaps the strongest case the administration can point to, but that isn’t saying a lot. The EU’s big investment pledges are hollow because the European Commission has no power to enforce them. Nevertheless, Europeans formally implemented the trade elements of the deal in June, and the regulations took effect on July 1. Thus, unlike the other Trump trade deals, this one is binding and binding for all 27 member states.

The specifics, however, are underwhelming. The EU deal’s main deliverable was duty-free access for U.S. industrial goods, but EU tariffs on these items were already very low (a trade-weighted average of 1.5 percent). As U.S. negotiators know well, the EU’s protected, subsidized, and regulated agriculture sector is where the real trade policy action lies, but the concessions here are modest: mainly slightly larger tariff quotas on non-sensitive products like pork, nuts, processed foods, seafood, and a few dairy items. Notably, many “sensitive” farm products are left out, as are European rules—on beef hormones, GMOs, pork enhancers, poultry treatments, etc.—that have long blocked U.S. farm goods from meaningful access. Also omitted are new European regulatory hurdles, such as the onerous deforestation regulation that the American Farm Bureau warns could affect nearly half of all U.S. agricultural exports to the EU. (Negotiators say they’re working on it.) 

Equally important, the EU deal’s implementing legislation contains several provisions that may discourage long-term contracts and investments by U.S. companies. In particular, the regulation sunsets the entire deal on December 31, 2029, suspends it at year-end if U.S. steel and aluminum tariffs don’t improve (they still haven’t), and introduces a new “safeguard” mechanism that could halt certain U.S. preferences if surging American imports “threaten” EU firms. The entire regime took effect on July 1, and it could terminate in December.

As we’ve discussed, the China “deal” is essentially a one-year truce that expires in November. There’s no formally signed agreement or even Chinese confirmation of most of what Washington announced. At the Beijing summit in May, China pledged even more agricultural and aircraft purchases, and both sides hailed a “Board of Trade” to liberalize a modest amount of trade in non‑sensitive goods. But the board hasn’t launched; the Boeing purchases were always expected; and even if the agricultural commitments pan out, the best-case scenario for U.S. exports is that they return to levels seen in 2024, before the trade frictions began. (Yes, this includes soybeans.) In the meantime, exporters in Latin America—especially Brazil and Argentina—are slowly taking share from American farmers’ markets.

Behind these numerous “deals,” a recognizable pattern emerges: In response to Trump’s tariffs and in exchange for modestly reduced duties, foreign governments have offered flashy headlines and big-number promises but few tangible concessions, while preserving almost all of their sensitive protections and aiming to run out the clock on everything else. Over time, commitments have grown thinner rather than thicker, and little of it seems destined to endure once Trump leaves office in 2029. Meanwhile, ongoing tariff wars and the aggressive posture of U.S. trade policy have likely undermined what was supposed to be the tariffs’ core foreign-policy aim—isolating China.

The pattern echoes what happened with the earlier Phase One China deal: it generated splashy headlines but little follow-through (on both sides) and minimal trade impact before it collapsed in 2021. And as I noted years ago, U.S. efforts in the 1980s and ’90s to use tariffs to open foreign markets failed far more often than they succeeded, while generating a slew of unintended harms along the way. The recurring lesson is clear: Vague, one-sided U.S. trade deals imposed at gunpoint tend to fail over time because other governments have little incentive to comply in good faith.

The results above are meager, but they aren’t nothing. Yet the modest achievements of these deals shouldn’t be measured against a Liberation Day status quo; they should be weighed against what the United States used to do—and, as my colleague James Bacchus explains in a new Cato paper, what everyone else is still doing today.

The United States maintains 14 free-trade agreements covering 20 countries. Unlike Trump’s arrangements, these eliminate nearly all tariffs—typically over 98 percent—on both sides. Data from the WTO show, for instance, that 99.85 percent of U.S.–Canada trade was duty-free in 2024 (i.e., before Trump began tarring duties with tariffs), thanks to NAFTA and then the USMCA. More importantly, these agreements liberalize services and digital trade and establish clear, detailed rules on intellectual property, customs enforcement, government procurement, investment, and more—along with binding dispute mechanisms for when disputes arise. And the accords are entrenched in law by the U.S. and counterparties, making them far more durable than Trump’s deals. 

Admittedly, these pacts aren’t perfect. They include politically sensitive carve-outs for items like Canadian dairy, Korean rice, or U.S. “trade remedies,” and new issues can emerge, especially in new legal domains like digital trade. Nevertheless, the combination of genuine trade liberalization; transparent, predictable, and stable rules; and sizeable economic gains for both sides has proven effective: Parties tend to comply with a deal’s terms because—unlike today’s gunboat arrangements—they want the agreement to endure, and trade and investment covered by an FTA expand markedly after it takes effect. By 2023, nearly half of all U.S. goods exports went to FTA partner countries that had committed to duty-free treatment.

The catch here is that Trump has violated all previous U.S. FTAs and in 2017 walked away from the CPTPP, which is as deep and comprehensive as the others (if not more so) and includes the U.K., Japan, Vietnam, and several other nations now engaging with Washington via “deals.” In these cases, Americans are now paying billions in new U.S. tariffs for terms far worse than those Trump abandoned nearly a decade ago. This stark contrast between so-called tariff deals and genuine FTAs helps explain why so many other governments are still pursuing the latter:

And that brings us to the costs associated with these tariff schemes. As Bacchus shows in his paper, rather than retaliating directly against U.S. goods and services, many governments have chosen a more durable route: striking real trade deals of their own. Notable examples from the past 18 months include: 

These agreements and others like them are deeper, broader, and more legally robust than the U.S. deals—and, importantly, they supplement the hundreds of non-U.S. FTAs already in force, including the China-backed Regional and Comprehensive Economic Partnership, which will eventually liberalize about 90 percent of all trade among its 15 member states (including Japan and Korea). 

These moves not only allow governments to hedge away from dependence on the U.S. market but also enable “hidden” retaliation against U.S. goods and services: Rather than raising tariffs on American products and drawing Trump’s ire, governments can still place U.S. exporters at a long-term disadvantage by lowering barriers to non-U.S. goods.

Other forms of retaliation have also appeared. China and Canada resorted to tariffs on U.S. exports—the former to a substantial extent. Brazil is now weighing the same. As I noted last year, foreigners also fought back by boycotting American goods and services. A new study quantifies some of that harm, showing that foreign tourism—particularly among Canadians—fell noticeably in response to “Liberation Day” tariffs, diminishing U.S. services exports and costing American firms more than $1 billion per month in lost revenue.

Trump’s tariff deals also require historically high U.S. tariffs buttressed by a flimsy legal rationale in perpetual flux—hundreds of billions in chaotic new taxes that primarily burden U.S. firms, are likely to dampen investment, output, and, ironically, exports in both seen and unseen ways, and have even helped fuel a “sell America” movement abroad as foreigners gradually divest from U.S. dollars and debt. Before this began, U.S. tariffs hovered around 2 to 3 percent and were relatively transparent and straightforward. Since then, they’ve roughly quadrupled in size and become mind-bogglingly complex. Add ongoing modifications and court litigation, and you have a regime tailor-made to discourage companies—both foreign and domestic—from making long-term bets on the U.S. market. 

And for what end? As I wrote previously, tariffs have likely restrained U.S. manufacturing output and capacity over the past 18 months, with the sector’s bump lately concentrated in less-protected industries and driven by non-tariff factors such as the AI buildout. Before the trade wars, the U.S. had long been the top global recipient of foreign direct investment (FDI)—much of it going into manufacturing—and exports of real goods grew around 3 percent annually from 2000 to 2019. 

So far, there’s little sign that Trump’s deals have improved these figures. Last year, the United States remained the largest destination (and source) of foreign direct investment, but America’s share of global inflows continued to fall, from about 22 percent in 2022 to roughly 17 percent in 2025. (And the 2025 decline occurred in a year when global FDI rose 6 percent, so we lost share in a rising market.) Foreigners’ direct spending on new or expanded U.S. facilities last year was $13.8 billion—a respectable figure but below 2023 in nominal terms. Promised future FDI of $66.1 billion was an improvement over 2024, but much of it is slated for 2028 or later. It’s also well below the $104.1 billion reported in 2022, not to mention the trillions the White House keeps claiming. 

In short, the “tariff investment boom” has yet to appear in the numbers, and—as shown above—there are strong reasons to doubt it ever will.

U.S. exports, meanwhile, rose 2.7 percent in real terms last year, slightly below the historical average and heavily aided by nonmonetary gold, moves tied to reasons only loosely connected to U.S. trade policy. Outside of tourism, exports of U.S. goods exposed to direct retaliation or tariff-induced costs—especially agriculture and autos—fell in real terms, with the farming sector needing another multibillion-dollar federal bailout to cope.

Economists have long observed that “a tax on imports is a tax on exports,” due to retaliation, higher input costs, currency shifts, and resources moving from export-driven to import-competing industries. So far, that rule remains valid.

Finally, there are costs we can’t capture in a chart. Studies have shown that past Trump tariff surges have eroded the United States’ soft power in measurable ways, and it seems to be happening again—benefiting China. In July, Pew found that China was viewed more favorably than the United States in most of the 36 countries surveyed, with notable swings in allied nations like Canada, Australia, France, and Germany. Middle-income countries, meanwhile, saw China as a more reliable partner than the U.S. and more likely to contribute to peace and stability around the world. A few months earlier, Gallup found China’s median global approval surpassing America’s across more than 130 countries by a historic margin. Foreign policy isn’t a popularity contest, but public opinion can influence how willing foreign officials are to align with U.S.-led initiatives. And—as we just observed at the G20 finance ministers’ meeting in Asheville, North Carolina—few, if any, nations are eager to join U.S. efforts to pressure Iran or to isolate China, partly because of tariff policy. (And let’s not even begin with the Greenland tariff fiasco.)

To the extent that projecting American power abroad depends on a robust and growing U.S. economy, or on softer persuasion, Trump’s tariffs have represented a clear drag.

On the foreign-policy front, Trump’s tariff experiment yielded a handful of tangible gains in market access abroad and in attracting investment at home. What truly matters, however, is how those incidental victories stack up against promises, and against what real-world alternatives have achieved—and at what cost. By those measures, the tariff-first approach to U.S. foreign policy has failed. We received grandiose, empty promises and modest, fleeting deliverables that pale beside what well‑vetted, ratified trade agreements have accomplished, while imposing significant economic costs and encouraging many countries—including several close geopolitical allies—to diversify away from the United States in durable ways. Meanwhile, the major global challenges remain untouched.

In the end, the president’s tariff-centric strategy—and the “world minus one” framework it produced—will render America less influential in trade and diplomacy and less secure overall, all while nudging China forward. And we’ll be poorer, too.

If this is the best-case argument for tariffs, I’d hate to see what the alternatives look like.