Asia: Markets mixed as trade deal cut-off looms

Business Times

a day ago

[HONG KONG] Asian markets swung on Wednesday amid trade war worries after Donald Trump said he would not push back next week's tariff deadline, with Tokyo taking a hit from threats to ramp up Japanese levies.
Sentiment was also mixed after the US president's signature budget bill scraped through the senate, with optimism over the extension of deep tax cuts offset by warnings that it could add around US$3 trillion to the country's already ballooning national debt.
With a week to go before Trump's 90-day pause on so-called reciprocal tariffs ends, hardly any governments have struck deals to avert the taxes, though White House officials have claimed several are in the pipeline.
And while the White House had set July 9 as the cut-off date for leaders to finalise pacts, investors largely expect that to be pushed back or countries given extra time.
However, the president said Tuesday he was 'not thinking about the pause' and again warned he would end negotiations or ramp up some duties, adding that he will be 'writing letters to a lot of countries'.
Among those in his sights was Japan, which he slammed at the start of the week over US rice and auto exports to the country.
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'I'm not sure we're going to make a deal. I doubt it with Japan, they're very tough. You have to understand, they're very spoiled,' he said Tuesday.
He added that Tokyo had 'ripped us off for 30, 40, years'.
They could pay a tariff of '30 per cent, 35 per cent, or whatever the number is that we determine, because we also have a very big trade deficit with Japan', he warned.
The remarks, which come after several visits by Japanese officials to Washington, jolted hopes that deals can be cut with the Trump administration.
Tokyo's Nikkei index fell around one per cent on Wednesday, having fallen more than that the day before.
'With domestic elections around the corner, Tokyo can't easily open the rice market,' said Stephen Innes at SPI Asset Management. 'But without concessions on autos, the lifeblood of its export economy, Japan stands exposed.'
He added: 'The auto sector, nearly a tenth of Japan's (gross domestic product), is directly in the crosshairs. It's not just about tariffs - it's about visibility.
'Japan is being made an example of, and markets are watching who's next.'
Asia Society Policy Institute vice president Wendy Cutler told AFP that 'Japan's refusal to open its rice market, coupled with the US resistance to lowering automotive tariffs, may lead to the reimposition of Japan's 24 per cent reciprocal tariff'.
Seoul was also sharply lower as South Korean negotiators battled to reach a deal with the White House.
Elsewhere in Asia, Shanghai, Taipei, Manila and Jakarta also fell while Hong Kong, Sydney, Singapore and Wellington edged up.
Eyes are also on Washington after senators passed Trump's 'Big, Beautiful Bill' that he says will boost the economy by extending tax cuts and slashing spending on programmes such as Medicare.
The legislation now faces a tough passage through the House of Representatives, where some Republicans have raised concerns about its cost amid already heightened fears over the country's finances.
The dollar remained under pressure against its peers as bets on a Federal Reserve interest rate cut intensify ahead of key US jobs data this week.
While most traders see a reduction in September, there is growing speculation a weak reading on the non-farm payrolls report could boost the chances of a move at this month's central bank policy meeting.
The Dollar Index, which compares the greenback to a basket of major currencies, fell 10.8 per cent in the first half of the year, its steepest decline since the greenback became the global benchmark currency. AFP