The markets only do not believe Trump on the definitions

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Good morning. Tesla’s share decreased by 7 percent yesterday after Elon Musk announced during the weekend that it would start a new American political party. Car industry investors have clearly proven that they are tired of the political strangeness of the billionaire. Musk either does not care or can’t get away. Send us psychological theories via email: United.com.

Hinter transactions in 90, no, wait, 113 days, and we are serious this time

The deadline was not at all, a surprise to anyone, that is, a deadline at all. Countries were supposed to negotiate a trade agreement with the United States by tomorrow, or to cope with the same Definitions At a detailed level on this famous part of the sticker plate in April. Now the big day has been returned to August first. Or it might be: Treasury Secretary Scott Payette, whose main function in converting statements has turned into politics, often mentioned September first. Like the president himself, the administration’s final dates should be taken seriously but not literally. “Seriously” because if Trump has to decide to apply the deadline, the effect may be seismic. “Not literal” because he may not do.

How will the next three weeks be (and perhaps more)? We taste that day, when the President announced that Japan and South Korea will face 25 percent of the customs tariff starting from the beginning of the month, taking into account the change “depending on our relationship with your country.” This looks scary. The couple are the largest commercial partners in the United States after Canada, Mexico and the European Union. They made approximately 9 percent of American imports and 7 percent of American exports in 2024.

But the market, instead of panic, gave the equivalent to ignore depression. The S&P 500 fell, already in a decrease pattern when the ad is hit, five percent of. The dollar has strengthened 0.7 percent against the Korean victory and one percent against the yen. In Tokyo and Seoul, the shares opened up to the rise: the Korean KOSPI index rose by more than 1.4 percent in the first two hours of trading, while the Japanese Nikkei 225 index rose by 0.4 percent. The humble movements are completely rational. For anyone, the new rates will not increase the rate of effective tariffs in any of the countries. Paul Ashworth, from Capital Economics, explained in a note to customers that the new prices

It does not apply to the goods of the Trump product definitions, as cars represent 34 percent of imports from both countries, which are already subject to a 25 percent tax that Trump threatened more than once to rise to 50 percent. Add in exempt electronics and pharmaceutical preparations. . . If Trump continues to threaten, the generally effective tariff for American imports will rise from 15.5 percent to 16.6 percent.

And why do you panic over any administration’s pronunciation at this stage? Even the conventions made appear wide open for further negotiation. “They are frameworks, not commercial agreements.”. Commercial deals lasted historically 18 months for the bilateral signature, and 40 to 45 months for implementation. The rare land exports “deal” with China were just an escalation-the Trump administration did not issue any details about the agreement, and China still blocks exports to American companies, according to what he said. Wall Street Journal.

China’s negotiations are a special issue. Dealms with the United Kingdom and Vietnam may tell us more about what other countries can contemplate. But, again, and The United States Agreement It was just a frame. The fees on British car makers and space -exempt space products have reduced customs tariffs, in exchange for more beef, ethanol and industrial imports. Our colleague Alan Betty Deviation As follows:

Politically, you can see why the relatively small open economy will seize with military and security dependency on the United States an opportunity for an unlawful agreement, and deals with some cow meat and small biology to protect its cars and prominent steel politically.

There is an indication of the agreement, though. The United States had a trade surplus with the United Kingdom last year, however it did not remove the global tariff agreement by 10 percent. Therefore, other countries should expect that the Earth is not less than 10 percent.

The last agreement with Vietnam is the closest to us on a “appropriate” deal: a 20 percent straight tariff on Vietnamese exports, no duties on American exports, and a rate of 40 percent on goods that express transit, aimed at targeting China. Warning is that the Vietnamese economy is very different from the economy of South Korea and Japan. He is the smallest and poorest, and he imported only $ 13 billion in American goods last year. In contrast, South Korea and Japan are richer and calculated a greater share of American exports; The total of each country alone is more than five times in Vietnam. This, and important American military alliances with each country, gives these countries a stronger negotiating stance.

The tariff game, in short, is still – in some way – in the introductory. It only starts seriously when agreements are made with senior commercial partners who believe that the market will continue; The market responds to these agreements; The president responds to the market response. The thesis of this newsletter has always been that Trump will retract any tariff that provokes a sustainable negative response from the market. Only when the markets are convinced that it is scheduled to stick to a specific deal, it will impose the case with it. We stay away from there.

It seems that American stock and bond markets have reached a conclusion that moderate definitions – 10 percent on all commercial partners, a little more in China and a few specific sectors – will not matter much of economic growth or profits, or will be softened if they do so. They simply ignored Trump’s continuous threats with more severe definitions. The big question, then, is whether investors have put themselves for great disappointment when Trump – which is encouraged by indifference in the markets and the elasticity of the economy – suddenly.

Sonders of Charles Schwab asks if Trump is placed (also known as Taco Trading), there may also be a “Trump’s invitation”:

With the market has done its business since April 9, with economic data and inflation data, it may not appear after the full impact of definitions, but does not explode to any degree. . . Is this the preparation of the administration’s willingness to continue pressing things from the perspective of customs tariffs?

We believe this deserves anxiety.

One good reading

“A cheap button” for Russia to pressure.