US President Donald Trump said he would not consider postponing the July 9 deadline for resuming tariffs and again threatened to suspend negotiations and impose tariffs on multiple countries, including Japan.
“No, I haven’t considered a pause,” Trump said Tuesday when asked if he would extend the negotiation period with trading partners. “I’ll be writing to many countries.”
The US stock market retreated after Trump spoke to reporters on Air Force One. The S&P 500 index, which had been trading steadily earlier in the day, dropped 14 points in response to the news. As of 3:36 p.m. New York time, the benchmark index was down 0.1%. The Chicago Board Options Exchange Volatility Index (VIX) briefly broke through 16.8 before giving up its gains.
After Trump’s speech, Bloomberg’s measure of the dollar was little changed, while the yen held onto gains against the dollar, outperforming all other Group of 10 currencies.
Investors are closely watching how the president will handle the current suspension of the April tariffs, which he has postponed for 90 days to allow time for negotiations.
For weeks, Trump has been trying to put pressure on trade partners, threatening to impose high tariffs on governments he deems difficult to deal with. His chief economic adviser, Kevin Hassett, had hinted the previous day that an announcement would be made after the July 4 holiday and after the tax and spending bill approved by the US Senate was signed.
Since Trump suspended tariffs on various countries, he and his team have repeatedly promised to reach a series of agreements to rebalance the unfair trade relations he has long condemned. But so far, only two such agreements have been reached, namely the broad framework agreements with the UK and China, leaving some key issues unresolved and many specific details to be negotiated later.
On Tuesday, the president further criticized Tokyo for refusing to accept US rice exports. He also said that there was an imbalance in the auto trade between the two countries. Trump said that Japan should be forced to “pay 30%, 35% or whatever number we decide, because we also have a huge trade deficit with Japan.”
In April this year, Trump proposed to impose a 24% tariff on Japanese goods. During the negotiations, these goods have been subject to a 10% tariff.
“I’m not sure we can reach an agreement. I doubt we can reach an agreement with Japan. They are very tough. You have to understand, they have been spoiled,” Trump said.
The president sounds more optimistic about reaching an agreement with India. When asked about the prospects of reaching an agreement next week, Trump said, “It’s possible. It will be a different type of agreement.”
“This will be an agreement that we can compete in. At present, India does not accept anyone to join,” he said. “I think India will do so. If they do, we can reach an agreement with much lower tariffs.”
Indian Foreign Minister Subrahmanyam Jaishankar said this week that India is close to reaching an agreement with the United States. The two sides are working hard to resolve some thorny issues, including the soon-to-be-implemented industry-specific tariffs and market access for US genetically modified crops.
The negotiations intensified, and India’s chief negotiator, Rajesh Agarwal, extended his stay in the United States to resolve the differences.
Other negotiations have been more difficult – Trump has been keen to use Japan as an example this week. This might be seen as a warning to other countries that they must either abide by the agreements or face high tariffs. However, the president’s negotiations with Canada last week also demonstrated his tendency to quickly backtrack. He initially called off the talks, but a few days later, Ottawa scrapped its digital services tax and the negotiations resumed.
Under the leadership of Japanese Prime Minister Ishiba Shigeru, Japan has been striving to maintain a stable and friendly negotiating stance. However, Trump’s intensified efforts to pressure for an agreement have put this to the test. Tokyo has been seeking tariff reductions on its key automotive industry and other tariff exemptions. But due to Trump’s pursuit of a quick victory on trade issues, this deliberate approach may backfire.
“I love Japan. I really like the new prime minister,” Trump told reporters. “But they and other countries have been getting ripped off by us for 30 or 40 years. They’ve been treated too well, so it’s very hard to make a deal.”
