‘Far less punitive than was feared’: Japanese auto stocks soar after Trump unveils trade deal

‘Far less punitive than was feared’: Japanese auto stocks soar after Trump unveils trade deal

>> IT IS TIME NOW FOR MONEY, POWER, POLITICS AND TODAY, THE WHITE HOUSE ANNOUNCED NEW TRADE DEALS WITH JAPAN AND THE PHILIPPINES ON A TRADE FRAMEWORK WITH INDONESIA WITHOUT TOO MANY DETAILS. BOTH PHILIPPINES AND INDONESIA WILL NOW BE SUBJECT TO 19% TARIFFS, WHILE THE PRESIDENT SAYS JAPAN WILL FACE RECIPROCAL TARIFFS OF 15%. BUT NOT EVERYONE IS HAPPY WITH THOSE WITH THAT NEWS. REUTERS REPORTS A GROUP REPRESENTING THE DETROIT THREE AUTOMAKERS CALLED IT A, QUOTE, BAD DEAL FOR U.S. INDUSTRY AND U.S. AUTO WORKERS. BOTH GM AND STELLANTIS SAY TARIFFS ARE EATING BILLIONS AND BILLIONS OF DOLLARS OUT OF THEIR PROFITS, AND STELLANTIS HAS WARNED THAT THE LEVIES MAY SOON FORCE THE COMPANY TO RAISE THEIR PRICES. WITH ME NOW TO DISCUSS MY FRIENDS, DAVID GURA, A CORRESPONDENT FOR BLOOMBERG AND HOST OF THE BIG TECH PODCAST, AND RON INSANA, CNBC’S SENIOR ANALYST. RON, LET’S START WITH THE BIG THREE AUTOMAKERS. WHY EXACTLY ARE THEY SO UPSET ABOUT THIS JAPAN DEAL? >> WELL. >> THE TARIFFS. >> THAT ARE ON JAPANESE AUTOMAKERS RIGHT NOW WERE AT 25%. THEY’RE DROPPING TO 15%. JAPAN’S NIKKEI IS UP 3.2%. OUR FUTURES ARE UP ONLY MODESTLY. AND JAPANESE AUTOMAKER STOCKS ARE SOARING IN JAPAN BECAUSE THIS. >> IS FAR. >> LESS PUNITIVE THAN WAS FEARED. AND SO THE JAPANESE AUTO COMPANIES WILL STILL HAVE FAIRLY FREE ACCESS TO US MARKETS, WHICH I GUESS IS NOT GOING TO BE PLEASING TO DOMESTIC CARMAKERS. >> DAVID, JAPANESE MEDIA IS REPORTING THAT JAPAN AND THE US HAVE ALSO AGREED TO KEEP 50% TARIFFS ON STEEL. TWO OF AMERICA’S BIGGEST STEEL PRODUCERS HAVE ALREADY RAISED THEIR PRICES DUE TO THESE TARIFFS. HOW SIGNIFICANT IS THIS? >> WELL, FIRST OF ALL, I WANT TO APPLAUD YOU FOR YOUR QUOTATION FINGERS. >> WHEN YOU SAID DEALS. >> JUST JUST A MOMENT AGO, BECAUSE THIS IS SOMETHING THAT WE STILL DON’T KNOW A WHOLE LOT ABOUT. THIS WAS POSTED ON TRUTH SOCIAL, AND WE SAW THE JAPANESE TRADE NEGOTIATOR POST THIS ON SOCIAL MEDIA AS WELL. AND THIS HAS BEEN THE CASE WITH ALL OF THESE DEALS. WE HAVEN’T DONE A WHOLE LOT OF DETAIL FROM THEM, FROM THE PRESIDENT OR FROM THE OTHER TRADING PARTNERS. BUT YOU BRING UP STEEL AND THIS IS SO CRUCIAL. THIS IS AN AN INCHOATE DEAL. THIS IS SOMETHING THAT’S STILL LEFT UNDETERMINED. IT’S THE SAME THING WITH THE DEAL THAT WE SAW SIGNED BETWEEN THE UNITED STATES, THE UNITED KINGDOM. STEEL IS STILL THIS, THIS OUTLIER. BUT YOU BRING UP DOMESTIC STEEL. AND WE’VE SEEN THE PRESIDENT OF THE UNITED STATES TAKE A REALLY PROTECTIONIST TACK WHEN IT COMES TO DOMESTIC STEEL. AND THE TWO MAJOR US STEEL PRODUCERS HAVE RAISED THEIR PRICES BY 16% HERE IN RECENT MONTHS. WHY ARE THEY DOING THAT? BECAUSE THEY CAN, UNDER THIS FRAMEWORK THAT THE PRESIDENT HAS PUT IN PLACE. SO IT’S GOING TO START TO BE A CRUNCH ON COMPANIES THAT RELY ON STEEL BROADLY. THEY’RE GOING TO HAVE A DIFFICULT TIME GETTING FOREIGN MADE STEEL BECAUSE THAT’S MORE EXPENSIVE BECAUSE OF TARIFFS. AND WE’RE SEEING DOMESTIC PRODUCERS, ONE COULD SAY OPPORTUNISTICALLY HERE RAISING THEIR PRICES AS WELL. SO THIS IS BOUND TO TRICKLE DOWN TO MANUFACTURERS. AND AFTER THAT OF COURSE TO CONSUMERS WHO ARE BUYING THESE PRODUCTS. >> YOU KNOW, IT’S INTERESTING STUFF. >> I WAS LISTENING TO AN EXPERT TALKING ABOUT THIS FROM THE FIRST TRUMP ADMINISTRATION WHEN STEEL TARIFFS WERE IMPOSED. WE GAINED 1000 JOBS IN THE STEEL INDUSTRY AND LOST 75,000 JOBS IN INDUSTRIES THAT WERE RELATED TO AND USED STEEL AND OTHER ALUMINUM PRODUCTS. >> HOLY SMOKES. >> YEAH. AND SO THIS ALWAYS KIND OF LOOKS GOOD ON PAPER, AND IT LOOKS GREAT IN SOCIAL MEDIA WITH A HUGE DEAL. THE PRESIDENT HINTED THAT THERE MIGHT BE A DEAL WITH EUROPEAN UNION COMING TOMORROW AS WELL, ALTHOUGH AGAIN, IT WOULD LIKELY BE A FRAMEWORK GIVEN THE SIZE AND SCOPE OF ANY AGREEMENT WE HAVE WITH THE EUROPEAN UNION. BUT YOU KNOW THESE TARIFFS. YEAH, THEY’RE RAISING A LITTLE MONEY. WE I. >> DON’T THINK WE FULLY. >> APPRECIATE THE LONG TERM EFFECTS OF THIS YET. AND I THINK THAT’S REFLECTED IN THE STOCK MARKET JUST KIND OF AS WE’VE DISCUSSED IN THE PAST, BOUNCING ALONG AT RECORD HIGHS. >> THIS IS. >> I THINK, A MUCH LONGER TERM STRUCTURAL CHANGE IN ECONOMIC ACTIVITY AROUND THE WORLD. AND IT’S JUST. >> GOING TO. >> TAKE TIME FOR THESE THINGS TO SINK IN AND AFFECT MARKETS AND THE ECONOMY. >> BUT, RON, WHEN PEOPLE GET CONFUSED, WHEN THEY SAY, LIKE, WHY ON EARTH ARE THE MARKETS SO HIGH? MARKETS ARE DIFFERENT THAN REAL BUSINESSES. OKAY. YOU CAN YOU CAN YOU CAN LOAD UP ON STOCKS TODAY AND YOU CAN SELL THEM ALL TOMORROW. THE IMPACT THESE TARIFFS ARE GOING TO HAVE ARE GOING TO HIT AND HURT THESE COMPANIES, THESE INDUSTRIES FOR MONTHS AND YEARS TO COME. >> WELL YOU BROUGHT IT UP. I MEAN THE AUTO GM WAS OVER $1 BILLION IN TARIFF HITS JUST THIS QUARTER. THEY SAID IT COULD BE UP TO $5 BILLION, $6 BILLION OVER THE COURSE OF A YEAR. THAT IS AN ENORMOUS HIT FOR A US AUTOMAKER TO TAKE. CERTAINLY IS NOT GOING TO, YOU KNOW, KEEP THEM IN GOOD STEAD. AND WHEN YOU LOOK DOWN THE LINE, THIS IS STILL ULTIMATELY INFLATIONARY. AND SO IT MAY NOT HAPPEN TODAY BECAUSE US COMPANIES IMPORTED SO MANY GOODS BEFORE THE TARIFFS WERE PUT IN PLACE THAT WE’RE GOING TO HAVE TO WAIT PROBABLY TO THE FALL OR THE WINTER FOR THIS TO HIT. AND SO I THINK THAT’S WHY THERE’S SO MUCH COMPLACENCY AROUND AS WELL. WE HAVEN’T SEEN THE EFFECTS, BUT THEY’RE JUST NOT READY TO HIT THE POPULACE QUITE AT THIS MOMENT. >> DAVID. BUT WE STILL DON’T HAVE IS ANY SORT OF FRAMEWORK OR EVEN TALK OR A HINT OF A DEAL WITH CHINA. AND THAT’S THE REASON WE’RE DOING ALL OF THIS. AND NOW WE’RE HEARING FROM TREASURY SECRETARY SCOTT BESSENT THAT DEADLINE THAT BIG, YOU KNOW, DO OR DIE DEADLINE AUGUST 1ST. WELL, MAYBE IT’S GOING TO GET EXTENDED. WHAT DO YOU THINK IS GOING ON? >> WELL, THE TREASURY SECRETARY’S GOING TO GO TO ANOTHER EUROPEAN CAPITAL IN THE COMING DAYS. HE’S GOING TO GO TO STOCKHOLM TO SIT DOWN WITH THE CHINESE ONCE AGAIN. AND HE INDICATED IN AN INTERVIEW WITH FOX BUSINESS THAT HE THINKS THERE’LL BE AN EXTENSION ONCE AGAIN WHEN IT COMES TO THE DEADLINE ON THOSE NEGOTIATIONS WITH CHINA. YOU KNOW, WATCHING ALL OF THIS UNFOLD, I’M I’M STRUCK BY HOW WE SEE THIS ADMINISTRATION GOING BACK TO A TEMPLATE THAT WAS IN PLACE DURING THE OBAMA ADMINISTRATION TO HAVE THESE KIND OF REGULAR STRATEGIC AND ECONOMIC DIALOG WITH CHINA THAT THEY VALUED COMMUNICATION, REGULAR COMMUNICATION. AND AS YOU LISTEN TO THE TREASURY SECRETARY TALK ABOUT WHAT HE HOPES TO DISCUSS AT THAT MEETING IN STOCKHOLM, IT’S NOT JUST TARIFFS, NOT JUST TRADE. HE WANTS TO GET INTO OIL, FOR INSTANCE, AND CHINA’S USE OF OIL. AND WHAT HAPPENS WITH MANUFACTURING SECTOR? I THINK THAT WHAT THE ADMINISTRATION IS REALLY PRIZING HERE IS JUST THE CHANCE TO SIT DOWN AT A TABLE WITH COUNTERPARTS FROM FROM CHINA. WE’LL SEE WHAT HAPPENS HERE. BUT TO YOUR BROADER POINT, WE’RE SEEING ONCE

A new trade agreement between the U.S. and Japan sent shares of Japanese automakers soaring. But American automakers warn the deal provides little relief for Americans. David Gura and Ron Insana discuss on The 11th Hour. 

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