Asian shares are mixed as Trump's tariff deadline looms, while U.S. stocks set records
MANILA--Asian shares were mixed Friday after U.S. stocks climbed further into record heights as the clock ticks on President Donald Trump's July 9 tariff deadline.
Japan's Nikkei 225 recovered earlier losses, gaining 0.1% to 39,810.88, while South Korea's KOSPI index was fell 2% to 3,053.18.
Hong Kong's Hang Seng index lost 0.8% to 23,871.03 while the Shanghai Composite index added 0.2% to 3,469.11. Australia's S&P/ASX 200 rose 0.1% to 8,603.00. India's Sensex index shed 0.2% to 83,039.77.
'Asian markets slipped into Friday like someone entering a dark alley with one eye over their shoulder — because while US equities danced higher on a sweet spotted post-payroll sugar rush, the mood in Asia was far less celebratory. The reason? That familiar, twitchy unease every time Trump gets near the tariff trigger,' Stephen Innes, managing partner at SPI Asset Management, wrote in a commentary.
On Thursday, after a report showed a U.S. job market stronger than Wall Street expected, the S&P 500 rose 0.8% and set an all-time high for the fourth time in five days. The Dow Jones Industrial Average added 344 points, or 0.8%, and the Nasdaq composite gained 1%.
Many of Trump's stiff proposed taxes on imports are currently on pause, but they're scheduled to kick in next week unless Trump reaches deals with other countries to lower them.
In other dealings on Friday, U.S. benchmark crude was down 27 cents to $66.73 per barrel. Brent crude, the international standard, shed 39 cents to $68.41 per barrel.
The U.S. dollar slid to 144.24 Japanese yen from 144.92 yen. The euro edged higher to $1.1781 from $1.1761.
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According to conventional wisdom, a strong national leader will force a weak one, or one with less popular support, to buckle in tough negotiations. By that logic, U.S. President Donald Trump has the whip hand in trade talks with Prime Minister Shigeru Ishiba. Yet, Ishiba has held out, resisting U.S. pressure to sign a quick deal, a position that is strengthened, ironically, by Ishiba's weakness. The prime minister cannot afford to make concessions as the July 20 Upper House election approaches. His spine is stiffened by the failure of the U.S. to make clear its demands and the U.S. president's record of ripping up deals that even he negotiated. Clarity and trust are the essential prerequisites of successful negotiations. Neither exists today. Japan was worried about Trump's return to the White House, fearful that the bilateral relationship would suffer given the 45th and 47th president's long-time animus toward Japan and the absence of a 'Trump whisperer,' former Prime Minister Shinzo Abe. Yet, in January, Trump described the partnership as 'a friendship like few others,' certain that 'the cherished alliances between our two countries will continue to flourish long into the future!' Sensing opportunity, Ishiba hurried to Washington to meet Trump, a move that some considered unseemly and perhaps unwise, but the resulting summit was a success. When Trump announced that he would impose blanket 10% tariffs on all trade partners, with still greater sanctions on specific sectors like autos, auto parts, steel and aluminum, Japan was one of the first countries to begin negotiations on a deal, its faith in the relationship yielding confidence that an agreement was possible. Since then, Ryosei Akazawa, Japan's chief tariff negotiator, has visited Washington regularly, sometimes weekly, in search of a deal. Despite seven rounds of talks, periodic claims that an agreement was imminent and impressive efforts by Japan to court the mercurial U.S. president — at one point, Akazawa wore a 'Make America Great Again' cap while meeting Trump — the two countries remain at loggerheads. In the last round, held late last month, Akazawa failed to even meet Scott Bessent, U.S. treasury secretary and chief U.S. negotiator, or U.S. Trade Representative Jamieson Greer. Worse, when the talks adjourned Trump unloaded on Japan, complaining that the country was 'spoiled' and took no U.S. rice or automobiles. Talking to reporters, he wasn't sure if a deal with Japan was possible, saying 'I doubt it. ... They're very tough.' Trump said that he would be sending Japan 'a letter,' or notice of his intent to impose tariffs on its goods, which would mark 'the end of the trade deal.' In an interview, Trump warned that Japan would 'pay a 25% tariff on your cars,' and later comments hinted it could be as high as a 35% levy. Japan responded with silence. While the current deadline for a deal is July 9, Bessent has indicated that an extension might be possible. There are reports that Akazawa may make yet another trip to Washington for another round of talks. One of the questions he needs answered is what purpose U.S. tariffs serve. If they are intended to raise revenue that facilitates the restructuring of the U.S. tax system, which would imply that they are permanent, then the parameters of a deal are much changed. An agreement is difficult when one side doesn't understand the facts. The charge that Japan imports no U.S. rice is false, as agriculture minister Shinjiro Koizumi explained. 'Rice imports from abroad, including from the U.S., had increased 120 times from a year earlier.' If Japanese consumers don't buy U.S. automobiles, it isn't because of tariffs — this country imposes no levy on imported passenger cars — but because American automakers don't build vehicles that Japanese want. Koizumi was right to call Trump's comments an 'obvious misunderstanding of the facts.' Autos are central to any eventual resolution of this dispute. Trump insists that his 25% tariff, imposed in March, is nonnegotiable. Japan wants it gone. The U.S. may believe that Japan will be squeezed by its tariffs. And, in fact, exports to the U.S. dropped by 11% year on year in May, with automobile exports down 24.7%. Automakers have been working to avoid passing on the tariff costs, but they are reaching the limits at which they can squeeze their supply chains. Japanese automakers have increased production in the U.S., which is one of Trump's objectives. Any eventual resolution is more likely to reflect larger political and economic considerations than the specific terms of any document. Fearful of some of the consequences, Trump has been criticized for failing to follow through on his threats and the prospect of an economic slowdown in the U.S. — the perpetual warning of economists when they evaluate his trade policy — could force him to back off again. Trump has also been promising deals for so long and has achieved such meager results — only agreements with Vietnam and the U.K., while a purported pact with China remains unclear — that his administration might settle for something with Japan that is more symbolic than real. If Trump believed that Ishiba would readily submit to his demands, he was mistaken. That error is understandable. The U.S. is central to Japan's economy and critical to its security but the leverage that affords the U.S. president is limited. Growing numbers of Japanese voters oppose gross concessions. One poll shows more than half of voters believe Japan should not make a deal even if it hurts the bilateral relationship. Only 15% agree to concessions to avoid additional tariffs. Most worrisome now is a growing sense among the Japanese public that the U.S. is no longer a reliable partner. After all, in 2019, Trump and Abe released a joint statement after signing a trade pact that said 'While faithfully implementing these agreements, both nations will refrain from taking measures against the spirit of these agreements and this Joint Statement.' Yet here we are again. American credibility is also diminished by constant calls for ever-more defense spending, first to 2% of gross domestic product, then 3% and now 5%. It is not surprising, then, that another recent poll showed that only 22% either greatly (3%) or somewhat (19%) trust the U.S., while 68% somewhat (46%) or entirely (22%) distrust it. An agreement is difficult in these circumstances. Still, it is possible. And Japan has cards to play. It could pledge to increase purchases of crude oil, natural gas and agricultural products to help balance trade accounts. While these are ultimately private sector decisions, the Japanese government could also encourage companies to invest in the U.S. This shouldn't take much effort since it is already occurring. But Japan must also draw lines. While this country needs a good working relationship with the U.S., it must not be at any cost. This country has national interests to protect. They include a thriving security partnership, a stable and growing economy and a rules-based international order. Indulging a mercurial if not arbitrary U.S. president is not among them, especially if it threatens those other concerns. The Japan Times Editorial Board
