Trump's Iran attack shows what it takes to win his military support
The attack may have triggered tectonic shifts in the Gulf region, and the rivalry between Iran, the United States and Israel is likely to continue for the foreseeable future. While global attention may now turn to the possibility of a Gaza cease-fire or more U.S. strikes on Iran, my focus is elsewhere.
The most significant point about this incident is the lesson it offers U.S. allies, especially in the Indo-Pacific, about how to convince a hesitant U.S. president to take military action abroad. Israel managed to persuade Trump — who had long avoided foreign intervention — to strike Iran. As a former diplomat, I was struck by the extent of Israel's diplomatic influence, especially Prime Minister Benjamin Netanyahu's political and negotiating skills, which surpassed all expectations.
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Nikkei Asia
26 minutes ago
- Nikkei Asia
US and EU agree to 15% tariffs, $600bn in investments from Europe
TURNBERRY, Scotland (Reuters) -- The United States struck a framework trade agreement with the European Union on Sunday, imposing a 15% import tariff on most EU goods, half the threatened rate, and averting a bigger trade war between two allies that account for almost a third of global trade. U.S. President Donald Trump and European Commission President Ursula von der Leyen announced the deal at Trump's luxury golf course in western Scotland after an hourlong meeting that pushed the hard-fought deal over the line. "I think this is the biggest deal ever made," Trump told reporters, lauding EU plans to invest some $600 billion in the United States and dramatically increase its purchases of U.S. energy and military equipment. Trump said the deal, which tops a $550 billion deal signed with Japan last week, would expand ties between the trans-Atlantic powers after years of what he called unfair treatment of U.S. exporters. Von der Leyen, describing Trump as a tough negotiator, said the 15% tariff applied "across the board," later telling reporters it was "the best we could get." "We have a trade deal between the two largest economies in the world, and it's a big deal. It's a huge deal. It will bring stability. It will bring predictability," she said. The deal, which Trump said calls for $750 billion of EU purchases of U.S. energy in coming years and "hundreds of billions of dollars" of arms purchases, likely spells good news for a host of EU companies, including Airbus, Mercedes-Benz and Novo Nordisk, if all the details hold. The baseline 15% tariff will still be seen by many in Europe as too high, compared with Europe's initial hopes to secure a zero-for-zero tariff deal, though it is better than the threatened 30% rate. German Chancellor Friedrich Merz welcomed the deal, saying it averted a trade conflict that would have hit Germany's export-driven economy and its large auto sector hard. German carmakers Volkswagen, Mercedes and BMW were some of the hardest hit by the 27.5% U.S. tariff on car and parts imports now in place. But Bernd Lange, the German Social Democrat who heads the European Parliament's trade committee, said the tariffs were imbalanced and the hefty EU investment earmarked for the U.S. would likely come at the bloc's own expense. The euro rose around 0.2% against the dollar, sterling and yen within an hour of the deal's being announced. The deal mirrors key parts of the framework accord reached by the U.S. with Japan last week, but like that deal, it leaves many questions open, including tariff rates on spirits, a highly charged topic for many on both sides of the Atlantic. Carsten Nickel, deputy director of research at Teneo, said it was "merely a high-level, political agreement" that could not replace a carefully hammered-out trade deal: "This, in turn, creates the risk of different interpretations along the way, as seen immediately after the conclusion of the U.S.-Japan deal." "We are agreeing that the tariff ... for automobiles, and everything else will be a straight-across tariff of 15%," Trump said, but he quickly added that a 50% U.S. tariff on steel and aluminum will remain in place. Von der Leyen said that tariff would be cut and replaced with a quota system. Von der Leyen said the rate also applied to semiconductors and pharmaceuticals, and there would be no tariffs from either side on aircraft and aircraft parts, certain chemicals, certain generic drugs, semiconductor equipment, some agricultural products, natural resources, and critical raw materials. Trump appeared to suggest pharmaceuticals would not be covered, leaving some question about that aspect of the deal. No fact sheet was immediately issued by the White House. "We will keep working to add more products to this list," von der Leyen said, adding that spirits were still under discussion. Eric Winograd, chief economist at AllianceBernstein in New York, noted the similarity with Japan's U.S. deal. "We will need to see how long the sides stick to the deal. From a market perspective, it is reassuring in the sense that having a deal is better than not having a deal," he said. The deal will be sold as a triumph for Trump, who is seeking to reorder the global economy and reduce decades-old U.S. trade deficits, and has already reached similar framework accords with Britain, Japan, Indonesia and Vietnam, although his administration has not hit its goal of "90 deals in 90 days." He has periodically railed against the European Union, saying it was "formed to screw the United States" on trade. Arriving in Scotland, Trump said the EU wanted "to make a deal very badly" and said, as he met von der Leyen, that Europe had been "very unfair to the United States." Trump has fumed for years about the U.S. merchandise trade deficit with the EU, which in 2024 reached $235 billion, according to U.S. Census Bureau data. The EU points to the U.S. surplus in services, which it says partially redresses the balance. Now he argues, his tariffs are bringing in "hundreds of billions of dollars" of revenues for the U.S., while dismissing warnings from economists about the risk of inflation. On July 12, Trump threatened to apply a 30% tariff on imports from the EU starting on Aug. 1, after weeks of negotiations with the major U.S. trading partners failed to reach a comprehensive trade deal. The EU had prepared countertariffs on 93 billion euros ($109 billion) of U.S. goods in the event there was no deal, and Trump made good his 30% tariff threat. Some member states had also pushed for the bloc to use its most powerful trade weapon, the Anti-Coercion Instrument, to target U.S. services in the event of a no-deal.
Japan Today
an hour ago
- Japan Today
What we know so far about the EU-US trade deal
The EU-US trade deal means the 27-country bloc will face a baseline US levy of 15 percent - instead of a threatened 30 percent By Raziye Akkoc EU chief Ursula von der Leyen clinched an agreement Sunday with US President Donald Trump to avoid crippling tariffs from hitting the bloc, with both leaders hailing a "good deal". The stakes were high with a looming August 1 deadline and $1.9 trillion transatlantic trading relationship on the line. Many European businesses will breathe a sigh of relief after the leaders agreed the 27-country bloc will face a baseline levy of 15 percent instead of a threatened 30 percent -- but the deal will not satisfy everyone. Here is what we know so far: What did EU, US agree? Both sides confirmed there will be a 15-percent across-the-board rate on a majority of EU goods -- the same level secured by Japan this month -- with bilateral tariff exemptions on some products. The deal will bring relief for the bloc's auto sector, employing around 13 million people -- and hit by Trump with 25-percent tariffs, on top of a pre-existing 2.5 percent. "Obviously, it is good news for the car industry. So Germany will be happy. And all the EU members with auto supply chains, they go from 27.5 to 15 percent," said Jacob Funk Kirkegaard of the Peterson Institute For International Economics. A 15-percent levy will remain "costly" for German automakers, "but it is manageable", said trade geopolitics expert Elvire Fabry at the Jacques Delors Institute. While 15 percent is much higher than pre-existing US tariffs on European goods -- averaging 4.8 percent -- it mirrors the status quo, with companies currently facing an additional flat rate of 10 percent imposed by Trump since April. The EU also committed to buy $750 billion of liquefied natural gas, oil and nuclear fuels from the United States -- split equally over three years -- to replace Russian energy sources. And it will pour $600 billion more in additional investments in the United States. Trump said EU countries -- which recently pledged to ramp up their defence spending within NATO -- would be purchasing "hundreds of billions of dollars' worth of military equipment". Are there exemptions? Von der Leyen said the 15-percent rate applied across most sectors, including semiconductors and pharmaceuticals -- a critical export for Ireland, which the bloc has sought to protect. Trump in April launched probes that could lead to significantly steeper tariffs on the two key sectors, warning this month he could slap 200-percent levies on drugs. Brussels and Washington agreed a bilateral tariff exemption for key goods including aircraft, certain chemicals, semiconductor equipment, certain agricultural products and critical raw materials, von der Leyen said. The EU currently faces 50-percent tariffs on its steel exports to the United States, but von der Leyen said a compromise on the metal had been reached with Trump. "Between us, tariffs will be cut and a quota system will be put in place," she said. It is understood that European steel would be hit with 50-percent levies only after a certain amount of the metal arrived in the United States, but no details were initially provided on the mechanism. What happens next? The deal needs to be approved by EU member states, whose ambassadors will meet first thing Monday morning for a debrief from the European Commission. And there are still technical talks to come, since the agreement needs to be fully fleshed out. Von der Leyen described the deal as a "framework" agreement. "Details have to be sorted out, and that will happen over the next weeks," she said. In particular, she said there has yet to be a final decision on alcohol, critical since France and The Netherlands have been pushing for carve-outs for wine and beer respectively. "This is something which has to be sorted out in the next days," von der Leyen said. © 2025 AFP
Japan Today
an hour ago
- Japan Today
U.S. Fed poised to hold off on rate cuts, defying Trump pressure
Donald Trump (L) has ramped up pressure on Federal Reserve Chair Jerome Powell (R) as the US president pushes for lower interest rates By Beiyi SEOW The U.S. central bank is widely expected to hold off slashing interest rates again at its upcoming meeting, as officials gather under the cloud of an intensifying pressure campaign by President Donald Trump. Policymakers at the independent Federal Reserve have kept the benchmark lending rate steady since the start of the year as they monitor how Trump's sweeping tariffs are impacting the world's biggest economy. With Trump's on-again, off-again tariff approach -- and the levies' lagged effects on inflation -- Fed officials want to see economic data from this summer to gauge how prices are being affected. When mulling changes to interest rates, the central bank -- which meets on Tuesday and Wednesday -- seeks a balance between reining in inflation and the health of the jobs market. But the bank's data-dependent approach has enraged the Republican president, who has repeatedly criticized Fed Chair Jerome Powell for not slashing rates further, calling him a "numbskull" and "moron." Most recently, Trump signaled he could use the Fed's $2.5 billion renovation project as an avenue to oust Powell, before backing off and saying that would be unlikely. Trump visited the Fed construction site on Thursday, making a tense appearance with Powell in which the Fed chair disputed Trump's characterization of the total cost of the refurbishment in front of the cameras. But economists expect the Fed to look past the political pressure at its policy meeting. "We're just now beginning to see the evidence of tariffs' impact on inflation," said Ryan Sweet, chief U.S. economist at Oxford Economics. "We're going to see it (too) in July and August, and we think that's going to give the Fed reason to remain on the sidelines," he told AFP. Since returning to the presidency in January, Trump has imposed a 10 percent tariff on goods from almost all countries, as well as steeper rates on steel, aluminum and autos. The effect on inflation has so far been limited, prompting the U.S. leader to use this as grounds for calling for interest rates to be lowered by three percentage points. Currently, the benchmark lending rate stands at a range between 4.25 percent and 4.50 percent. Trump also argues that lower rates would save the government money on interest payments, and floated the idea of firing Powell. The comments roiled financial markets. "Powell can see that the administration floated this trial balloon" of ousting him before walking it back on the market's reaction, Sweet said. "It showed that markets value an independent central bank," the Oxford Economics analyst added, anticipating Powell will be instead more influenced by labor market concerns. Powell's term as Fed chair ends in May 2026. Analysts expect to see a couple of members break ranks if the Fed's rate-setting committee decides for a fifth straight meeting to keep interest rates unchanged. Sweet cautioned that some observers may spin dissents as pushback on Powell but argued this is not necessarily the case. "It's not out-of-line or unusual to see, at times when there's a high degree of uncertainty, or maybe a turning point in policy, that you get one or two people dissenting," said Nationwide chief economist Kathy Bostjancic. Fed Governor Christopher Waller and Vice Chair for Supervision Michelle Bowman have both signaled openness to rate cuts as early as July, meaning their disagreement with a decision to hold rates steady would not surprise markets. Bostjancic said that too many dissents could be "eyebrow-raising," and lead some to question if Powell is losing control of the board, but added: "I don't anticipate that to be the case." For Sweet, "the big wild card is the labor market." There has been weakness in the private sector, while the hiring rate has been below average and the number of permanent job losers is rising. "There are some fissures in the labor market, but they haven't turned into fault lines yet," Sweet said. If the labor market suddenly weakened, he said he would expect the Fed to start cutting interest rates sooner. © 2025 AFP
