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Good morning and welcome to White House Watch!
Let’s dive into:
Donald Trump is back to creating tariff threats.
The carrot: he gave US trading partners one other three weeks beyond the unique July 9 deadline to barter trade deals before his so-called reciprocal tariffs go into effect. The stick: if agreements aren’t reached by then, countries risk being slapped with roughly the identical sweeping tariffs Trump announced on “liberation day” in April.
Yesterday, Trump sent letters to Japan and South Korea — two of the US’s biggest trading partners — saying he’d hit them with 25 per cent levies from August 1. A bunch of other countries received similar letters.
Within the letters posted on his Truth Social platform, Trump called the trade deficit with Tokyo and Seoul a “major threat to our economy and indeed our National Security”.
He wrote that ought to either country raise its tariffs on Washington in retaliation, “then, regardless of the number you select to lift them by, might be added on to the 25 per cent that we charge”.
Trump’s letters also suggested that, if the nations open their markets, that number might be negotiated down: “These tariffs could also be modified, upward or downward, depending on our relationship together with your Country.”
Trump yesterday also said any country embracing the “anti-American policies” of the Brics bloc of countries would face an additional 10 per cent tariff on exports. The 11-nation group — which incorporates China, Russia, Iran and Brazil — lashed out in response.
Several proposals have come from weeks of negotiations between the US and Japan, including Tokyo buying more American energy and agricultural products. Nonetheless, Japan has demanded a full exemption from Trump’s 25 per cent auto tariffs. Meanwhile, Trump has complained about Japan’s refusal to purchase more US rice, calling the country “spoiled”.
As for South Korea, its talks were delayed by political turmoil after the impeachment of its former president Yoon Suk Yeol.
Despite the three-week reprieve, markets weren’t impressed by the continuing trade tensions. The S&P 500 closed down 0.8 per cent yesterday. Japan and South Korea’s currencies declined about 1 per cent against the US dollar.
Follow the newest trade developments on the FT’s live blog.
The newest headlines
What we’re hearing
The trajectory of Elon Musk’s business empire just isn’t moving in a straight line because the billionaire feuds with Trump.
Tesla shares tumbled yesterday after Musk said he’d create a brand new political party to combat the “one-party system”.
And Trump’s “big, beautiful bill” puts in danger a vital profit source for Tesla by neutering rules that allow the electric-vehicle maker to sell billions of dollars in emissions credits. The president has also suggested his administration should cancel Tesla and SpaceX’s federal contracts.
At the identical time, private space firms similar to SpaceX and Jeff Bezos’s Blue Origin — that are leading the modern-day space race — stand to profit from a preferential tax treatment tucked into the BBB.
The bill allows spaceports to be financed within the municipal debt market through what are often known as private activity bonds. They provide tax-free interest, lowering financing costs compared with typical corporate bonds.
The addition of the spaceport clause “speaks to the advocacy and lobbying going down in Washington”, Jason Appleson, head of municipal bonds at PGIM Fixed Income, told the FT’s Will Schmitt.
The clause also covers spacecraft manufacturing facilities and mission control operations, making it “just a little more expansive than the definition of an airport”, said Leslie Powell, a partner with law firm Kutak Rock focused on public finance.
Democratic US senator Ron Wyden slammed the “special recent tax break for SPACEPORTS” as “Trump’s wedding gift to Bezos and birthday gift to Musk” in a social media post.
Viewpoints
Investors are ignoring Trump’s threats of more tariffs, but they is perhaps setting themselves up for disappointment if the president finally shows some resolve, says Robert Armstrong in his latest Unhedged newsletter. [Free to read]
Trump is ushering in America’s ICE age as he makes Immigration and Customs Enforcement the best-funded law enforcement agency within the US, writes Edward Luce.
A fragmented and competitive media landscape signifies that a second Trump administration might be a double-edged sword for Fox News, which has been riding a rankings high for the reason that president’s re-election, says Pan Yuk in her latest Lex column.
Rana Foroohar thinks that so long as the world hasn’t settled on a brand new economic narrative, we’ll probably proceed to experience an uneasy market stasis.