Markets shaken as Trump threatens new unilateral tariffs
Agencies
Investors were rattled on Thursday after Donald Trump said he would impose unilateral tariffs on partners in the next two weeks, reigniting trade war fears soon after reaching a deal with China to dial down tensions between the superpowers.
The mood was also shaded by geopolitical concerns after the US president said personnel were being moved from the Middle East as nuclear talks with Iran faltered and fears of a regional conflict grew.
The equity losses snapped a recent rally fueled by talks between Beijing and Washington in London that saw them hammer out a framework agreement to move towards a pact to reduce levies.
Investors have been on edge since Trump's 'Liberation Day' tariff blitz on April 2 that sent shockwaves through stock and bond markets and stoked global recession fears.
Days later he announced a pause in those measures until July 9 to allow for countries to cut deals with the White House, sparking relief rallies that have pushed some markets towards all-time highs.
However, he once again shook confidence by saying on Wednesday that he intended to send letters telling governments what levies Washington would be imposing.
'We're going to be sending letters out in about a week-and-a-half, two weeks, to countries, telling them what the deal is,' he told reporters.
'At a certain point, we're just going to send letters out. And I think you understand that, saying this is the deal, you can take it or leave it.'
While some analysts indicated that previous threats had been rowed back, the comments added to the ongoing uncertainty about Trump's policies, reviving fears about sky-high levies and the impact on the economy.
They also came not long after he had flagged the London agreement, and posted on social media that 'President Xi and I are going to work closely together to open up China to American Trade', referring to his counterpart Xi Jinping. Stephen Innes at SPI Asset Management said: 'Whether this is a hardball negotiation tactic or a pressure valve reset ahead of another 90-day extension is anyone's guess—but traders are reading it as another layer of headline risk.
'The market knows the Trump playbook: bark, delay, then deal. But the closer we get to the cliff's edge, the more likely someone slips.'
Most Asian markets fell on Thursday, with Tokyo, Hong Kong, Wellington, Sydney, Taipei, Mumbai, Bangkok and Jakarta in the red after a broadly healthy run-up this week.
London was flat as data showed the UK economy shrank more than expected in April, while Paris and Frankfurt fell. There were gains in Singapore, Seoul and Wellington. Shanghai was barely moved.
The weak performance followed losses on Wall Street, where trade worries overshadowed another below-forecast inflation reading that provided fresh speculation the Federal Reserve will cut interest rates. Oil prices slipped more than one percent after Wednesday's surge that came after Trump said US personnel were being moved from the potentially 'dangerous' Middle East as Iran nuclear talks stutter.
The move came as Tehran threatened to target US military bases in the region if a regional conflict broke out. The US president said the staff were 'being moved out because it could be a dangerous place'.
'We've given notice to move out and we'll see what happens.' With regard to Iran, he added: 'They can't have a nuclear weapon, very simple. We're not going to allow that.' Trump had until recently expressed optimism about the talks, but said in an interview published on Wednesday that he was 'less confident'.
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However, on Thursday, Washington also hinted at the possibility of an imminent escalation when it announced it was partially evacuating its embassy in Iraq and had authorised 'the voluntary departure' of dependants of US personnel from other locations across the Middle East. On Thursday, the United Nations nuclear watchdog, the International Atomic Energy Agency (IAEA), declared that Iran had not complied with its nonproliferation obligations for the first time in almost 20 years. Tehran maintains that its nuclear programme focuses on peaceful purposes and is not developing weapons. The spokesperson for Iran's armed forces, Abolfazl Shekarchi, warned that Israel would pay a 'heavy price' for its attacks, which also killed three senior military figures, including Mohammad Bagheri, the country's highest-ranking official. In total, six Iranian scientists have been killed in the Israeli strikes. Iran's Tasnim news agency described two of the victims, Mohammad Mehdi Tehranchi and Fereydoun Abbasi, as 'major nuclear scientists'. Tehranchi, a theoretical physicist, was the president of the Islamic Azad University of Iran. He was added to the US Department's Entity List of actors 'acting contrary to the national security or foreign policy interests' in March 2020. The building housing the residence of Tehranchi and several other Iranian scientists was severely damaged in Friday morning's attacks. Abbasi was a former head of the Atomic Energy Organization of Iran and a former member of the Iranian parliament. He held a PhD in nuclear physics and had conducted nuclear research at the defence ministry. In 2010, Abbasi survived twin blasts in Tehran that killed fellow nuclear scientist Majid Shahriari. Iran blamed Israel for the incident, although Israel neither confirmed nor denied the assassination. 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Netanyahu said the military operation aimed to 'roll back the Iranian threat to Israel's very survival' and would 'continue for as many days as it takes to remove this threat.' The killing of the six Iranian scientists is only the latest in a long line of assassinations blamed on Israel. In 2020, top nuclear scientist Mohsen Fakhrizadeh was shot dead by a remote-controlled machine gun in the town of Absard, east of Tehran. Iranian authorities blamed the assassination on Israel, which again neither confirmed nor denied its involvement. Mostafa Ahmadi Roshan, an academic who worked at the Natanz uranium enrichment facility, was killed in 2012 by a magnetic bomb stuck to his car as he was driving in Tehran. The explosion occurred on the second anniversary of the killing of Masoud Ali Mohammadi, another nuclear scientist killed by a remote-control bomb. In November 2010, Majid Shahriari, a top nuclear scientist and a member of the nuclear engineering department of Shahid Beheshti University in Tehran, was killed in one of two explosions in Tehran. The then-president, Mahmoud Ahmadinejad, accused 'Western governments' and Israel of being behind the assassination. The second blast caught Abbasi, the scientist killed in Israel's attacks on Friday, and his wife. Both were injured but survived the event. Yes. While Israel has never used missiles in direct attacks on Iran's nuclear military sites before, it has targeted Iran's primary nuclear facility at Natanz by other means. In April 2021, Iran accused Israel of causing an explosion and power cut at the nuclear site that damaged centrifuges in its underground fuel enrichment plant. Ali Akbar Salehi, who headed the Atomic Energy Organization of Iran (AEOI), said the attack was an act of 'nuclear terrorism' but did not specify who was responsible. The same site was also damaged by an explosion in August 2020. Iran accused Israel of 'sabotage' on that occasion, but it did not specify what had caused the blast. Israel has stepped up its cultivation of human intelligence sources inside Iran, and has improved its technological capabilities for spying with the help of European and US satellites. Muhanad Seloom, an assistant professor in critical security studies at the Doha Institute for Graduate Studies, told Al Jazeera that the Israeli attack was a demonstration of its progress in this sector. 'The Israeli side have already sent the message clearly to Tehran that we know where your leaders are, we know who they are, we have accurate intelligence, and we have the technological means to reach inside Iran,' he said. 'The significance is not about the type of weapons used, but the intelligence success that Israel has been able to achieve inside Iran,' he said. 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As Israel strikes Iran, what happened to ‘America First'?
Early this morning, Israel conducted unprecedented strikes on Iran, killing civilians along with senior military officials and scientists and basically forcing the Iranian government into a position in which it must retaliate – as if there already was not enough going on in the Middle East, particularly with Israel's ongoing genocide of Palestinians in the Gaza Strip. Israel, of course, thrives on perpetual upheaval and mass killing, all the while portraying itself as the victim of the folks it is slaughtering and otherwise antagonising. True to form, the Israelis have now cast Iran as the aggressor, with the country's nonexistent nuclear weapons allegedly posing a 'threat to Israel's very survival', as Israeli Prime Minister Benjamin Netanyahu declared in his statement announcing the launch of 'Operation Rising Lion'. Unlike Iran, Israel does happen to possess nuclear weapons – which just renders the whole situation all the more flammable. But for Netanyahu, at least, keeping the region in flames is a means of saving his own skin from domestic opposition and embroilment in various corruption charges. The United States, for its part, has denied collaboration in the Israeli attacks, although just yesterday US President Donald Trump acknowledged that an Israeli strike on Iran 'could very well happen'. The US head of state, who in March trumpeted the fact that he was 'sending Israel everything it needs to finish the job' in Gaza, has more recently gotten under Netanyahu's skin by urging a diplomatic solution with Iran, among other insufficiently belligerent moves. By launching a so-called 'preemptive strike' on Iran, then, Israel has effectively preempted the prospect of any sort of peaceful solution to the issue of whether or not the Iranians should be permitted to pursue a civilian nuclear enrichment programme. Already on Wednesday, Trump confirmed that US diplomatic and military personnel were being 'moved out' of certain parts of the Middle East 'because it could be a dangerous place, and we'll see what happens'. Now that the place appears to have become definitively more dangerous, the White House has scheduled a National Security Council meeting in Washington – with Trump in attendance – for 11 am local time (15:00 GMT). In other words, perhaps, there is no rush to deal with a potentially impending apocalypse without leaving US officials ample time for a leisurely breakfast first. Trump's Secretary of State Marco Rubio has, however, already weighed in on developments, stating: 'We are not involved in strikes against Iran and our top priority is protecting American forces in the region.' Rubio additionally warned: 'Let me be clear: Iran should not target US interests or personnel.' To be sure, the United States is no stranger to targeting Iranian interests and personnel. Recall the case of the January 2020 US assassination by drone strike of Qassem Soleimani, head of the Quds Force of Iran's Islamic Revolutionary Guard Corps, which simply further enshrined imperial double standards. The assassination, which took place in Baghdad during Trump's first stint as president, constituted a violation of international law – hardly an aberration in US foreign policy. The killing was so exciting even to members of the liberal US media that, for example, The New York Times swiftly published the opinion by its resident foreign affairs columnist that 'one day they may name a street after President Trump in Tehran'. That day has yet to come – though Trump would have undoubtedly been regarded with less ill will in Tehran had he stuck to the 'America First' policy that is the cornerstone of his second administration. As the name suggests, this policy ostensibly promotes a focus on US citizens and their needs rather than on, you know, bombing people in other countries. And yet the at least tacit endorsement extended by Trump for today's attacks on Iran would seem to call into question American priorities – and raise the possibility that the US is instead putting 'Israel First'. Indeed, this would not be the first time the US government is accused of placing Israel's policy objectives ahead of its own. The billions upon billions of dollars in lethal aid that Republican and Democratic administrations alike have showered upon Israel can scarcely be said to benefit the average US citizen, who would certainly be better off if said billions were invested in, say, affordable housing or healthcare options in the US itself. Understandably, such financial arrangements lend themselves to rumours that Israel is in fact calling the shots in Washington. But at the end of the day, key sectors of US capitalism make a killing off of Israel's regional savagery; you're not going to hear the US arms industry, for instance, complaining that today's assault on Iran doesn't put America first. The Reuters news agency reports that the spokesperson for Iran's armed forces has 'said Israel and its chief ally the United States would pay a 'heavy price' for the attack, accusing Washington of providing support for the operation'. And whatever that price is, Israel's chief ally will no doubt ultimately find that it was all worth it. The views expressed in this article are the author's own and do not necessarily reflect Al Jazeera's editorial stance.
