Trade Man Strikes Again!
Global equities rose yesterday, as traders rode a wave of optimism following signs that the US is back in deal-making mode. Hot on the heels of a pact with Japan announced on Tuesday, markets are now buzzing with talk of similar moves with Europe and South Korea. The Stoxx 600 climbed 0.7%, while the S&P 500 and the MSCI World reached record highs. Risk-on is back, and traders are betting Washington’s bark may prove louder than its bite when it comes to tariffs.
But, behind the rally, not everyone is cheering.
President Trump’s Japan deal is being hailed by the White House as a model for others: a 15% tariff cap, sweetened by Tokyo’s promise of a $550 billion investment fund targeting US projects. Trump declared Japan’s markets “OPEN” for the first time ever. But, at home the backlash is growing. Critics say the deal hands Japan a free pass on autos — the very sector driving America’s trade gap with Tokyo — and risks undermining domestic manufacturing just as tariff pressure was starting to bite.
“Any deal that charges a lower tariff on Japanese imports with zero US content than on North American-built vehicles with high US content is a bad deal,” said Matt Blunt of the American Automotive Policy Council, voicing what many in Detroit are now thinking.
The agreement is also raising alarm among protectionists who see it as a crack in the armour of Trump’s Section 232 tariffs — long considered the most durable shield for US industry. Unlimited auto imports at a 15% rate? Steel and parts, though, still taxed at 25% and 50%? For some, it looks like the goalposts are moving — and not in America’s favour.
Still, the administration insists its strategy is working — cutting deals, cracking open markets, and keeping rivals guessing. Next stop: Stockholm, where US and China officials are gearing up for round three of trade talks.
Buckle up — trade season’s not over yet.
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