Trump’s Tariff Gamble Falters as Trade Deals Fall Short of Promises

Economic

Summary:

With just days remaining before a July 9 tariff deadline, President Trump’s push for comprehensive global trade reform appears to be falling short, delivering a patchwork of limited deals instead of the sweeping pacts initially promised...

Reality Check on Trump’s "Trade Overhaul" Vision

Despite early promises of “90 deals in 90 days” following the April 2 tariff shock, the Trump administration is now expected to announce only a limited number of bilateral trade frameworks, many of which fall short of resolving deep-rooted structural issues. Most agreements focus on narrow, sector-specific concessions, with numerous key details deferred to future talks.

According to trade law experts, these outcomes don’t meet the traditional definition of trade agreements. “They’ll be called trade deals, but likely lack substance,” said Tim Meyer of Duke University, emphasizing the symbolic rather than economic weight of these pacts.

Tariff Threats and Retaliation Risks

Countries that fail to strike a deal before the July 9 deadline may face tariffs reverting to the elevated levels imposed in April — up to 25% in some cases. Treasury Secretary Scott Bessent has said countries seen as negotiating “in good faith” may retain the lower 10% rate, but even this guidance has been undercut by President Trump’s inconsistent statements. In a press conference, he asserted, “We can do whatever we want,” and floated the idea of blanket 25% tariffs, further fueling uncertainty.

Trump abruptly terminated trade talks with Canada over its digital services tax, prompting Ottawa to repeal the measure in hopes of reopening negotiations. While some interpreted this move as a diplomatic victory, others see it as a warning to other nations that defiance will be met with swift tariff retaliation.

A Patchwork of Partial Progress

Deals are reportedly near with Taiwan, Indonesia, Vietnam, and South Korea, and talks are progressing with India and the EU. Yet observers expect many of these to be preliminary frameworks that leave thorny issues like digital taxes, rare earths, and industrial subsidies unresolved.

Past deals offer cautionary tales: the UK accepted a framework under the assumption that steel and aluminum tariffs would be lifted, only to find 25% levies remain in place. Likewise, Trump’s claims that China would resume rare earths exports have yet to materialize, deepening skepticism about the follow-through on trade pledges.

Uncertain Legal Terrain

The legality of Trump’s tariff regime also remains unsettled. In May, the U.S. Court of International Trade ruled most of the tariffs illegal, citing misuse of emergency powers. However, an appeals court has allowed the measures to continue until a hearing in late July, casting further doubt on the administration’s strategy.

This legal limbo leaves U.S. businesses and global partners in a state of limbo, uncertain whether current trade terms will survive the summer.

Market Volatility and “TACO” Diplomacy

Financial markets have grown wary of Trump’s brinkmanship. The unpredictable cycle of threats and partial retreats has become so common that investors have coined the term “TACO” — short for “Trump Always Chickens Out” — reflecting the pattern of harsh rhetoric followed by tactical pullbacks.

Although some short-term concessions have been won, the broader reform of global trade imbalances remains elusive. Critics argue that Trump’s focus on headlines over substance may deliver political theatre, but little durable economic value.

Public and Political Backlash Grows

Recent polling shows that Trump’s trade policy is increasingly unpopular. A Quinnipiac University poll from early June found 57% of voters disapprove of his trade agenda. The growing discontent may weigh on his re-election strategy, particularly if tariffs begin to raise consumer prices or lead to foreign retaliation.

With time running out and pressure mounting on multiple fronts — from allies, businesses, courts, and voters — the president’s “deal-making” strategy appears more vulnerable than ever to both domestic and global scrutiny.

A Narrow Window for Resolution

As July 9 approaches, the world is watching to see if Trump delivers meaningful deals or simply rebrands partial concessions as diplomatic victories. Either way, the risk of economic dislocation remains high — especially if retaliatory tariffs emerge or legal rulings nullify the administration’s trade actions.

The coming days could define the future trajectory of U.S. trade relations — or signal the limits of a go-it-alone strategy in an interdependent global economy.

Source: Reuters

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Glendon

Economic

Forex

The UK economy grew strongly in the first quarter of the year, official data confirmed Monday, before the Labour government’s tax hikes and extra US tariffs came into effect.

The Office for National Statistics said UK gross domestic product rose 0.7% in the first three months of the year, unrevised from the first estimate published in May. It was the strongest quarterly performance in a year and made Britain the fastest-growing of the Group-of-Seven economies.

The savings ratio declined to 10.9% in the first quarter, down 1.1 points from a historically high level. The fall was driven by people saving less outside their pensions.

The outlook has darkened since the start of April amid a sharp drop in employment, weak retail sales and plunging exports to the US. BOE Governor Andrew Bailey recently warned of weak underlying growth as businesses pause investment and consumers hold back on spending.

Chancellor of the Exchequer Rachel Reeves’ £26 billion ($36 billion) increase in a payroll tax kicked in at the start of April, a measure she said was necessary to shore up the public finances but which has also been blamed for denting sentiment and pushing up food prices. At the same time, US President Donald Trump unleashed a wave of global tariffs, knocking economic prospects even though the UK struck a partial deal to lessen some of the impact on British exports.

Source: Bloomberg Europe

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Gerik

Economic

Strategic Resources Take Center Stage in Trade Diplomacy

Indonesia’s senior economic minister, Airlangga Hartarto, announced Monday that Jakarta has formally offered Washington an opportunity to co-invest in a major critical minerals initiative. The move comes as part of broader tariff discussions between the two nations, positioning natural resource cooperation as a lever to unlock concessions on trade.

This strategic proposal reflects Indonesia’s push to capitalize on its rich reserves of key minerals such as nickel, cobalt, and rare earth elements — all vital components in electric vehicle batteries, electronics, and renewable energy infrastructure. By involving the U.S. in upstream resource development, Indonesia is seeking to deepen bilateral ties and reduce future exposure to trade-related disruptions.

Danantara Indonesia at the Core of the Partnership

The proposed joint project will be managed by Danantara Indonesia, the country's sovereign wealth fund. This inclusion signals Jakarta's intention to ensure both transparency and strategic alignment in managing national resource assets. Danantara's participation would likely facilitate smoother financial structuring and oversight, offering the U.S. a more stable and state-backed investment framework.

While full details of the project — including location, resource type, and scale — have yet to be disclosed, officials suggest the plan could provide the U.S. with direct access to critical minerals outside of China, aligning with Washington’s ongoing efforts to diversify its supply chains.

Geopolitical and Economic Context

The proposal is particularly timely as the U.S. government accelerates its global search for alternative critical mineral sources amid rising tensions with Beijing. U.S. officials have repeatedly stressed the need for “friend-shoring” supply chains, and Indonesia, the world’s largest nickel producer, represents a compelling partner.

The announcement also coincides with President Donald Trump’s ongoing efforts to renegotiate tariffs and trading terms with key partners in Asia, including Vietnam and Japan. Offering U.S. investors a stake in resource extraction and processing could make Indonesia more attractive as a long-term trade and industrial ally.

Implications and Outlook

If successful, the joint investment initiative could reshape Indonesia-U.S. trade relations, shifting the focus from commodity exports to collaborative resource development. It could also position Indonesia more firmly within the U.S.-led economic security network in the Indo-Pacific region.

Analysts will be watching whether this offer leads to meaningful concessions in U.S. tariff policy or investment incentives, particularly in the electric vehicle and battery manufacturing sectors. The outcome could also set a precedent for other resource-rich ASEAN countries negotiating with Washington.

Further details on the project and formal responses from the U.S. Trade Representative’s office are expected in the coming weeks.

Source: Reuters

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FastBull Featured

Daily News

[Quick Facts]

1. German Corporate Bankruptcies hit ten-year high in first half of year.

2. Trump's "Big and Beautiful" Bill clears key Senate hurdle; Democrats employ delaying tactics.

3. The United States has reached an agreement with G7 members to establish a "parallel" system to avoid a global tax war.

4. Yemen's Houthis vow to continue attacks against Israel.

5. Japanese poll shows Prime Minister Shigeru Ishiba's cabinet support below 30% for fourth consecutive month.

6. Trump hopes Powell resigns, vows not to appoint Fed Chair who won't cut rates.

7. U.S. firms to gain exemptions from parts of Global Minimum Tax under G7 Deal.

8. Yemen's Houthis vow unabated attacks on Israel.

9. OPEC+ poised for another major output hike in August.

10. April GDP report signals imminent Bank of Canada rate cut.

11. Core PCE inflation edges higher while consumer spending unexpectedly contracts.

[News Details]

German Corporate Bankruptcies hit ten-year high in first half of year

Data recently released by German credit rating agency Creditreform shows that in the first half of this year, the number of corporate bankruptcies registered in Germany reached 11,900, a 9.4% increase compared to the same period last year, reaching the highest level in ten years. Patrik-Ludwig Hantzsch, the agency's economic expert, stated that German companies are facing multiple challenges, including weak demand, rising costs, and uncertainty. He predicts that the number of corporate bankruptcies in Germany will keep growing until the end of this year.

Trump's "Big and Beautiful" Bill clears key Senate hurdle; Democrats employ delaying tactics

On June 28th local time, the US Senate passed a procedural motion by a vote of 51 to 49, aimed at advancing the large-scale tax and spending bill dubbed "Big and Beautiful" by President Donald Trump. Following the passage of this procedural vote, the likelihood of the bill passing within the coming days has increased. It is understood that after this procedural motion is passed, the massive tax and spending bill will undergo recitation, debate, amendment votes, and a final vote, a process expected to take several days. This leaves less than one week before the July 4th deadline set by Trump. Not only did all Democrats vote against the motion, but they also employed delaying tactics. On June 28th, Senate Minority Leader Chuck Schumer stated that Democrats would force the Senate to recite the full 940-page bill. The Hill reported that reciting the bill would take 12 hours.

The United States has reached an agreement with G7 members to establish a "parallel" system to avoid a global tax war

The United States and other G7 members signed an agreement aimed at avoiding a global tax war, proposing the establishment of a "parallel" system to exempt U.S. companies from certain provisions of the existing global agreement. As part of the agreement, U.S. officials agreed to remove provisions from the Trump tax cuts that would increase taxes on income earned by non-U.S. companies and individuals in the United States. This provision, known as Article 899, is referred to as a "retaliatory tax" because it only raises the tax rates on countries that the U.S. government deems to have discriminatory tax policies. The G7 stated on Saturday that this parallel system could "provide greater stability and certainty for the future of the international tax system."

Yemen's Houthis vow to continue attacks against Israel

Yahya Saree, spokesperson for Yemen's Houthi group, declared in a statement on June 28 that the Houthis had launched a "Zolfaghar" ballistic missile at a target in Beersheba, southern Israel, successfully achieving its objective. Additionally, over the past week, the Houthis had repeatedly fired ballistic missiles and drones targeting Israeli locations in Beersheba, Jaffa, and Haifa. Saree emphasized that the group would not abandon its support for the Palestinian people and would continue operations until Israel halts its aggression against the Gaza Strip and lifts the siege. Earlier that day, the Israel Defense Forces (IDF) reported monitoring a missile originating from Yemen, triggering alerts across multiple Israeli regions. The IDF stated the missile was "most likely successfully intercepted".

Japanese poll shows Prime Minister Shigeru Ishiba's cabinet support below 30% for fourth consecutive month

A recent poll in Japan revealed that public support for Prime Minister Shigeru Ishiba's cabinet stands at 24%, remaining below 30% for the fourth consecutive month. In Japanese politics, a cabinet approval rating below 30% is viewed by public opinion as entering the "danger zone," while a drop below 20% is considered the "resignation zone." According to Japanese media analysis, if the current governing coalition fails to secure a majority in the July 20th House of Councillors election, Ishiba may lose his position as Prime Minister.

Trump hopes Powell resigns, vows not to appoint Fed Chair who won't cut rates

Last Friday, U.S. President Donald Trump stated he would not appoint anyone as Federal Reserve Chair unless they commit to lowering interest rates beyond current levels. This marks his clearest condition yet for potential candidates to succeed Jerome Powell, making interest rate cuts a non-negotiable requirement for the position.

Trump renewed his attacks on Powell during remarks at the White House, declaring, "I would love it if he resigned, if he wanted to. His performance has been really shoddy." Trump also labeled Powell "a stupid person." With Powell's term expiring in May 2026, Trump has increasingly shifted focus toward potential successors.

In recent weeks, Trump revealed he has three or four candidates in mind and will announce his decision soon. Historically, most Fed chair appointments occur about three to four months before a vacancy. With approximately 10 months remaining in Powell's term, Trump's early nomination push is widely seen as an attempt to undermine Powell's authority, effectively creating a "shadow Fed chair" advocating for divergent policies.

However, Treasury Secretary Bessent, who is considered a potential successor, downplayed the notion of a "shadow chair." Bessent indicated Trump's nomination of the new chair may come in October or November. When asked about reports naming him as a candidate, Bessent said he has "the best job" in Washington and is "happy to do what President Trump wants me to do". Other rumored candidates include National Economic Council Director Hassett, former Fed Governor Warsh, and current Governor Waller.

U.S. firms to gain exemptions from parts of Global Minimum Tax under G7 Deal

According to a Saturday report by the Financial Times, the G7 stated in a declaration that the U.S. and its G7 partners have agreed to support a proposal exempting American companies from certain provisions of the 2021 "global minimum tax". Canada, the current G7 chair, announced in the declaration that a "parallel system" has been established in response to the U.S. government's agreement to repeal Section 899—the retaliatory tax provision—from President Donald Trump's tax and spending bill. U.S. Treasury Secretary Bessent announced the agreement with the G7 on June 26th, noting that the G7's acceptance of partial tax exemptions for U.S. firms comes in exchange for removing Section 899, colloquially known as the "retaliatory tax," from the U.S. "Big and Beautiful" Bill.

Yemen's Houthis vow unabated attacks on Israel

OPEC+ poised for another major output hike in August

OPEC+ will consider extending its significant production increases at next month’s meeting, with Saudi Arabia leading efforts to reclaim market share, according to reports. Eight major OPEC+ members have collectively raised output by 411,000 barrels per day (b/d) monthly over the past three months. Several representatives confirmed these nations are prepared to approve another production hike for August during the July 6th meeting. Despite sluggish demand and ample supply, Saudi Arabia directed OPEC+ to accelerate its planned output restoration, an unexpected reversal that briefly drove oil prices to four-year lows in April.

April GDP report signals imminent Bank of Canada rate cut

TD Securities stated that Canada's April GDP report showing a 0.1% month-over-month decline signals the Bank of Canada (BoC) is poised to cut interest rates again. This view aligns with the central bank's latest meeting minutes, which indicate BoC officials require economic growth to hover near zero before considering further cuts. April's GDP data crossed this threshold, suggesting another contraction likely occurred in May. A second prerequisite—cooling inflation—is also materializing: this week's core CPI edged down slightly, and the BoC will seek further evidence of moderation when June inflation data arrives in July.

Core PCE inflation edges higher while consumer spending unexpectedly contracts

U.S. data released Friday showed the Personal Consumption Expenditures (PCE) price index rose 2.3% year-over-year and 0.1% month-over-month in May. The core PCE index increased 2.68% from a year earlier and 0.2% from the prior month.

Meanwhile, inflation-adjusted consumer spending fell 0.3%—the largest decline since the beginning of this year—indicating growing uncertainty from the Trump administration's economic policies is increasingly weighing on growth prospects. Personal income in May recorded its steepest drop since 2021, mainly due to reduced government transfer payments. However, wages rose 0.4% for the second consecutive month, extending recent solid gains. This suggests consumers retain their capacity to keep spending, though the savings rate plunged to 4.5%.

Following the PCE release, market expectations for Fed rate cuts saw minimal shifts. According to the CME FedWatch Tool: The probability of holding rates steady in July is 77.3% (previously 79.3%). The probability of a 25-basis-point cut in July is 22.7% (previously 20.7%). The probability of holding rates steady in September is 8.1% (previously 8.2%). The probability of a cumulative 25-bp cut by September is 71.6% (previously 73.3%). The probability of a cumulative 50-bp cut by September is 20.4% (previously 18.5%).

[Today's Focus]

UTC+8 14:00 Germany May Retail Sales (MoM)

UTC+8 20:00 Germany June CPI

UTC+8 22:00 Speech by Bostic, President of the Federal Reserve Bank of Atlanta

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Gerik

Economic

Commodity

Trade Progress Dampens Risk Hedging Demand

Gold extended its downward trajectory on Monday following two consecutive weeks of declines. The drop was driven largely by a "risk-on" sentiment in global markets, as traders priced in the likelihood of progress on several U.S. trade deals ahead of President Donald Trump’s self-imposed July 9 deadline. Spot gold slipped as much as 0.8% in early Asian trading before trimming losses to 0.2%, settling near $3,269.16 an ounce.

The Trump administration is reportedly nearing trade agreements with Mexico, Vietnam, and the European Union, while discussions with India and Japan remain ongoing. Although these deals are unlikely to be comprehensive — echoing the limited nature of previous U.S. pacts with the UK and China — even partial progress has been enough to temporarily ease global risk sentiment and reduce the urgency for safe-haven assets like gold.

Fundamentals Remain Bullish, But Momentum Slows

Despite the recent pullback, gold remains up roughly 25% year-to-date, still supported by lingering geopolitical tensions earlier in the year and persistent structural demand for hedging amid central bank gold buying. However, June is on track to become the metal’s first losing month of 2025. This marks a potential inflection point as the market narrative temporarily shifts from fear-driven accumulation to speculative recalibration based on economic data and trade diplomacy.

The Bloomberg Dollar Spot Index dipped 0.1%, which would typically support gold prices, but it wasn't enough to reverse the decline. Meanwhile, other precious metals showed mixed performances, with silver and palladium falling alongside gold, while platinum posted a modest gain.

Macroeconomic Conditions Undermine Short-Term Gold Support

The fading urgency over Middle East conflicts and an improving outlook for the U.S. economy — particularly in terms of consumer sentiment and inflation expectations — have eroded immediate gold demand. Investors are increasingly eyeing macroeconomic signals, such as the Fed’s potential rate cuts in September and the outcome of Trump’s proposed $4.5 trillion tax-cut bill, which could alter the long-term fiscal and inflationary trajectory.

The tax bill remains controversial, particularly among fiscal conservatives concerned about adding an estimated $3.3 trillion to the U.S. deficit over the next decade. Any stalling or failure of the bill could reintroduce fiscal risk and reignite gold buying. Until then, however, the perceived reduction in global uncertainty has removed some of the urgency for traditional hedges.

Gold's retreat reflects a temporary calming of investor nerves rather than a structural bearish shift. While easing tensions and trade optimism have pressured prices in the short term, the broader macro environment — including potential Federal Reserve easing, persistent fiscal risk, and geopolitical uncertainty — continues to support the long-term bull case. Traders should monitor developments on Capitol Hill and the July 5 U.S. jobs report for the next directional catalyst.

Source: Bloomberg

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James Whitman

Economic

UK car manufacturers can export to the US under a 10% tariff starting Monday, a reduction from the 25% rate imposed by Donald Trump on other countries, as the first elements of an economic agreement between the US president and Prime Minister Keir Starmer come into effect.

British aerospace companies like Rolls Royce Holdings plc also saw 10% tariffs on goods including engines and aircraft parts slashed to zero as of 5:01 a.m. London time. However, there still remained no sign of progress toward lowering levies on the UK’s beleaguered steel industry, which remain at 25% despite Britain previously announcing an agreement to reduce them to zero.

“From today, our world-class automotive and aerospace industries will see tariffs slashed, safeguarding key industries that are vital to our economy,” Starmer said in a statement.

The UK’s business and trade department said Britain was the only country to have secured such a deal with Trump, adding that it would save thousands of jobs.

The new 10% US tariff on British-made cars will apply to an annual quota of 100,000 vehicles, benefiting companies such as Jaguar Land Rover compared with rivals from other nations, although the reduced rate is above the level enjoyed before Trump’s return to office.

While the UK is the only country to be exempted from the global 50% tariff applied by the US to steel, negotiations to remove the 25% levy are proving difficult with issues over ownership and product origin. The failure to implement a zero-tariff deal on steel will serve as a warning to other countries negotiating their own tariff reduction deals with Trump.

The UK will continue to talk to the US about making progress toward zero tariffs on steel as agreed, the business department said, without specifying when it expected that to happen.

Source: Bloomberg

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Gerik

Economic

Resilient Markets and Bigger Bets Power M&A Rebound

Global mergers and acquisitions (M&A) in the first half of 2025 have outperformed cautious expectations, with total deal value reaching $2.14 trillion—up 26% year-over-year—despite market turbulence sparked by U.S. President Donald Trump’s tariff war and elevated interest rates. While the total number of deals dropped, the average deal size grew significantly, with a notable 62% rise in $10 billion-plus transactions compared to the same period in 2024.

The unexpected strength in M&A stems largely from a late-quarter resurgence in U.S. equity markets and renewed optimism among institutional investors. According to Dealogic, North American deal volume hit $1.04 trillion by June 27, while Asia accounted for $583.9 billion—more than doubling its contribution from a year earlier. Japan and China led the charge, with regional giants like Toyota and ADNOC initiating multibillion-dollar transactions that kept capital circulating within Asia-Pacific.

Trump’s Tariff Policy Initially Disrupts, Then Clears Path

The launch of President Trump’s aggressive tariff campaign—branded “Liberation Day” on April 2—initially suppressed deal activity by creating uncertainty. Many IPOs and cross-border transactions were delayed or shelved. However, the unexpected upside emerged as Trump’s administration took a more lenient stance on antitrust reviews, which investment bankers suggest may facilitate future megadeals exceeding $50 billion in size.

Market sentiment further improved as the S&P 500 and Nasdaq reached record highs, pushing down volatility. The VIX index’s decline signaled growing investor confidence. This stabilization enabled dealmakers to restart negotiations and revisit postponed IPO plans.

U.S. and Asia Anchor Activity as Europe Lags

While North America remains the largest M&A market, Asia gained over 11 percentage points in global deal share from 2024, now accounting for 27.3% of total volume. Noteworthy transactions include Toyota’s $33 billion supplier buyout and ADNOC’s $18.7 billion acquisition of Santos in Australia.

In contrast, Europe’s M&A momentum remained relatively sluggish, hampered by persistent inflation and weaker capital market performance. However, bankers expect the global upswing to eventually lift deal activity in the region, especially in sectors benefiting from clean energy subsidies and industrial digitization.

Bankers Signal Stronger H2: IPOs Return, Investors Reengage

Interviews with senior bankers from UBS, Goldman Sachs, Bank of America, and Deutsche Bank highlight growing optimism for the second half of 2025. With monetary policy expectations stabilizing and institutional investors returning to equities, a window of opportunity for IPOs and leveraged buyouts is reopening.

“We’re seeing momentum rebuild,” said Jefferies vice chairman Philip Ross. “The number of new issuances and client mandates over the past three weeks is unlike anything we’ve seen since early 2022.”

Goldman Sachs noted that Asia-to-Asia deals are accelerating, while Deutsche Bank emphasized the resilience of European equities amid geopolitical shocks. In short, there is growing consensus that dealmaking could surpass pre-pandemic levels if macro risks remain contained.

Though the number of deals signed in H1 2025 (17,528) fell short of the 20,583 deals from the same period last year, the shift toward higher-value transactions signals a new phase in global dealmaking. With regulatory barriers easing in the U.S., confidence returning to Asian markets, and risk appetite rebounding among major institutional investors, the stage is set for a blockbuster second half of 2025—one potentially marked by megadeals that redefine global capital flows.