Smoke and mirrors only work until the smoke clears, and someone smashes the mirror. When reality is then made visible, it's too late to do anything to fix it.

One of his big "wins" on the deal was Japan having no tariffs on cars but Japan already had no tariffs on passenger vehicles. US cars just don't fit their market. Also, we are already seeing prices on goods rising more. Inflation measures are being held down by services.

He also claimed rice was a big "no no" to send to Japan but they had an agreement with the WTO to import 770k tonnes per year. The US was already a leading foreign supplier of rice. So now, Japanese cars have a lower tariff than US automakers are paying on parts and the "wins" are fake.

The Japanese can stall the 500B investment for 3.5 years!

The other thing about this "deal" is that it isn't a deal. All of the reporting is based on Administration claims of the framework of a deal. The Japanese have yet to agree to anything. www.ft.com/content/c118...

INFLATION IS COMING

I figured it would be, like the few other “deals”

Here is all of the information and true facts about Trumps deal with Japan! It’s not a great deal. Tariffs are significantly higher than last year and will definitely increase prices and inflation. Plus the money they are giving is also problematic!!

So you’re friends with the Japanese stock market? It assessed within hours that the deal which greatly increased tariffs on cars was also really good for Toyota. Hmm🤔🤔🤔

Thank you. If only the Trump administration was interested in expanding their knowledge rather than capitalizing on their ignorance. Also, the GoT reference was *chef’s kiss.

Hmm..central planning by the Communist Executive Officer? What could go wrong?

So all of the new oligarch administration trade deals will be designed to enrich #Donnie2Dolls while raising prices on Americans?

Yes.

Too late Trump should resign. His tariff playbook is a proven losing strategy. Our nation cannot afford another day with him there. Stop the madness.

The EU deal is a bigger joke... (at least for the EU).

Remember, The Felon eliminated Tariffs on British Luxury Cars such as Bentleys while imposing tariffs on cars working people buy.

Truly unbelievable!

WORSE! GOP CUT TOOL: Overload admin => millions "churned out" (GOP calls them "lazy") This cruel Medicaid cutting gimmick will impoverish the rural middle class But it won't stop there. If unchecked - and the GOP won't check it - it will destroy our entire healthcare system Read nxt to see how

Safety net admin is labor-intensive, expensive. Tenncare admin costs 900M annually, yet some eligibles still face long delays (churn) 2x verification freq => 2x admin costs - OR - thousands "churned out". GOP says churn = lazy Intentional admin overload. Really bites rural. Also bites emp-based

2x verify freq => admin overload Provider tax cuts => fewer admin $$$ Result: Huge churn pool that impacts all providers, insurers Churn pool always in flux => Costs, Risk always in flux => unmanageable FOR EVERYONE Insurers flee rural => Employers flee rural => Rural middle class collapses

Huge churn pool syncs to tax season => participants w/ coverage jan-jun only Provider income now "seasonal". Layoffs 2nd half of year. Need ample "cash on hand" to survive "boom-bust" cycles Insurers in constant rate renegotiation. Many fail. Many flee. And boom-bust = "bust only" in rural

GOP saw SNAP, Medicaid work req fail BECAUSE OF ADMIN OVERLOAD Realized ADMIN OVERLOAD => cuts. Double verify => 1000s cut Not imp what is verified - could be shoe size 2x per year But "work" => 1000s cut can be called "lazy" INTENTIONAL - GOP LOVES IT! Unintentional: Destroying entire system

This is Japan's biggest surrender to the country formerly known as the "United States" since August 15, 1945. 550 billion dollars straight into Daughterfucker Trump's Russian bank account.

Killing American auto jobs while favoring foreign auto companies—but don’t let it overshadow the fact that Donald Trump has been irrefutably linked to Jeffrey Epstein, likely appears on Epstein’s list, and is accused of predatory and illegal behavior involving underage girls, including his daughter.

And the oligarch media is mum.

U mean just like the Ukraine resource deal?

"Today I want to mostly take a break from politics — but only mostly, because these days everything is political." Krugman, don't you wish you had no interest in politics and international trade, just like the old Turkish farmer at the end of Voltaire's Candide? "We must cultivate our garden."

Krugman, I like (and trust) what Spencer posts, and he is saying that the provisions of the trade deal (actually a framework) is not what TACO is claiming. Sur-prise, sur-prise, sur-prise!

It's basically a meme to say that Trump's political views haven't advanced since the 1980s, but in the '80s a politician celebrating a deal to sell off America to the Japanese would have been sent packing the next day.

"When you owe a bank $1,000 you're in trouble. When you owe a bank $1,000,000 the bank is in trouble." That's all you need to know about US- #Japan relations. Plus, no way you're defeating the Chinese alone, since even we can't. #Pentagon ran 18 war games scenarios vs #China, lost 18 times.

Hooray! A 15% tax hike! Everything from Japan will cost more... I would say buy your new car now, but many are already assembled here.

If the Trump administration wasn't so cruel it would be a joke Well it is a joke just that this is their cruel humor side of it

I wonder if Michael Pettis is pre-ordering a rotisserie skewer in his burial casket for all the times he'll have to turn over in his grave over the misunderstanding of balance of payments.

With no credible US substitutes, the US people will have to pay higher tariffs.

And the 15% tax on businesses and consumers goes to finance all his tax cuts for billionaires.

📌

Oh oh. Here comes that sovereign wealth fund of Trump NFTs. What can go wrong?

stock market response to all these tariffs is still

Does this math add up? How much do raw materials factor into the price of a car?

Toyota isn't paying 15% more. Buyers of Toyota made vehicles are paying 15% more

Right now Toyota dealers are paying 15% more. Companies have thus far mostly not passed on tariffs, hoping they will be temporary. Once they are finalized, expect them to be passed on to consumers.

Haven't new car prices increased substantially since the tariff decrees started being tossed around?

Not as of June. www.cnn.com/2025/06/16/b...

I guess 2.5% isn't a large increase Raises the question, are dealers hurting or are the manufacturers hurting more?

I suspect what's mainly happening is they cutting back on finance incentives and ordering more expensive vehicles. Perhaps also negotiating harder on price.

Now that auto loan interest is deductible, I'm sure the sales people will push that line to get people buying at higher rates.

A $550 billion slush fund that Donnie Two Dolls can give to the Rulling Class who give him the proper kickback, what could possibly go wrong?

Where is the actual signed agreement with Japan?? Just because trump says it means nothing- his constant lies and felony convictions renders his statements unbelievable

Signing it means nothing. Look at the trade deal made with Canada his last administration. He blew it up. Nothing he says or does means a thing.

Does anybody believe that this Japanese state (!) investment into the US will materialize?

Professor, great post. Questions: where is the data that says that inflation is coming? You say that companies are selling out of their pre-tariff inventory; where is the data on inventory purchases before tariffs and changes since? Also, how do you explain the behavior of the stock market?

"Navalny, I assume you are asking these questions in good faith, so I will reply in kind. If you look at the data tracking imports coming into America for the first quarter of 2025, you will see a massive increase. Why? Because American corporations knew that Donald Trump was going to raise...1/

...tariffs significantly, so businesses began building up inventories before the price increases. Our trade deficit for Quarter1 was more than 40% larger than our trade deficit for Q4 (2024). Companies were obviously building up inventories. 2/

American corporation are currently drawing down on these large inventories, so there has not been a great need to increase consumer prices yet, and it has been reported that some corporations are sacrificing profits temporarily in order to maintain market share, but prices still have gone up. 3/

We know that foreign manufacturers and exporters are not paying for the increased tariffs by looking at the Import Price Index provided by the Bureau of Labor Statistics. You can see that prices on imported goods have increased in the last three months. Trump lies about who pays the tariffs. 4/

Lastly, what the stock market does is not a reflection of wisdom and sobriety. The stock market is driven by GREED and FEAR. It can be highly irrational. Since the end of WWll, there have been 15 collapses of 20% or greater, with three of those being greater than 40%. Every time there has been...5/

...a significant collapse of the stock market, it had been preceded by an euphoric rise. Remember the 90% collapse of the stock market at the end of the Roaring Twenties just before the Great Depression, and the 51.9% collapse of the market during the Great Financial Crisis of 2007-2009.

This was a real missing piece for me. I did not know this part of the puzzle is calculated.

Navalny, I should add that it is much more complicated than this, but the general point stands. For example, we know the US dollar has gradually lost about 10% of its value compared to a basket of major currencies this year, so US imports in some instances should be more expensive, but we don't...1/

...see price increases on imported goods. One reason for this is that some of our major trading partners have currencies that have not appreciated against the dollar, such as the Chinese juan and the Mexican peso. Another reason is that import contracts are often written six to twelve...2/

...months in advance, and are also denominated in dollars, so you are not going to see any major price fluctuations. As a general rule, you can expect American importers, wholesalers, retailers, and consumers to pay for most of the tariffs, but foreign manufacturers and exporters will at...3/

...times lower their prices to maintain market share. P.S. I am always amused when a follower of Krugman asks him a question because he never answers anybody's questions. Never. Evidently you didn't know that.

I was asking in good faith and I am so grateful for your work stitching this together for me. I will admit that I have been perplexed, wondering if the economy is too large to break and doubting my senses and experience Thanks again.

The other critical question is: can you trust it to actually last any significant length of time? Trump & the current admin don't seem to stick to any of the agreements they ink. The commitments they make are not binding on themselves, only on others. The trustworthiness ship has sailed.

What could be the reason the stock market keeps rising as tariffs create higher prices worldwide and drain GDP? I’m expecting a recession by year’s end, but it doesn’t seem like Wall St. is.

As Krugman correctly points out, Americans will still pay 15% tax on Japanese goods, and trump gets to chose winners and losers in this $.5 trillion investment fund. Guess what trump's cut will be. The level of graft and grift in the US presidency is at historic astronomical levels.

Gee... tRump is lying again...

Wait. Just a minute. We could get high speed rail as modeled by the Japanese? I’m in.