The Trump tariff deals could be hard to reach, says Evercore ISI's Sarah Bianchi

Key Concepts:

• Executive Order on Medicare Drug Price Negotiation
• National Security Investigation into Pharmaceutical Imports
• Tariffs
• Section 232 Investigations
• Trade Negotiations (Japan, China)
• Auto Tariffs
• Transactional vs. Structural Deals
• Uncertainty in Markets
• China's Bank Shifting

1. Executive Order and National Security Investigation:

• President Trump signed an executive order related to Medicare, allowing for changes to negotiate prescription drug prices.
• The administration initiated a national security investigation into pharmaceutical imports, potentially leading to new tariffs.

2. Timelines and Impatience:

• Section 232 investigations traditionally take a while.
• There's a concern about the length of these investigations (e.g., six months to study rare earth minerals).
• The President has been known to become impatient and pull investigations forward.

3. Trade Negotiation Strategies:

• The administration seems to want to settle some trade disputes and is trying to get quick wins with countries like Japan.
• Negotiating with Japan will be difficult without some relief on auto tariffs.
• The administration is indicating they want to hold firm on auto tariffs.
• Deals will depend on whether the administration is looking for transactional or structural changes.
• Countries may hold out to see how much the administration will pull back on its own.

4. China and Global Trade Disruption:

• Even if the U.S. makes deals with everyone except China, the disruption to global trade could still be significant.
• The two largest economies in the world going "tit for tat" (e.g., Boeing vs. rare earth) is destabilizing.

5. China's Bank Shifting and Bifurcation:

• A major concern is China bank shifting through other countries like Vietnam and Mexico to get to the United States.
• If the U.S. ends up with a bifurcation (deals with everyone but China), this problem could become exponentially worse.

6. Market Uncertainty:

• Markets and the economy dislike uncertainty.
• The ongoing trade disputes and investigations are not helpful for market stability.

7. Negotiating vs. Holding Firm:

• The "negotiating side" of the administration seems to be doing better currently.
• The electronics pivot and the pause on the 90 days are examples of this.

8. Conclusion:

The administration's trade policies are complex and create uncertainty in the markets. While there's a push to settle some disputes, new investigations and the ongoing conflict with China continue to pose challenges. The success of future trade deals will depend on the administration's willingness to compromise and address concerns about China's bank shifting.