Latest news with #U.S-Japan
CNBC
7 days ago
- Business
- CNBC
CNBC Daily Open: Japan markets rally on the country's 15% tariff rate — it's a new era of trade
The anchoring effect is one of the sneakiest tools companies use to make us spend money. Here's how it works. Let's say we're shopping for a smartphone manufactured by Dapple, which has just released two new models: a $1,200 model with a big screen and a $900 one that is more compact. The more expensive smartphone will serve as the "anchor" by which we make comparisons, so the $900 model will appear to be value for money — even if it is costly in absolute terms. But we're likely to feel good about choosing it because we've "saved" $300 on our purchase. This scenario seems to be what's happening with the U.S-Japan trade agreement freshly announced late Tuesday stateside. U.S. President Donald Trump said Washington would gain access to Japan's markets for rice and cars — which had been sticking points during negotiations — while the latter would pay 15% tariffs on its exports to America. At first glance, that doesn't sound too positive for Japan. But investors celebrated the news — the Nikkei 225 jumped 3.8% at 1:45 a.m. ET. After all, a 15% tariff rate is a big improvement from the 25% tariff Trump slapped on Tokyo earlier this month. Furthermore, Japanese auto exports to the U.S. — which made up 28.3% of all shipments in 2024 — will face a tariff of 15%, lower than the universal 25% other countries are subject to. As Brian Jacobsen, chief economist at Annex Wealth Management, said, "It's a sign of the times that markets would cheer 15% tariffs. A year ago, that level of tariffs would be shocking. Today, we breathe a sigh of relief." That, in essence, is the anchoring effect at play. Trump announces 'massive' trade deal with Japan. The country's exports to the U.S. will face a 15% tariff, Trump said. Japan's Prime Minister Shigeru Ishiba said auto tariffs on Tokyo will be lowered to 15% from the current 25% across countries. The U.S. and Indonesia agree on a trade framework. Imports into the U.S. from Indonesia will be set at 19%, while goods flowing from America to the Southeast Asian country will be tariff-free, according to a joint statement issued by the White House on Tuesday. Tariff suspension with China likely to be extended. The U.S. and China's 90-day tariff pause expires on Aug. 12. However, U.S. Treasury Secretary Scott Bessent said the U.S. will be "working out what is likely an extension." The S&P 500 ticks up to a fresh record. That's the index's 11th record close in 2025. On Tuesday, the Dow Jones Industrial Average also rose, but the Nasdaq Composite slipped. Japan's Nikkei 225 jumped over 3% on Wednesday, fueled by a surge in auto stocks. [PRO] Tailwinds from China's $167 billion mega-dam project. China has kicked off construction on the world's largest hydropower dam, and analysts expect suppliers of the project to receive a huge boost. Chinese and EU leaders are about to meet — but the U.S. is complicating things China and the European Union will hold a top-level meeting in Beijing on Thursday, while the U.S. is making their already tense relationship more complicated. Clashes over trade and economic policy, technological issues and defense and security have been commonplace between China and the EU — and tensions have recently been heating up.
CNBC
7 days ago
- Business
- CNBC
CNBC Daily Open: The 15% tariff rate on Japan can feel like a relief only because of hefty ones before
The anchoring effect is one of the sneakiest tools companies use to make us spend money. Here's how it works. Let's say we're shopping for a smartphone manufactured by Dapple, which has just released two new models: a $1,200 model with a big screen and a $900 one that is more compact. The more expensive smartphone will serve as the "anchor" by which we make comparisons, so the $900 model will appear to be value for money — even if it is costly in absolute terms. But we're likely to feel good about choosing it because we've "saved" $300 on our purchase. This scenario seems to be what's happening with the U.S-Japan trade agreement freshly announced late Tuesday stateside. U.S. President Donald Trump said Washington would gain access to Japan's markets for rice and cars — which had been sticking points during negotiations — while the latter would pay 15% tariffs on its exports to America. At first glance, that doesn't sound too positive for Japan. But, in comparison with the 25% tariff Trump slapped on Tokyo earlier this month, it's a big improvement. As Brian Jacobsen, chief economist at Annex Wealth Management, said, "It's a sign of the times that markets would cheer 15% tariffs. A year ago, that level of tariffs would be shocking. Today, we breathe a sigh of relief." That, in essence, is the anchoring effect at play. Trump announces 'massive' trade deal with Japan. Under the agreement, Japan's exports to the U.S. will face a 15% tariff, and the country will "open" its market for cars and rice, Trump said. Japan will reportedly pay 15% tariffs on autos, lower than the universal 25% the U.S. imposed on cars built outside the country. Tariff suspension with China likely to be extended. The U.S. and China's 90-day tariff pause expires on Aug. 12. However, U.S. Treasury Secretary Scott Bessent said the U.S. will be "working out what is likely an extension." Bessent says Jerome Powell doesn't need to resign. However, Bessent reiterated his call for the Fed Chair to conduct an internal review of the central bank. On the flipside, Mohamed El-Erian, chief economic advisor at Allianz, called on Powell to step down. The S&P 500 ticks up to a fresh record. That's the index's 11th record close in 2025. The Dow Jones Industrial Average rose 0.4%, but the Nasdaq Composite lost 0.39% as chip stocks slipped. The Stoxx Europe 600 fell 0.41%, led by a sell-off in defense stocks. [PRO] Goldman Sachs is getting worried over the U.S. economy. Economists at the investment bank expect growth to slow, real income to "drag" and inflation to heat up in 2025 — all of which will raise the firm's projected recession risk. How Europe's 'trade bazooka' could be a last resort against Trump's tariffs The European Union appears to be considering whether to deploy its "Anti-Coercion Instrument" — characterized as a "nuclear option" to try to deter trade disputes — as the threat of a 30% tariff on EU imports looms large. The measures could see the EU restrict U.S. suppliers' access to the EU market, excluding them from participation in public tenders in the bloc, as well as putting export and import restrictions on goods and services, and limits on foreign direct investment in the region.
Business Standard
09-07-2025
- Automotive
- Business Standard
Japanese benchmark ends modestly higher
Japanese markets recovered from an early slide to end modestly higher as the yen slid below 147 per dollar, logging its third straight daily loss amid rising tensions in U.S-Japan trade talks. The Nikkei average rose 0.33 percent to 39,821.28 while the broader Topix index ended up 0.41 percent at 2,828.16. The yen's weakness lifted automakers, with Honda Motor and Toyota rising 3.4 percent and 0.9 percent, respectively. Yoshinoya Holdings surged 6.5 percent after the beef bowl chain reported a 9 percent rise in quarterly net profit.
Japan Times
11-04-2025
- Business
- Japan Times
Trump calls U.S.-Japan alliance ‘one-sided' as nations prepare for tariff talks
As Washington and Tokyo prepare to launch key tariff negotiations, U.S. President Donald Trump has once again criticized the 1960 security treaty with Japan as 'one-sided,' rekindling Japanese fears he might use the talks to ask Tokyo to pay more for hosting American troops, buy more U.S.-made weapons or further boost defense spending. "We pay hundreds of billions of dollars to defend them, but ... they don't pay anything," Trump told reporters Thursday in Washington. "If we're ever attacked, they don't have to do a thing to protect us," he added, marking the second time in as many months that he has questioned the decades-old alliance and voiced displeasure with what he views as an unfair partnership with Japan — remarks he also made during his first term. Back in March, Tokyo was quick to set the record straight , noting that the original security treaty does allow for a joint response for protecting Japan and that legislation passed in 2015 greatly expanded the scope of mutual protection under certain circumstances. Moreover, Japan, which hosts about 50,000 American troops, contributes some $2 billion annually to cover expenses such as utilities, facility maintenance and wages for Japanese staff at U.S. military bases as part of the bilateral Special Measures Agreement (SMA), which is up for renewal in 2027. However, Trump has long argued that this isn't enough and reportedly even demanded during his first term that Tokyo quadruple SMA payments to $8 billion per year — or risk U.S. troop withdrawal. While Japan managed to fend off those demands back in 2019, it's got its work cut out this time around as Washington's new ambassador to Tokyo, George Glass, has already said he will "undoubtedly" need to press Japan to contribute more money while also having 'tough conversations' about the allies' economic relationship. In addition, Elbridge Colby, the Pentagon's new Undersecretary of Defense Policy, has made it clear that the Trump administration expects Japan to further hike its military budget , saying that the country should spend 'at least 3% of GDP (gross domestic product) on defense as soon as possible.' Under the current plans, Japan only expects to reach a 2% spending target by fiscal 2027. During his visit to Japan in late March, Colby's boss, Defense Secretary Pete Hegesth, was full of praise for Tokyo, calling it a 'model ally' and saying the alliance has 'never been stronger.' Asked if he had broached the defense spending or cost-sharing issues with Defense Minister Gen Nakatani, Hegseth said that while the two allies did not talk specific numbers, they both 'recognize that everybody needs to do more." While Japan is considering sending a team of negotiators as early as next week to Washington to discuss tariffs, Trump's transactional approach to foreign policy and the timing of his remarks on the U.S-Japan defense pact suggests that nothing may be off the table, including Washington's level of defense commitment to a decades-old 'model ally.'
