Asian stocks opened lower today following President Donald Trump’s announcement that he would not delay the July 9 deadline to impose higher tariffs on trade partners, reigniting trade tensions.
A regional stock index fell 0.3%, and shares on the Japanese market opened negatively, dropping nearly 1% by midday trading. This reaction came after Trump’s threats to raise tariffs on the country, coupled with criticism of Japan for not accepting U.S. rice exports.
Investors are closely monitoring Trump’s decisions regarding the pause in tariff imposition in April, which the President postponed for 90 days to allow for negotiations. However, market calmness is driven by expectations that the White House will extend the tariff deadline.
“While U.S. stocks are probably overly optimistic, international stocks have been prone to overreact negatively whenever Trump escalates,” said Phillip Wool, head of portfolio management at Rayliant Global Advisors Ltd, in comments to Bloomberg.
“It’s not surprising at all to see Trump maintaining the prospect of a July 9 stalemate and high tariffs as a threat to press for better deals. There’s also a political theater element here,” he added.
For weeks, Trump has sought to exert influence over trade partners by threatening high tariffs on governments he deems difficult, only to backtrack—a strategy analysts and strategists call “TACO,” or “Trump Always Chickens Out.”
His top economic advisor, Kevin Hassett, indicated that agreements will be announced after the July 4 holiday and the approval of the U.S. fiscal and budgetary bill by the Senate.
Trump’s latest tariff comments do not pose a significant threat to Japanese stocks, suggested Neil Newman, head of strategy at Astris Advisory Japan, to Bloomberg.
“From his rhetoric, President Trump is running out of complaints,” he said. “I believe there are too many things on the Japanese negotiation table that would allow Americans to close the negotiations, but we know Trump will go to the limits for more. This is just noise.”
