Trump Says Car Trade With ‘Mr Japan’ Is Unfair As Deadline Looms

Economic

Political

Summary:

US President Donald Trump characterized trade in cars between the US and Japan as unfair on Sunday, little more than a week before higher tariffs are set to kick in if a deal isn’t reached between the two nations.

“So we give Japan no cars. They won’t take our cars, right? And yet we take millions and millions of their cars into the United States. It’s not fair,” Trump said during a Fox News interview that aired Sunday.

“And I explained that to Japan. And they understand it. And we have a big deficit with Japan. And they understand that too,” he said in remarks. “Now, we have oil. They could take a lot of oil. They could take a lot of other things,” he added.

Japan’s top negotiator Ryosei Akazawa visited Washington DC last week for the seventh round of trade negotiations that have been ongoing for months, even extending his stay in hopes of hashing out a deal as the July 9 deadline for higher so-called reciprocal tariffs looms.

In a statement released by the Japanese government Sunday, Akazawa and his counterpart, US Commerce Secretary Howard Lutnick had a “fruitful discussion” and agreed to continue seeking a deal that is beneficial for both the US and Japan.

It was unclear from Trump’s statements in the interview whether Japan was close to reaching a deal or winning an extended reprieve from a jump in the across-the-board tariffs.

Trump said the US can set its trade terms with Japan unilaterally.

“I’m going to send letters,” Trump said on Sunday, referring to a plan to inform some trading partners that the US will unilaterally set tariffs. “I could send one to Japan. ‘Dear Mr. Japan, here’s the story. You’re going to pay a 25 percent tariff on your cars.’”

Source: Bloomberg Europe

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Hannah Ellis

Oil prices fell 1% on Monday as an easing of geopolitical risks in the Middle East and the prospect of another OPEC+ output hike in August boosted the supply outlook.

Brent crude futures fell 66 cents, or 0.97%, to $67.11 a barrel by 0031 GMT, ahead of the August contract's expiry later on Monday. The more active September contract was at $65.97, down 83 cents.

U.S. West Texas Intermediate crude dropped 94 cents, or 1.43%, to $64.58 a barrel.

Last week, both benchmarks posted their biggest weekly decline since March 2023, but they are set to finish higher in June with a second consecutive monthly gain of more than 5%.

A 12-day war that started with Israel targeting Iran's nuclear facilities on June 13 caused Brent prices to surge above $80 a barrel after the U.S. bombed Iran's nuclear facilities and then slump to $67 after President Donald Trump announced an Iran-Israel ceasefire.

The market has stripped out most of the geopolitical risk premium built into the price following the Iran-Israel ceasefire, IG markets analyst Tony Sycamore said in a note.

Further weighing on the market, four delegates from OPEC+, which includes allies of the Organization of the Petroleum Exporting Countries, said the group was set to boost production by 411,000 barrels per day in August, following similar-size output increases for May, June and July.

OPEC+ is set to meet on July 6 and this would be the fifth monthly increase since the group started unwinding production cuts in April.

In the U.S., the number of operating oil rigs, an indicator of future output, fell by six to 432 last week, the lowest level since October 2021, Baker Hughes said.

Source: Yahoo Finance

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Julia Daniels

Senate Republicans pushed forward President Donald Trump's sweeping tax cut and spending bill on Sunday in a marathon weekend session even as a non-partisan forecaster said it would add an estimated US$3.3 trillion to the nation's debt over a decade.

The estimate by the Congressional Budget Office (CBO) of the bill's hit to the US$36.2 trillion federal debt is about US$800 billion more than the version passed last month in the House of Representatives.

Republicans, who have long voiced concern about growing US deficits and debt, have rejected the CBO's long-standing methodology to calculate the cost of legislation.

Democrats, meanwhile, hope the latest, eye-widening figure could stoke enough anxiety among fiscally-minded conservatives to get them to buck their party, which controls both chambers of Congress.

“Republicans are doing something the Senate has never, never done before, deploying fake math and accounting gimmicks to hide the true cost of the bill," Democratic Senate Minority Leader Chuck Schumer said as debate opened on Sunday. "Republicans are about to pass the single most expensive bill in US history, to give tax breaks to billionaires while taking away Medicaid, SNAP benefits and good paying jobs for millions of people."

The Senate only narrowly advanced the tax-cut, immigration, border and military spending bill in a procedural vote late on Saturday, voting 51-49 to open debate on the 940-page megabill.

Trump on social media hailed Saturday's vote as a "great victory" for his "great, big, beautiful bill". In a separate post on Sunday, he said: "We will make it all up, times 10, with growth, more than ever before."

In an illustration of the depths of the divide within the Republican Party over the bill, Senator Thom Tillis said he would not seek re-election next year, after Trump threatened to back a primary challenger in retribution for Tillis' Saturday night vote against the bill.

On Sunday, Trump celebrated Tillis' announcement as "great news!" on Truth Social and issued a warning to fellow Republicans who have concerns over the bill. "Remember, you still have to get re-elected. Don’t go too crazy!" Trump wrote in a post.

Tillis' North Carolina seat is one of the few Republican Senate seats seen as vulnerable in next year's midterm elections. He was one of just two Republicans to vote no on Saturday.

Trump wants the bill passed before the July 4 Independence Day holiday. While that deadline is one of choice, lawmakers will face a far more serious deadline later this summer when they must raise the nation's self-imposed debt ceiling or risk a devastating default on US$36.2 trillion in debt.

“We are going to make sure hardworking people can keep more of their money,” Senator Katie Britt, an Alabama Republican, told CNN’s State of the Union on Sunday.

Hits to benefits

Senator Mark Warner, a Democrat from Virginia, said this legislation would come to haunt Republicans if it gets approved, predicting 16 million Americans would lose their health insurance.

"Many of my Republican friends know...they're walking the plank on this and we'll see if those who've expressed quiet consternation will actually have the courage of their convictions," Warner told CBS News' "Face the Nation with Margaret Brennan."

The legislation has been the sole focus of a marathon weekend congressional session marked by political drama, division and lengthy delays as Democrats seek to slow the legislation's path to passage.

Schumer called for the entire text of the bill to be read on the Senate floor, a process that began before midnight Saturday and ran well into Sunday afternoon. Following up to 20 hours of debate on the legislation, the Senate will enter an amendment session, known as a "vote-a-rama", before voting on passage. Lawmakers said they hoped to complete work on the bill on Monday.

Senator Rand Paul of Kentucky, the other Republican "no" vote, opposed the legislation because it would raise the federal borrowing limit by an additional US$5 trillion.

The megabill would extend the 2017 tax cuts that were Trump's main legislative achievement during his first term as president, cut other taxes and boost spending on the military and border security.

Representative Michael McCaul, however, warned that fellow Republicans who do not back Trump on the bill could face payback from voters.

"They know that their jobs are at risk. Not just from the president, but from the voting, the American people. Our base back home will not reelect us to office if we vote no on this," McCaul also told CBS News.

Senate Republicans, who reject the CBO's estimates on the cost of the legislation, are set on using an alternative calculation method that does not factor in costs from extending the 2017 tax cuts. Outside tax experts, like Andrew Lautz from the non-partisan think tank Bipartisan Policy Center, call it a "magic trick".

Using this calculation method, the Senate Republicans’ budget bill appears to cost substantially less and seems to save US$500 billion, according to the BPC analysis.

If the Senate passes the bill, it will then return to the House of Representatives for final passage before Trump can sign it into law. The House passed its version of the bill last month.

Source: Theedgemarkets

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Michelle Reid

Japan’s factory output grew at a much slower pace than expected in May as weaker external demand, primarily due to U.S. tariffs on automobiles, weighed on industrial activity, government data showed on Monday.

Industrial output rose 0.5% in May compared to a 1.1% drop in the previous month, but sharply missed a median market forecast for a 3.4% rise, data released by the Ministry of Economy, Trade and Industry (METI) showed.

Manufacturers surveyed by the ministry expect seasonally adjusted output to rise 0.3% in June and contract 0.7% in July.

Meanwhile, trade talks between Japan and the U.S. are still ongoing, with Tokyo saying it cannot accept 25% auto tariffs. After six rounds of talks in two months, the sides remain deadlocked on tariffs.

Japan faces both broad and sector-specific tariffs, with general duties set to rise from 10% to 24% on July 9 without a deal, alongside a 25% levy on cars and auto parts and 50% on steel and aluminum.

Today’s figures will be analyzed for their implications on the Bank of Japan’s decisions, especially as policymakers monitor domestic resilience against global economic headwinds and political uncertainties.

While the central bank has signalled readiness to raise rates further, the economic impact of higher U.S. tariffs and cooling inflation prints complicates decisions around the timing of the next rate increase.

Source: Investing

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Olivia Brooks

Economic

Political

With just 10 days to go until President Donald Trump’s country-specific tariffs are set to resume, the White House appears poised to fall short of the sweeping global trade reforms it promised to achieve during the three months they were on hold.

Agreements with as many as a dozen of the US’s largest trading partners are expected to be completed by the July 9 deadline, top Trump advisers said this week. But if Trump’s only two other accords, with China and the UK, offer any indication, the pacts likely won’t be fulsome deals that resolve core issues, but instead will address a limited set of topics and leave many specifics to be negotiated later.

“I would expect the White House will announce some number of frameworks that it’s going to call trade deals, but do not meet anyone’s ordinary understanding of that term,” said Tim Meyer, a professor at Duke University law school who specializes in international trade.

For dozens of other countries that don’t reach deals — but were hit by Trump’s higher tariff on April 2 — the president has threatened to impose new duties above the 10% baseline that has been in place during the negotiating period. Those would mostly be “smaller trading partners,” Treasury Secretary Scott Bessent said Friday on CNBC.

Trump and his advisers have left investors on edge ahead of July 9, offering cryptic signals about which countries were close to agreements and which were off track. The outcome will help determine the future of Trump’s trade agenda — one of the centerpieces of his 2024 campaign — with high stakes for the global economy and America’s relationships with allies and adversaries alike.

Even with those high stakes, it was still unclear whether the administration would hold firm on the deadline or extend it to allow more time for talks.

Bessent on Friday said about 20 countries that don’t reach deals by next Wednesday could continue negotiating but would see their tariff rates reverted to the higher April 2 rate or stay at 10% if they are deemed to be “negotiating in good faith,” Bessent said.

But hours later, Trump reiterated his threat to unilaterally set tariff rates for countries — even saying he could do so even before July 9. The US will not broker individual deals with hundreds of nations, Trump said.

Source: Yahoo Finance

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Gerik

Economic

Forex

A Politicized Fed Threatens Dollar Credibility

The prolonged clash between President Donald Trump and Federal Reserve Chair Jerome Powell is shaking investor confidence in the U.S. dollar. Trump’s repeated public criticisms and reported intentions to replace Powell as early as September have fueled market speculation that the Fed’s independence may be compromised. While Powell’s current term ends in May next year, the looming threat of early replacement introduces significant policy uncertainty.

Since January, the U.S. Dollar Index (DXY) has fallen by more than 10.4%, a sharp drop for a currency that typically fluctuates within tighter bounds. On June 28 alone, the dollar lost another 0.55%, following a 0.3% dip the previous day after Wall Street Journal reports indicated Trump might soon announce a successor.

Bond Market Reacts with Capital Flight

Beyond the dollar, the U.S. bond market is showing signs of distress. Investors are rapidly pulling funds from long-term U.S. Treasury bonds, concerned about Trump’s expansive fiscal plans under the “One Big Beautiful Bill.” In Q2 alone, net outflows from long-term Treasuries reached $11 billion—levels unseen since the peak of the COVID-19 crisis.

Bill Campbell from DoubleLine noted that this reflects deeper structural concerns: domestic and international investors are becoming increasingly uneasy about holding U.S. government debt in light of surging federal deficits and potential interest rate manipulation.

Powell Resists Rate Cuts Amid Inflationary Pressure

A central point of contention is Powell’s refusal to cut interest rates from their current 4.25% level, despite pressure from Trump. Inflation remains above 3%, surpassing the Fed’s 2% target, largely fueled by tariff-driven cost increases under Trump’s trade policies. While Trump advocates for lower rates to stimulate growth, premature cuts could risk reigniting inflation.

If Powell is replaced by someone more politically aligned with Trump’s stance, the Fed’s credibility as an independent inflation-fighting institution could erode. UBS analyst Paul Donovan warned that such a move may spark internal conflict with the Federal Open Market Committee (FOMC), compromising the integrity of monetary policymaking.

A Decoupling in Financial Markets

In contrast to the dollar and bond markets, U.S. equities remain resilient. The S&P 500 is approaching a record 6,144.15 points, buoyed by investor optimism and a belief that potential rate cuts—however politically motivated—could support short-term corporate profits. Futures rose 0.36% in early Friday trading, reflecting a risk-on sentiment in equities even as bond and currency markets flash warnings.

According to Antonio Ruggiero from Convera, geopolitical risks and the dollar’s traditional status as a safe-haven asset no longer offer the same support. The erosion of political stability and concerns about monetary policy integrity are now dominant themes driving bearish sentiment.

The ongoing power struggle between Trump and Powell is more than political theater—it is redefining global perceptions of U.S. monetary leadership. A weakening dollar, unstable bond markets, and questions over institutional independence suggest that unless clarity and discipline are restored soon, the long-term credibility of the U.S. financial system could be at risk. Meanwhile, equity markets remain optimistic, but their resilience may be tested if the institutional erosion begins to impact real economic fundamentals.

Source: The Guardian

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Gerik

Economic

Commodity

A Sanctioned Project Shows Signs of Life

Eight months after U.S. sanctions halted operations at Russia's Arctic LNG 2 facility, new evidence suggests Moscow is attempting to discreetly restart exports. The LNG tanker Iris, formerly North Sky, recently signaled a course toward the vicinity of the Arctic LNG 2 terminal—a site central to Russia’s ambitious LNG expansion goals but effectively frozen by Western sanctions since October 2023.

Although Iris has officially listed its destination as the nearby Yamal LNG port of Sabetta (which is not sanctioned), the route and timing of its voyage have sparked speculation that it may actually be bound for Arctic LNG 2. Satellite imagery from June 25 confirms that the surrounding Utrenniy terminal waters remain partially icebound, but the port authority recently permitted Arc4-class vessels like Iris to navigate without icebreaker escort, potentially signaling a greenlight for renewed maritime activity.

Geopolitical Context and Strategic Implications

Arctic LNG 2 was envisioned as a cornerstone in Russia’s plan to triple its LNG exports by 2030. The project was designed to supply nearly 20 million metric tons of LNG annually. However, Russia’s invasion of Ukraine triggered sweeping Western sanctions, particularly from the U.S. and EU, aimed at crippling its fossil fuel revenues. These restrictions not only targeted infrastructure and technology transfers but also named and sanctioned specific LNG tankers, cutting off trade routes and limiting insurance access.

The potential return of Iris marks the first visible logistical move to restart shipments since the project’s suspension. While Russian authorities and Novatek PJSC, the project’s lead developer, have remained silent, the timing—coinciding with seasonal ice melt—suggests a deliberate window of opportunity.

“Shadow Fleet” Tactics and Challenges Ahead

Last year, Russia reportedly attempted to export Arctic LNG 2 cargoes using what has been dubbed a “shadow fleet”—a collection of vessels operating in regulatory gray zones. However, most of those shipments struggled to find buyers due to legal risks, reputational concerns, and sanctions enforcement pressure from Western countries.

This logistical dilemma remains unresolved. Even if Iris or similar ships can dock and load LNG from Arctic LNG 2, finding end-users or intermediary ports willing to accept those shipments poses a persistent obstacle. The chilling effect of U.S. sanctions has extended far beyond physical barriers, making financial transactions, reinsurance, and even transshipment through third-party countries fraught with risk.

The movement of Iris could mark a turning point in Moscow’s attempts to sidestep energy sanctions, testing how far Western enforcement will go to block Russian fossil fuel flows from re-entering global markets. If Arctic LNG 2 exports resume, even modestly, it would reflect Russia’s adaptability and the limits of unilateral sanctions. However, without significant shifts in legal frameworks or diplomatic conditions, any revival is likely to be partial, temporary, and under the constant threat of further escalation.