Trump’s tough tariff tactics is getting results

Japan is a big problem for the upheavals of President Donald Trump of the global trade system.

In his own words, we could now say that his aggressive approach gives tangible results.

From the start, the American team spoke about the chances of an agreement with Japan, but despite several delegations, the agreement had been strangely elusive – so far.

In a narrow sense, this is a victory for the Trump approach, especially if Japan becomes the domino which leads the rest of the world to enter online.

Japan now has the best deal, or rather the least, of all nations with major trade surpluses with the United States.

The general rate of 15% to be invoiced on Japanese products imported into the United States is higher than the 10% of the United Kingdom, but the United Kingdom has no surplus.

As I have already reported, the fury of the Japanese negotiators during the talks was noted among the diplomats of Washington DC accustomed to the extreme politeness of the nation.

Tokyo played Hardball. The Japanese Minister of Finance has described the $ 1.1 dollars in the country in detention of the US Treasury obligations, the largest in the world, such as a “card” which could be put on the table.

They are rumors about hedge funds in Japan selling American bonds following the announcement of Trump’s “Liberation Day” tariffs in April which sparked a larger sale and larger issues about the largest economy in the world and the status of refuge in the US dollar.

Thus, the achievement of an agreement matters enormously, in itself, and as an example to other major economic blocks, including the European Union (EU).

The agreement comes the day when Japanese EU leaders in Tokyo. There had been chatter on Japan, the EU and Canada coordinating their reprisals. This stops such an initiative.

Some EU members will wonder why a similar agreement cannot be concluded, at the very moment when Germany and France have taken the implementation of reprisals, perhaps against the giants of American technology.

The world is waiting for details here, but it is clear that Japan has protected its agricultural imports, but will import more American rice.

We do not know what can change the lack of popularity of large American cars in the country, although Japanese private companies are supported to invest half a billion dollars in the United States, in one form or another.

Japan has concluded this agreement when it could have waited to see how things develop and international markets react when Trump’s most difficult rates for a multitude of countries come into force on August 1.

The internal political weakness of his Prime Minister may have been a factor, although other countries, including Indonesia and the Philippines, also concluded agreements.

Overview is a tired acceptance of the United States to collect what would have been unthinkable prices a year ago on its main allies, for fear of something worse.

In the case of Japan, it was a 25% price threatened by Trump.

Prices are now increasing significant sums for the US Treasury, without reprisals against American exporters. Until now, at more than $ 100 billion this year, around 5% of American federal revenues come from prices, against 2% more generally.

The United States Secretary of the Treasury Scott Bessent thinks that the annual tariff will be $ 300 billion.

It is far from the amount increased by income taxes, but a significant amount. It is taken without direct reprisals and currently the agitation of the market seen earlier.

However, history does not stop here. Who really pays for these prices? In the end, American consumers will pay a large part in terms of price they pay for imported goods.

In the past, Bessent and others have suggested that an increasing value of the US dollar would help to mitigate the cost of imports for consumers. The opposite has occurred.

The dollar dropped in the first half of this year, losing 10% of its value compared to a basket of global currencies. This will add to the cost of imports, in addition to prices.

There is also a wider canvas here. The governor of the Bank of England Andrew Bailey said this week that “the most congested market on the market at the moment was” a short Dollar “.

He added that the refuge models established on the markets, in particular the US dollar, were “essentially broken down”.

There is a “reduction in exposure” to the dollar because companies and traders now eliminate transactions or “hedges” designed to ensure that they are protected from decline, “said the governor.

As I have already discussed, it is suspected in the markets that this lower dollar could actually be part of these interventions, designed to help stimulate, for example, American rust belt manufacturers find competitiveness.

In addition to that, the United States has also helped its great rival China to assert at least one case for the rest of the world, that it can be a more stable trading partner.

For this first stage of the Great World War of the Trade, Japan is an important victory for the White House, which will return against the suggestion that “Trump has always made passions” or Taco.

Although this can also result in more apparent victories before next week’s deadlines, which leads to a new euphoria on the market, the wider economic image remains much more troubled.

Follow the twists and turns of Trump’s second term with Trump’s newsletter, the correspondent of North Correspondent Anthony Zurcher.

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