Zen and the Art of Trade Realignment
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What new tariffs did the Trump administration announce and which countries are affected?
TARES 2.0 is starting to arrive in the post if the letters were ever actually posted, but we already know that Japan, South Korea, and South Africa have been hit hard. So what about Europe and Australia? When will we find out? We'll look at all of that and further questions over the independence of the Fed. A tiny dribbling of data overnight. And today the RBA and the NAB Business Survey. It's Tuesday, it's the 8th of July 2025. It's the morning call from NAB. Good morning. Well the US dollar is up a little today, 0.3% higher, up to 97.5 on the DXY. The Aussie is down 0.9% to 65 US cents. The Euro has lost half percent. Same for the Canadian dollar, a quarter percent off the pound, and 0.6% off the yen, 1.2% off the South Korean one.
And US stocks have taken a hit. 1% off the down, 0.9% off the Nasdaq, and 0.8% down for the SP. At the close as well as one point six percent off the Russell two thousand, presumably because they are more dependent on imports to do their business. Uh the first of the tariff news came well after the European market closed. So blissfully unaware, the Eurostox fifty euros one percent, one point two percent for the DAX and uh a naught point two percent four for the pound. Uh Bonya's yields are higher, up four basis points for ten year treasuries, same in Canada and Italy. Basis points higher across much of the rest of Europe as well. Just three basis points for the UK though. Aussie 10 years were at 4.18% at the end of the day yesterday, now more like 4.26% on futures this morning.
And oil, even though OPEC told us there will be a lot more of it, it's up quite a lot today. 1.6% higher for WTI, 2% higher for Brent, edging towards 70 a barrel. So So let's get straight on to the elephant in the room tariffs. I'm joined by Nabstapa Strickland in Sydney, so we know uh in the last few hours twenty five percent for South Korea and Japan. Uh I mean Japan is the US's fourth biggest trading partner, South Korea's number six, also thirty percent on South Africa. Uh there has been and there's others as well Kazakhstan twenty five percent, Malaysia twenty five percent. Laost forty percent, Myanmar forty percent.
How are the latest tariffs impacting major currency pairs and commodity prices?
No word on the uh EU yet, or really any clear idea about the logic behind all of this apart from a trade deficit is a bad thing with the U the US, which is m most of the world. Um but markets have reacted to this, haven't they?
Good morning, Phil. Uh you'd have to say it's actually probably a relatively mild market reaction. Um so when you look at uh the S P five hundred, well that's down by about one percent. Uh you look at the uh currency markets, the US dollar is up a little bit, but it's starting to reverse a little bit of that. And then you look at yields, they're actually higher than they are lower. So I'd say there's only been a relatively mild market reaction. And when you looked at the details of these letters that have gone out to I think Seven countries so far, although the White House press secretary did say there's going to be 14 letters in total today and a few more in the coming days. It looks like uh effectively what the Trump administration has done is for those countries that they've been unable to come to a negotiation with, which is many countries it seems, uh they've effectively pushed out the date in uh which the effective Liberation Day tariffs would come into place.
So uh It was expected on the ninth of uh July that if countries hadn't agreed, then the old Liberation Day tariffs uh would come back on. That's been extended out to August one effectively, and all these tariff rates that you mentioned, Japan twenty five percent, South Korea twenty five percent, they're actually uh pretty much what their liberation day tariff was gonna be, just rounded or the integer just rounded to the nearest five. So it seems like they've tweaked tweaked that formula of uh uh exports minus imports over imports and just rounded that to the nearest five. So for example, Japan at twenty five percent, its liberation day tariff was going to be twenty four percent, South Korea twenty five percent, its liberation day tariff was going to be twenty five percent.
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Chapters
8 chapters
1
What new tariffs did the Trump administration announce and which countries are affected?
0:01–2:09
2
How are the latest tariffs impacting major currency pairs and commodity prices?
2:09–4:50
3
Why is the market reaction to the tariff announcements relatively muted?
4:50–7:44
4
What are the implications of the US‑BRICS tension and the extra 10% tariff threat?
7:44–10:21
5
How might the extended deadline to August 1st affect trade negotiations and market volatility?
10:21–13:04
6
What is the connection between Fed policy, interest‑rate decisions and the US fiscal outlook?
13:04–14:22
7
What does the NAB Business Survey and RBA outlook indicate for Australian economic conditions?
14:22–14:35
8
What are the key takeaways and what should listeners watch for in the coming weeks?
14:35–14:35