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TRUMP: Trade Deals, Tariffs, Tactics, Econ Policies & Consequences - Method or Madness? Good or Bad?
Decent article at CNBC / ISTM the NASDAQ is also at a record high. But not seeing that in the article.
Agree there’s no real value to these numbers other than seeing who was right and who got it wrong months ago. @Junkster seems to have hit the nail on the head with this April 7 April 11 post: Wednesday was no dead cat bounce says…….
Trump signed a 15% tariff deal with Japan (link). Japanese stocks exploded. The SP500 and QQQ (I never watch the Dow) have been going up nicely in the last 3+ months because markets understand the tariff negotiations. See the chart(https://schrts.co/yRkxYyQJ).
This is what I call, tune out the noise and follow the markets=money.
Decent article at CNBC / ISTM the NASDAQ is also at a record high. But not seeing that in the article.
Agree there’s no real value to these numbers other than seeing who was right and who got it wrong months ago. @Junkster seems to have hit the nail on the head with this April 7 post: Wednesday was no dead cat bounce says…….
Thanks @Hank but actually April 11 post regarding the action on April 9. As it turned out that Wednesday was the greatest up volume as a percentage of total volume ever on the NYSE.
Thanks @FD1000 for your civil comment and the chart. Personally, I think we all tend to over-emphasize the role of one Administration / President or another in analyzing these market milestones. Domestic and global economies and large companies are way too complex for any one actor to take all the credit. But - yes - both sides do it. Human nature I guess.
Nice to have an agreement, but the American car makers are freaking out b/c other tariffs on raw materials and parts will force them to incur higher costs than their Japanese counterparts. That's probably why Toyota popped last evening.
That's where we differ. A sentence that mentions American carmakers freaking out and tariff change the thread immediately into politics. I could comment that Japanese automakers look like a better choice now.
Practical Investing Mindset You look at results: Does the investment perform? You ignore PR or political noise: Corporate or government statements don’t sway your decisions. You follow data, price action, and momentum. This mindset is especially important today when the lines between markets and politics are often blurred in the media and online forums.
Bottom Line You’re prioritizing performance over narrative. That’s not just smart—it’s sustainable. It’s also a reminder to others: markets don’t care about your politics, your patriotism, or your preferences—they care about profits and capital flows.
Yes, I watch this area more than some; as Michigan is my home. The Japan tariff agreement seems a bit strange and tilted. Your opinion may vary.
ADD: GM, The automaker forecasts a full-year 2025 tariff impact between $4 billion and $5 billion.
“American automakers still need to review the details of the US-Japan agreement, but any deal that charges a lower tariff for Japanese imports with virtually no US content than the tariff imposed on North American built vehicles with high US content is a bad deal for US industry and US auto workers,” said Matt Blunt, president of The American Automotive Policy Council, which represents General Motors, Ford and Stellantis (parent of Jeep, Ram, Dodge and Chrysler brands).
Monday from GM: In Q2 2025, General Motors (GM) reported a 35% drop in net income, largely due to a $1.1 billion hit from tariffs imposed by the Trump administration. While the recent trade agreement with Japan sets tariffs on Japanese auto imports at 15%, which is lower than the previous 25% imposed on other countries, GM, along with other US automakers, expressed concern. They argue this deal puts them at a disadvantage, as they still face higher tariffs on steel, aluminum, and parts compared to their Japanese competitors. The American Automotive Policy Council, representing GM, Ford, and Stellantis, stated that any deal charging lower tariffs on Japanese imports with minimal US content compared to North American-built vehicles with high US content is detrimental to the US auto industry and workers. Despite the challenges, GM maintains its adjusted operating profit guidance of $10 billion to $12.5 billion for the full year 2025, although it expects the tariff impact to worsen in the third quarter. The company plans to mitigate the tariff costs through strategies like shifting production to the US, reducing expenses, and making selective pricing adjustments. However, some experts predict that the tariffs will lead to higher car prices, reduced sales, and potential job losses in the auto industry.
There are three main things you should take away from this deal:
1. It will increase, not reduce, the U.S. trade deficit
2. It will accelerate America’s descent into crony capitalism
3. U.S. consumers are still facing a major price shock.
The deal, as reported, involves imposing a tariff of “only” 15 percent on imports from Japan, mainly in return for a promise by the Japanese government to invest $550 billion in the United States. It appears that Japan will create a sovereign wealth fund for that purpose, and that Trump will have a say in how it invests.
So, first, the impact on the trade deficit. As I and others have repeatedly pointed out, there’s some basic arithmetic linking international investment and the trade balance. A few technical details aside,
U.S. trade deficit = Net foreign investment in the United States
This isn’t a theory, it’s just accounting. So if the deal leads to more investment in the U.S., it must, necessarily, lead to a bigger trade deficit.
How, exactly, would that work? The most likely channel is that capital inflow from Japan will lead to a stronger dollar than we would have had otherwise, making U.S. goods less competitive across the board.
It has been clear for a while that Trump and co. don’t understand or believe in balance of payments accounting, that they want both a smaller trade deficit and more foreign investment in America. Now their basic lack of understanding is embodied in a specific deal.
Second, as I said, it appears that Trump will get to influence how Japan invests. We’re already well on the way toward an economy in which success in business depends not on how good your product is but on your political influence (and also an economy in which Trump tells Coca-Cola what ingredients it should use.) This is another step on that road.
Finally, a 15 percent tariff is still really, really high — much higher than the 1.6 percent tariff Japanese non-agricultural exports faced before Trump began his trade war.
Will Japanese exporters, rather than U.S. consumers, end up paying that tariff? Some people have looked at the relatively muted effect of tariffs on consumer prices so far and suggested that maybe Trump was right about that. But they’re looking at the wrong data.
If foreigners were eating the tariffs, we’d expect to see a large decline in the prices America is paying for imports. And the BLS does, in fact, measure import prices; its index specifically does not include tariffs.
So let’s compare the increase in average tariffs from a year ago with the change in nonfuel import prices:
[graph showing 18 vs1]
Have import prices fallen by enough to offset the tariff hikes? No, they’ve gone up slightly.
So why aren’t we seeing big increases in consumer prices yet? Basically because for the moment U.S. businesses are absorbing much of the cost rather than passing it on to consumers. They’ve been able to do that partly because many companies rushed to bring imports in before the tariffs hit, and are still selling out of that inventory. They’ve been willing to do that because they don’t want to alienate customers and lose market share, and have been hoping that the tariffs will mostly go away.
But if Japan still faces a 15 percent tariff after making a deal, that hope will soon fade. Inflation is coming.
The markets reaction is like finding out that your cancer is treatable. Not good, but better than the alternative. The other shoe will drop soon enough. Tariffs now stand at 100 year highs. A huge tax increase.
"But while Mr. Trump is celebrating putting his plan into practice and stock markets are at all-time highs, economists have continued to insist that the higher tariffs will eventually start to weigh on the U.S. economy. Price increases have been slow to materialize but started to become more apparent in appliances, toys, furniture and other imported items last month. Economists anticipate that higher prices will weigh on company sales and consumer activity, resulting in slower growth for the U.S. economy.
Ryan Young, a senior economist at the Competitive Enterprise Institute, a libertarian think tank, called the deal a “lose-lose” for both Japan and the United States, saying it would lead to a sevenfold increase on the tariffs Americans are paying on Japanese products.
“While this is a smaller tax hike than President Trump’s threatened 25 percent tariff, it is still a big loss for American consumers and retailers, as well as American manufacturers who use Japanese components,” he said."
From Hank’s link. It is lope-sided in favor of Japan’s auto industry.
The new deal includes access for American cars in Japan, but that isn’t much of a carrot. American companies sold only 16,000 cars in Japan, a mere 0.35% of that country’s total market.
The Japanese market is roughly one-quarter the size of the U.S. market. It would take billions of dollars and years for U.S. auto makers to start selling a relatively small number of cars in Japan.
Japanese companies sold 5.3 million vehicles in the U.S. last year, representing around one-third of the entire market. Roughly half were imported.
Apparently, EU is expecting to agree to a 15% tariffs as well.
Let's not forget, Trump's proposed tariffs are still the highest tariffs since the 1930s. U.S. companies selling imported goods (and/or using imported inputs), importers, and consumers will bear the negative financial repercussions. The subsequent impact will become more evident in the coming months. By the way, markets' recent reactions will not necessarily coincide with the effects of an ill-conceived and poorly executed tariff policy.
noted global economist joeri s. @ makes a strong case that resultant policy changes due to trump tariffs can be a big net positive for ALL top 5 trading partners. ~6 months in much too early for lagging indicators, but the most reliable signal shows america's own GDP to shrink by a full point.
(there were several attempts by the macro&money economist to untangle whether any real trump\gop strategy exists. this is slowly being walked back. there has been no attempt to verify\judge any actual signed agreement, nor future compliance due to lack of trust on all sides.)
By the time anyone is able to validate trade agreement compliance, Trump will be gone. It will take a year, or more, just to get preliminary numbers.
As stated, Japan doesn't want our cars. The exception being Jeeps, and the Jeep brand is no longer a true American brand, being owned by Germany's Stellantis. Ford and GM only sell cars in the hundreds, in Japan.
The fact that this administration feels the need to lie (gaslight), says it all - "Commerce Secretary Howard Lutnick said Thursday that American auto CEOs told him they are “cool with” President Donald Trump’s new trade deal, which could put lower tariffs on cars imported from Japan than on cars made by U.S. companies in Canada and Mexico."
From Hank’s link. It is lope-sided in favor of Japan’s auto industry.
The new deal includes access for American cars in Japan, but that isn’t much of a carrot. American companies sold only 16,000 cars in Japan, a mere 0.35% of that country’s total market.
The Japanese market is roughly one-quarter the size of the U.S. market. It would take billions of dollars and years for U.S. auto makers to start selling a relatively small number of cars in Japan.
Japanese companies sold 5.3 million vehicles in the U.S. last year, representing around one-third of the entire market. Roughly half were imported.
Apparently, EU is expecting to agree to a 15% tariffs as well.
Comments
The SP500 and QQQ (I never watch the Dow) have been going up nicely in the last 3+ months because markets understand the tariff negotiations. See the chart(https://schrts.co/yRkxYyQJ).
This is what I call, tune out the noise and follow the markets=money.
Thanks @FD1000 for your civil comment and the chart. Personally, I think we all tend to over-emphasize the role of one Administration / President or another in analyzing these market milestones. Domestic and global economies and large companies are way too complex for any one actor to take all the credit. But - yes - both sides do it. Human nature I guess.
“tune out the noise” / I try to …
Nice to have an agreement, but the American car makers are freaking out b/c other tariffs on raw materials and parts will force them to incur higher costs than their Japanese counterparts. That's probably why Toyota popped last evening.
I could comment that Japanese automakers look like a better choice now.
Practical Investing Mindset
You look at results: Does the investment perform?
You ignore PR or political noise: Corporate or government statements don’t sway your decisions.
You follow data, price action, and momentum.
This mindset is especially important today when the lines between markets and politics are often blurred in the media and online forums.
Bottom Line
You’re prioritizing performance over narrative. That’s not just smart—it’s sustainable.
It’s also a reminder to others: markets don’t care about your politics, your patriotism, or your preferences—they care about profits and capital flows.
The Japan tariff agreement seems a bit strange and tilted.
Your opinion may vary.
ADD: GM, The automaker forecasts a full-year 2025 tariff impact between $4 billion and $5 billion.
“American automakers still need to review the details of the US-Japan agreement, but any deal that charges a lower tariff for Japanese imports with virtually no US content than the tariff imposed on North American built vehicles with high US content is a bad deal for US industry and US auto workers,” said Matt Blunt, president of The American Automotive Policy Council, which represents General Motors, Ford and Stellantis (parent of Jeep, Ram, Dodge and Chrysler brands).
CNN article
Monday from GM: In Q2 2025, General Motors (GM) reported a 35% drop in net income, largely due to a $1.1 billion hit from tariffs imposed by the Trump administration.
While the recent trade agreement with Japan sets tariffs on Japanese auto imports at 15%, which is lower than the previous 25% imposed on other countries, GM, along with other US automakers, expressed concern. They argue this deal puts them at a disadvantage, as they still face higher tariffs on steel, aluminum, and parts compared to their Japanese competitors. The American Automotive Policy Council, representing GM, Ford, and Stellantis, stated that any deal charging lower tariffs on Japanese imports with minimal US content compared to North American-built vehicles with high US content is detrimental to the US auto industry and workers.
Despite the challenges, GM maintains its adjusted operating profit guidance of $10 billion to $12.5 billion for the full year 2025, although it expects the tariff impact to worsen in the third quarter. The company plans to mitigate the tariff costs through strategies like shifting production to the US, reducing expenses, and making selective pricing adjustments. However, some experts predict that the tariffs will lead to higher car prices, reduced sales, and potential job losses in the auto industry.
PK:
There are three main things you should take away from this deal:
1. It will increase, not reduce, the U.S. trade deficit
2. It will accelerate America’s descent into crony capitalism
3. U.S. consumers are still facing a major price shock.
The deal, as reported, involves imposing a tariff of “only” 15 percent on imports from Japan, mainly in return for a promise by the Japanese government to invest $550 billion in the United States. It appears that Japan will create a sovereign wealth fund for that purpose, and that Trump will have a say in how it invests.
So, first, the impact on the trade deficit. As I and others have repeatedly pointed out, there’s some basic arithmetic linking international investment and the trade balance. A few technical details aside,
U.S. trade deficit = Net foreign investment in the United States
This isn’t a theory, it’s just accounting. So if the deal leads to more investment in the U.S., it must, necessarily, lead to a bigger trade deficit.
How, exactly, would that work? The most likely channel is that capital inflow from Japan will lead to a stronger dollar than we would have had otherwise, making U.S. goods less competitive across the board.
It has been clear for a while that Trump and co. don’t understand or believe in balance of payments accounting, that they want both a smaller trade deficit and more foreign investment in America. Now their basic lack of understanding is embodied in a specific deal.
Second, as I said, it appears that Trump will get to influence how Japan invests. We’re already well on the way toward an economy in which success in business depends not on how good your product is but on your political influence (and also an economy in which Trump tells Coca-Cola what ingredients it should use.) This is another step on that road.
Finally, a 15 percent tariff is still really, really high — much higher than the 1.6 percent tariff Japanese non-agricultural exports faced before Trump began his trade war.
Will Japanese exporters, rather than U.S. consumers, end up paying that tariff? Some people have looked at the relatively muted effect of tariffs on consumer prices so far and suggested that maybe Trump was right about that. But they’re looking at the wrong data.
If foreigners were eating the tariffs, we’d expect to see a large decline in the prices America is paying for imports. And the BLS does, in fact, measure import prices; its index specifically does not include tariffs.
So let’s compare the increase in average tariffs from a year ago with the change in nonfuel import prices:
[graph showing 18 vs1]
Have import prices fallen by enough to offset the tariff hikes? No, they’ve gone up slightly.
So why aren’t we seeing big increases in consumer prices yet? Basically because for the moment U.S. businesses are absorbing much of the cost rather than passing it on to consumers. They’ve been able to do that partly because many companies rushed to bring imports in before the tariffs hit, and are still selling out of that inventory. They’ve been willing to do that because they don’t want to alienate customers and lose market share, and have been hoping that the tariffs will mostly go away.
But if Japan still faces a 15 percent tariff after making a deal, that hope will soon fade. Inflation is coming.
https://www.nytimes.com/2025/07/23/business/economy/trump-tariffs-japan.html
"But while Mr. Trump is celebrating putting his plan into practice and stock markets are at all-time highs, economists have continued to insist that the higher tariffs will eventually start to weigh on the U.S. economy. Price increases have been slow to materialize but started to become more apparent in appliances, toys, furniture and other imported items last month. Economists anticipate that higher prices will weigh on company sales and consumer activity, resulting in slower growth for the U.S. economy.
Ryan Young, a senior economist at the Competitive Enterprise Institute, a libertarian think tank, called the deal a “lose-lose” for both Japan and the United States, saying it would lead to a sevenfold increase on the tariffs Americans are paying on Japanese products.
“While this is a smaller tax hike than President Trump’s threatened 25 percent tariff, it is still a big loss for American consumers and retailers, as well as American manufacturers who use Japanese components,” he said."
Maybe Ford and GM should have ponied up a $550 billion fund (bribe) that Trump will have the say in how it invests.
U.S. companies selling imported goods (and/or using imported inputs),
importers, and consumers will bear the negative financial repercussions.
The subsequent impact will become more evident in the coming months.
By the way, markets' recent reactions will not necessarily coincide
with the effects of an ill-conceived and poorly executed tariff policy.
~6 months in much too early for lagging indicators, but the most reliable signal shows america's own GDP to shrink by a full point.
(there were several attempts by the macro&money economist to untangle whether any real trump\gop strategy exists. this is slowly being walked back. there has been no attempt to verify\judge any actual signed agreement, nor future compliance due to lack of trust on all sides.)
As stated, Japan doesn't want our cars. The exception being Jeeps, and the Jeep brand is no longer a true American brand, being owned by Germany's Stellantis. Ford and GM only sell cars in the hundreds, in Japan.
The fact that this administration feels the need to lie (gaslight), says it all - "Commerce Secretary Howard Lutnick said Thursday that American auto CEOs told him they are “cool with” President Donald Trump’s new trade deal, which could put lower tariffs on cars imported from Japan than on cars made by U.S. companies in Canada and Mexico."
https://www.cnbc.com/2025/07/24/lutnick-trump-japan-deal-auto-trade-tariffs.html
We can look back on GDP (and trade deficit) in 6-18 months and see the true story. The rest is BS.
https://paulkrugman.substack.com/p/about-that-japan-deal
https://paulkrugman.substack.com/p/the-art-of-the-really-stupid-deal
Rushed, naive and incompetent make a dangerous trio.