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Let’s dive into:
Donald Trump is again to creating tariff threats.
The carrot: he gave US buying and selling companions one other three weeks past the unique July 9 deadline to barter commerce offers earlier than his so-called reciprocal tariffs go into impact. The stick: if agreements usually are not reached by then, nations danger being slapped with roughly the identical sweeping tariffs Trump introduced on “liberation day” in April.
Yesterday, Trump sent letters to Japan and South Korea — two of the US’s greatest buying and selling companions — saying he’d hit them with 25 per cent levies from August 1. A bunch of different nations acquired related letters.
Within the letters posted on his Fact Social platform, Trump known as the commerce deficit with Tokyo and Seoul a “main risk to our financial system and certainly our Nationwide Safety”.
He wrote that ought to both nation elevate its tariffs on Washington in retaliation, “then, regardless of the quantity you select to boost them by, shall be added on to the 25 per cent that we cost”.
Trump’s letters additionally recommended that, if the nations open their markets, that quantity may very well be negotiated down: “These tariffs could also be modified, upward or downward, relying on our relationship along with your Nation.”
Trump yesterday additionally mentioned any nation embracing the “anti-American policies” of the Brics bloc of nations would face an additional 10 per cent tariff on exports. The 11-nation group — which incorporates China, Russia, Iran and Brazil — lashed out in response.
A number of proposals have come from weeks of negotiations between the US and Japan, together with Tokyo shopping for extra American power and agricultural merchandise. Nevertheless, Japan has demanded a full exemption from Trump’s 25 per cent auto tariffs. In the meantime, Trump has complained about Japan’s refusal to purchase extra US rice, calling the nation “spoiled”.
As for South Korea, its talks had been delayed by political turmoil after the impeachment of its former president Yoon Suk Yeol.
Regardless of the three-week reprieve, markets weren’t impressed by the persevering with trade tensions. The S&P 500 closed down 0.8 per cent yesterday. Japan and South Korea’s currencies declined about 1 per cent in opposition to the US greenback.
Comply with the newest commerce developments on the FT’s live blog.
The most recent headlines
What we’re listening to
The trajectory of Elon Musk’s enterprise empire is just not shifting in a straight line because the billionaire feuds with Trump.
Tesla shares tumbled yesterday after Musk mentioned he’d create a brand new political celebration to fight the “one-party system”.
And Trump’s “huge, stunning invoice” places in danger a crucial profit source for Tesla by neutering guidelines that permit the electric-vehicle maker to promote billions of {dollars} in emissions credit. The president has additionally recommended his administration ought to cancel Tesla and SpaceX’s federal contracts.
On the similar time, personal house corporations comparable to SpaceX and Jeff Bezos’s Blue Origin — that are main the modern-day house race — stand to benefit from a preferential tax treatment tucked into the BBB.
The invoice permits spaceports to be financed within the municipal debt market by way of what are often known as personal exercise bonds. They provide tax-free curiosity, decreasing financing prices in contrast with typical company bonds.
The addition of the spaceport clause “speaks to the advocacy and lobbying going down in Washington”, Jason Appleson, head of municipal bonds at PGIM Mounted Earnings, informed the FT’s Will Schmitt.
The clause additionally covers spacecraft manufacturing services and mission management operations, making it “a bit of extra expansive than the definition of an airport”, mentioned Leslie Powell, a accomplice with regulation agency Kutak Rock targeted on public finance.
Democratic US senator Ron Wyden slammed the “particular new tax break for SPACEPORTS” as “Trump’s wedding ceremony reward to Bezos and birthday reward to Musk” in a social media publish.
Viewpoints
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Buyers are ignoring Trump’s threats of extra tariffs, however they could be setting themselves up for disappointment if the president finally shows some resolve, says Robert Armstrong in his newest Unhedged publication. [Free to read]
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Trump is ushering in America’s ICE age as he makes Immigration and Customs Enforcement the best-funded regulation enforcement company within the US, writes Edward Luce.
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A fragmented and aggressive media panorama implies that a second Trump administration may very well be a double-edged sword for Fox News, which has been driving a scores excessive because the president’s re-election, says Pan Yuk in her newest Lex column.
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Rana Foroohar thinks that so long as the world hasn’t settled on a brand new financial narrative, we’ll in all probability proceed to expertise an uneasy market stasis.
