Trump’s hard tariff strategy is getting results

Japan President Donald Trump has a big thing for the upheaval of the world’s business system.

On its terms, it can now be said that their aggressive approach is giving tangible results.

From the bandh, the US side is talking about the possibility of a deal with Japan, but despite many delegations, the deal was strangely elusive – till now.

In a narrow sense, it is a win for the trump approach, especially if Japan becomes a dominoz that inspires the rest of the world to come in line.

Japan now has the best deal, or instead, the lowest deal, in all countries with major trade surplus with the US.

The general tariff of 15% charged on Japanese goods being imported into the US is more than 10% of the UK, but the UK has no surplus.

As I have mentioned earlier, the fury of Japanese dialogues during the talks was accustomed to the extreme politics of the country among the Washington DC diplomats.

Tokyo was playing hardball. The Japanese Finance Minister told the country’s $ 1.1 trillion holding about American Treasury Bonds, the largest in the world, as a “card”, which can be placed on the table.

It was rumors about the sale of American bonds in Japan after Trump’s announcement of Trump’s “Liberation Day” tariff in April, which gave rise to wide sales on the world’s largest economy and a secure shelter of the US dollar, and gave rise to big questions.

So the access of a deal matters extremely, and in itself, and other major economic blocks including the European Union (EU).

The deal comes on the day the Japanese hosts in Tokyo by the European Union leaders. There were some nonsense about Japan, the European Union and Canada, coordinating his vengeance. This prevents any such initiative.

Some members of the European Union will be surprised why a similar deal cannot be killed, at the same moment that Germany and France entered the east on retaliation, perhaps against American technical veterans.

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

It is not clear what can change the lack of popularity of large American cars in the country, although Japanese private companies will be supported to invest half a trillion dollars in some form or the other in the US.

Japan has signed the deal when it can wait to see how things develop and international markets react when applied to Trump’s hard tariffs for a host of Trump on 1 August.

Its Prime Minister’s domestic political weakness can be a factor, although other countries including Indonesia and the Philippines have also made deals.

The big picture, however, is a tiring acceptance of the US that was a unimaginable tariff on its leading colleagues a year ago, which was of some worse fear.

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

Tariffs are now increasing significant amounts for US Treasury, without vengeance against American exporters. So far this year, more than $ 100bn, about 5% of the US federal revenue is coming from tariff, vs 2% more generally.

American Treasury Secretary Scott Besent feels that the annual tariff will be $ 300BN.

This income is far from the amount raised by taxes, but is a remarkable amount. It is being taken without direct vengeance and the market turmoil was seen first without a vengeance.

However, the story does not end here. Who is actually paying these tariffs? Ultimately, American consumers will pay a large share in terms of prices they pay for imported goods.

In the past, other people have suggested that the increasing value of the US dollar will help reduce the cost of imports for consumers. The opposite has happened.

The dollar has slipped in the first half of this year, which lost 10% of its value against a basket of world currencies. This will add the cost of imports, in addition to tariffs.

There is also a broad canvas here. Bank of England Governor Andrew Bailey said this week that “the most crowded trade in the market is ‘small dollar’.

He said that safe haven patterns in markets, especially US dollars, were “essentially breaking”.

The governor stated that there is a “exposure decrease” for dollars as companies and traders, which now exclude trades or “hedges” to ensure that they are protected against its decline. ,

As I have previously discussed, the markets suspect that this weak dollar may actually be part of the point of these interventions, which are designed to help promote, for example, American rust-belt manufacturers can achieve competitiveness.

At its top, the US has helped its great rival China to make a case in the rest of the world, that it can be a more stable business partner.

For this first phase of the great global trade war, Japan is an important win for the White House, which will push back against the suggestion that “Trump always out the chickens” or taco.

Although it can translate into more clear victory before the next week’s deadline, the comprehensive economic picture is far away, further enhancing market enthusiasm.