I’m Not a Trade Negotiator… But I Played One in Brussels
Trump’s approach won't lead to traditional trade agreements like those we scripted in the past
There’s an old U.S. advertisement that goes, “I’m not a doctor, but I play one on TV.” For this month’s Alphabet Soup, I can confirm: I’m not a trade negotiator — but I did play a part in Brussels about a decade ago. And here’s what I learned from the effort to negotiate the failed US-EU Transatlantic Trade and Investment Partnership (TTIP): trade agreements are tedious, complicated, and painfully long.
Take the Trans-Pacific Partnership (TPP): the deal the U.S. ultimately walked away from. It came in at a whopping 5,600 pages.
In trade agreements, both sides often reach agreement on 97% of the goods and services in scope, but the whole thing falls apart over the remaining 3%. That’s what happened with the TTIP — though to be fair, the U.S. and EU disagreed on more than just 3%.
Why bring this up now?
Because Trump’s trade agreements aren’t really trade agreements. They’re more like statements of mutual intent.
Let me explain.
Traditional trade agreements take years to negotiate. There are endless chapters, subchapters, clauses, and sub-clauses — each tied to a distinct area of trade. Both sides come to the table armed with data, but they rarely agree on what the data say. Then there are the interest groups — autos, agriculture, tech, financial services, pharma — each throwing considerable weight (and money) behind protecting their market share.
In the EU, things are even trickier. Once a deal is struck, all 27 member states must ratify it. Just ask Canada. After nearly a decade of negotiating CETA (the Comprehensive Economic and Trade Agreement), the deal nearly collapsed in 2016 when Wallonia, a Belgian region with veto power over national decisions, refused to approve. The Canadian trade minister, Chrystia Freeland, was so frustrated she was brought to tears.
Meanwhile, the U.S. is adding a new twist to the trade agreements it’s seeking: it will insist that partners must include alignment with U.S. trade policy toward China — a condition that complicates any bilateral deal.
So what will we see instead?
We’ll get letters of intent (LOIs) — not comprehensive trade deals. Trump has already done this with the UK. In these arrangements, the U.S. states its intent to cap tariffs at, say, 10%, while the other country promises to “rebalance” trade flows — in practice, a vague commitment that rarely requires immediate action.
These LOIs allow both sides to declare victory. The U.S. imposes a 10% or more tariff (with some exceptions); the other country does little but swallow it. Treasury Secretary Scott Bessent has already said the LOI is the deal — and that tariffs won’t snap back to “Liberation Day” levels so long there's an LOI or visible progress toward one.
A Side Note on the Legality of Those Tariffs...
Many readers will have noticed that the U.S. Court of International Trade recently ruled that President Trump lacked the authority under the International Emergency Economic Powers Act of 1977 (IEEPA — an Alphabet Soup-worthy acronym!) to impose certain reciprocal tariffs.
But within 24 hours, the U.S. Court of Appeals for the Federal Circuit stepped in and paused the lower court’s decision, pending a hearing of the legal arguments.
These are constitutional speed bumps — hugely important from a societal and rule-of-law perspective. But from an economic standpoint, they’re mostly noise. In practical terms, they are unlikely to stop tariffs from being imposed.
This case will likely make its way to the Supreme Court, where I expect the justices will uphold the view that the President has broad discretionary authority under IEEPA — especially in matters framed as national security or foreign policy.
So let’s be clear:
Trump’s trade agreements aren’t your parents’ trade agreements. In fact, they’re not trade agreements at all — they’re tariff agreements.
It’s one reason why the Treasury Secretary, not the U.S. Trade Representative, is leading these negotiations. (There are other reasons, but we’ll save those for a conversation.)
Where does this leave us?
All the hand-wringing over comprehensive trade deals is a distraction. The real takeaways are:
At least 10% tariffs are here to stay in nearly all cases
Trump will use tariff threats to keep trading partners off balance — or in the administration’s words, “to attain maximum negotiating leverage”
The trade lawyers who once churned out thousands of pages of carefully negotiated text can reminisce about the classical age of trade deals. But those days are over.
For the record, when I served as the U.S. Treasury Attaché in Brussels, my trade negotiation job was to repeat the same line again and again:
“Financial services regulation does not belong in a free trade agreement.”
And then I watched USTR and the European Commission go to battle over chlorine-washed chickens. (Mmmmm… chlorinated poultry).
Michael Pedroni, Founder and CEO of Highland Global Advisors