The focus is back on trade today, in more ways than one

Where are the US red lines on trade?

This is the big question that needs an answer for me to have any kind of conviction in the macro outlook. Yesterday Kyodo reported this:

U.S. officials including Treasury Secretary Scott Bessent told Japan’s
top negotiator Ryosei Akazawa in their meeting in Washington last week
that the administration of President Donald Trump intends to put only a
cut in the 14 percent country-specific tariff, suspended through early
July, on the negotiating table, the sources said

That’s a big problem for Japan and the rest of the world. If the US is putting a floor on 10% tariffs then we’re in for a bruising trade war. I just can’t see many countries conceding anything if the US isn’t aiming for free trade.

Moreover, I fear that Trump wants these negotiations to fail so he can put on tariffs. Maybe that sets up a showdown with Congress that restores order but that’s a hard bet to make at this point.

In the meantime, we get US and Canadian trade balance numbers today for March. At 11:30 pm ET, Carney will arrive to meet Trump and the pair will have a meeting 15 minutes later and then lunch at 12:15 pm ET. It’s not clear when they will address the media.

As for the trade data, I wouldn’t expect it to be a market mover.

This article was written by Adam Button at www.forexlive.com.