Trump’s heavy tariff tactics get results

Japan is a great deal to shock President Donald Trump’s world trading system.

Now we can say that its aggressive approach gives tangible results.

Out -of -off, the American side talked to the chances of an agreement with Japan, but despite several delegations, the transaction was strangely elusive – so far.

In a narrow sense, it is a win for Trump’s approach, especially when Japan becomes a domino that makes the rest of the world queue.

Now Japan has the best deal, more precisely, the least transaction from all countries with major trade surplus from the United States.

A total of 15%, which should be charged in that Japanese goods imported in the US is higher than 10% of the UK, but there is no excess in the UK.

As I reported earlier, the fury of the Japanese negotiators during the talks was noted among the Washington diplomats, which were accustomed to the country’s extraordinary courtesy.

Tokyo played a hard ball. Japan’s finance minister described 1.1 trillion. Dollars containing US Treasury bonds are the world’s largest “map” that could be put on the table.

Rumor about hedge funds in Japan, which sell US bonds after the “Liberation Day” tariffs in April, which raised wider sale and big issues on the world’s largest economy and the status of safe asylum in US dollars.

Thus, the achievement of the transaction matters, in itself, and as an example for other major economic blocks, including the European Union (EU).

The transaction goes on the day when Japanese EU leaders are in Tokyo. There were chatters about Japan, the EU and Canada, which coordinate their revenge. This stops any such initiative.

Some EU members will wonder why such a deal cannot be reached at the very moment when Germany and France raised an antee on revenge, perhaps against US technological giants.

The world is waiting for details here, but it is clear that Japan has defended its agricultural imports, although it will import more US trait.

It is unclear that the lack of popularity of large American cars in the country can change, although Japanese private companies will be backed up to invest half a million dollars in the US.

Japan made this deal when it may be expected to learn how things develop and respond to international markets when on August 1, more stringent tariffs for many countries come into force.

The internal political weakness of his Prime Minister may have been a factor, though other countries, including Indonesia and Philippines, also made deals.

A great picture is a tired US recognition that charges what would be an incredible tariffs a year ago on its main allies, fearing something worse.

In the case of Japan, Trump threatened 25% tariff.

Tariffs now bring significant amounts for the US Treasury, without revenge against US exporters. So far, more than $ 100 billion, about 5% of the US federal revenues come from tariffs, not 2% more usually.

US Treasury Minister Scott Baby believes that the annual tariff reception will be $ 300 billion.

This is the way from the amount collected by the income tax, but a noticeable amount. It is accepted without direct revenge and without now the market shocks have seen earlier.

However, the story does not end here. Who actually pays these tariffs? In the end, US consumers will pay a big role in the prices they pay for imported goods.

In the past, the inflations and others suggested that the increase in the US dollar will help to mitigate the cost of imports for consumers. On the contrary happened.

The dollar dropped in the first half of this year, losing 10% of the cost of the world currencies. This will add the cost of imports except tariffs.

There is also a wider canvas here. This week, Bank Governor Andrew Bailey said the “short -term market trade is currently a” short dollar “.

He added that installed samples of safe asylum in the markets, especially the US dollar, were “essentially destroyed.”

There is a “decline” to the dollar, as companies and traders are now bidding or “live hedges” designed to protect against its reduction, “the governor said.

As I discussed earlier, the markets have suspicion that this weak dollar can actually become part of that moment aimed at helping to increase, for example, American rust manufacturers return competitiveness.

In addition, the United States also helped its great competitor China, at least, to do the rest of the world, which can be a more stable trading partner.

At this first stage of the Great Global Trade War, Japan is an important victory for the White House, which will push away from the opinion that “Trump is always chickens” or tacos.

Although it can also lead to more obvious victories on the eve of next week, moving further market euphoria, the wider economic picture remains much more fierce.