Trump's Trade Victories Could Be Hollow. Why Markets Must Be Wary of China Talks. — Barrons.com
Dow Jones Newswires ·
Sometimes the rhetoric obscures the most important detail — and that seems to be the case for the latest raft of trade deals. President Donald Trump's agreements with Japan and the European Union promise a huge investment boost but might not deliver the amounts suggested. That has a bearing on the China trade talks, making a lasting agreement even trickier.
A foreign spending splurge looks like a boon for American manufacturers and exporters — Japan promised $550 billion of investments in the U.S., only for the EU to go bigger with a $750 billion commitment to energy purchases and a $600 billion investment pledge. Liquefied natural gas players such as Cheniere Energy and Venture Global were celebrating.
But the details are murky. Japanese ministers said the vast majority of Tokyo's commitment is in loans. European officials say energy purchases aren't legally binding and depend on private company decisions. With no detailed texts of the agreements yet available, there's plenty of room for interpretation.
And so to China talks, currently under way in Sweden, with the tariff truce set to be extended another 90 days beyond the Aug. 12 deadline. Will we see another big headline investment figure? If so, treat it with caution — Beijing didn't fulfill the $200 billion promise it made in Trump's first term.
That might mean a tougher line from the White House, such as a much higher baseline tariff. Analysts at Lazard assume an eventual 40% levy on Chinese goods. That would be hefty, but this time the Trump administration has leverage with Nvidia's processors — quite literally a key bargaining chip — which China's tech companies want desperately.
With other countries buying into Trump's trade vision, China's President Xi Jinping might decide not falling behind in AI is worth some tariff pain. But keep an eye out for the caveats and footnotes — the devil is in the detail.
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Trump Trade Deals Are Following an Emerging Pattern
The U.S.-European Union trade deal reaffirms an emerging pattern: The administration is aiming not just for tariffs but for purchase commitments and investment pledges, some of which are creating confusion. It draws comparisons to the Phase One trade deal with China reached during President Donald Trump's first term.
What's Next: Kirkegaard sees an elevated risk that smaller countries end up with higher tariffs. As for Canada and Mexico, analysts see both countries ending up with similar rates as Japan and the EU for the goods that aren't covered by their existing agreement with the U.S.
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Google Awaits Judge's Order on Remedy for Search Business
Alphabet has been awaiting word on what remedies a federal judge will order Google to adopt in general search services and general text advertising after the 2024 ruling that established the tech giant maintained a monopoly in those areas. Apple investors should be paying attention, too.
What's Next: Google has argued that rapidly advancing artificial intelligence technology is already reshaping the search business, and because of that only minor remedies are needed. The government contends that AI's rise alone won't rein in Google's power.
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Blackstone Executive Among 4 Killed in NYC Office Shooting
A gunman opened fire in a busy New York office building on Monday, killing three people before turning the gun on himself. The city's Mayor Eric Adams called it "another senseless act of gun violence."
What's Next: While police couldn't yet determine a motive for Monday's killing, the event is likely to raise concern about violence against corporate executives. The spree took place just a few blocks from where UnitedHealthcare executive Brian Thompson was shot dead last year.
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Figma Raises Price Range as Hopes Grow for More IPOs
Design software maker Figma makes its stock market debut this week, the latest so-called unicorn private company to test Wall Street's appetite for initial public offerings in a red-hot market. One possible good sign: it raised its targeted IPO price, which could sway other companies waiting in the wings.
What's Next: Firefly Aerospace, maker of the Blue Ghost lunar lander, has separately filed to offer 16.2 million shares at $35 to $39 each, which would raise about $631.8 million. At the top of its range, the space company's valuation would reach $5.5 billion.
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Boeing Faces Another Potentially Damaging Worker Strike
About 3,200 Boeing workers at facilities near St. Louis rejected a contract offer, raising the potential for another damaging labor strike for the plane maker just days from now. The news comes just as Boeing is slated to report progress on narrowing its quarterly loss and on revenue growth.
What's Next: Investors should also watch labor relations at other companies. Woodward, which makes components for aircraft and industrial engines, has a labor contract covering 800 employees, about 9% of its workforce, expiring in September 2025, noted Jefferies analyst Sheila Kahyaoglu.
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This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
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Dow Jones Newswires