In the grand theater of global finance, few performers command attention quite like Donald J. Trump. With a flair for the dramatic and a penchant for policy pronouncements delivered via social media, his impact on stock markets is less a steady hand and more a high-stakes game of “guess the next tweet.” The latest act? A series of “massive” trade deals, each accompanied by the familiar, yet ever-surprising, inclusion of tariffs. It’s a masterclass in market psychology, where the threat of pain is often followed by a slightly less painful reality, and the world’s investors respond with a collective sigh of relief and a flurry of buy orders.
The Japan Deal: A Tariff That’s Also a Win?
Just when global markets were bracing for the August 1 deadline and the specter of higher tariffs, President Trump pulled a rabbit out of his hat – or rather, a trade deal with Japan. Announced with characteristic fanfare on Truth Social, the President declared it “perhaps the largest Deal ever made,” boasting of a $550 billion investment into the United States and a promise of “Hundreds of Thousands of Jobs.” The kicker? Japan will pay a “reciprocal tariff” of 15% on shipments to the U.S. This, we are told, is a “significant reduction” from the previously threatened 25% tariff that loomed large.
The market’s reaction was, predictably, a study in relief. Japan’s Nikkei 225 index, a bellwether for Asian markets, jumped over 3% on Wednesday following the announcement, with some reports noting a 2.6% surge in early trading. Japanese automaker stocks, which had been particularly vulnerable to tariff threats, soared. Toyota Motor Corp (TM) jumped a staggering 11%, while Honda Motor Co (HMC) climbed nearly 9%, and Nissan Motor advanced more than 8.5% in Tokyo trading. Even Mazda Motor rallied 17%. It seems the prospect of a 15% tariff, however counterintuitive, was preferable to the uncertainty of a 25% one. Tim Waterer, chief market analyst at Kohle Capital Markets, observed that these deals are “likely to keep market sentiment propped up.”
U.S. stock futures were mixed in the immediate aftermath, with S&P 500 futures up a modest 0.2% and Dow Jones futures rising 99 points, or 0.2%. The NASDAQ 100 futures, however, hovered near the flatline. The dollar, meanwhile, held its losses against the yen. It’s almost as if the market has developed a particular fondness for the predictable unpredictability of Trump’s trade policy – a threatened catastrophe averted, replaced by a manageable, albeit still present, tax on goods.
The Philippines and Indonesia: More Deals, More Tariffs
Not content with a single “largest deal ever,” President Trump also announced trade agreements with the Philippines and Indonesia, setting a 19% tariff rate on goods imported into the U.S. from both nations. This 19% rate, much like the Japan deal, is presented as a reduction from a previously threatened 20% tariff. In exchange, the Philippines and Indonesia are expected to open their markets to U.S. goods with zero tariffs. Trump, ever the negotiator, lauded Philippine President Ferdinand “Bongbong” Marcos Jr. as a “very good, and tough, negotiator.”
The pattern is clear: a looming threat, followed by a “deal” that still includes tariffs, but at a slightly lower rate than the most dire projections. This creates a curious dynamic where markets celebrate a new tax, simply because it’s not as high as the one they were originally told to fear. It’s the economic equivalent of being told you’re getting a root canal, only to find out it’s “only” a filling – still not ideal, but certainly better than the alternative.
The Ever-Present Threat: China and Beyond
While Japan and the Philippines are getting their “deals,” the shadow of ongoing and potential tariffs looms large elsewhere. The U.S.-China trade war, a saga of escalating duties, continues to define a significant portion of global trade. Current average U.S. tariffs on Chinese exports stand at 51.1%, covering 100% of all goods. This figure has more than doubled since January 20, 2025, when the second Trump administration began. At one point in early May 2025, average U.S. tariffs on imports from China had even soared to 126.5% before being reduced.
China, in turn, has its own retaliatory tariffs, with an average of 32.6% on U.S. exports. The second Trump administration has seen a “significant escalation of the conflict,” with U.S. tariffs on Chinese goods reaching 145% and China’s retaliatory tariffs hitting 125%. Despite discussions about extending a tariff deadline, the underlying tension remains.
Beyond China, President Trump has also threatened “very severe tariffs” of up to 100% on countries that continue to trade with Russia, giving Moscow 50 days to reach a peace deal in Ukraine. This aggressive stance extends to other nations like India and Brazil, which could face economic pressure over their Russian oil imports. There are even threats of tariffs on imported drugs, which AstraZeneca recently cited as a reason for its $50 billion investment in U.S. drug manufacturing.
The market, in its infinite wisdom, has learned to live with this constant state of tariff roulette. Analysts like Sean Callow of InTouch Capital Markets have even called some of Trump’s announced figures, like the $550 billion Japanese investment, a “phantom number,” suggesting a degree of skepticism is now baked into market reactions. Yet, the immediate, visceral response to any perceived de-escalation, even if it’s just a reduction from a self-imposed threat, highlights the underlying anxiety that these policies create.
The Contradiction as Policy
The undeniable impact of Donald Trump on stock markets is a testament to the power of executive action and the psychology of expectation. His approach to trade, characterized by initial threats of steep tariffs, followed by “deals” that often still include significant duties, creates a unique form of market volatility. The Dow Jones Industrial Average, S&P 500, and NASDAQ Composite, while not always reacting with the dramatic swings seen in more directly impacted foreign markets, nonetheless operate within this framework of policy uncertainty. On July 22, for instance, while the Japanese market surged, the S&P 500 (SPX) eked out a 0.1% gain to a new all-time high of 6,309.62, the Dow Jones Industrial Average (DJI) rose 0.4% to 44,502.44, and the Nasdaq Composite (IXIC) slipped 0.4% from its own record. This mixed bag suggests a cautious optimism, a relief that things aren’t worse, rather than unbridled enthusiasm.
It’s a world where a “trade deal” can simultaneously mean opening markets and imposing new taxes, where a “reduction” in tariffs still leaves them at double-digit percentages, and where a presidential Truth Social post can send billions of dollars shifting across continents. For traders, it’s a wild ride, but for those who can decipher the subtle art of the tariff threat and the subsequent “deal,” it appears there’s still profit to be made in the chaotic symphony of Trump-onomics.
DISCLAIMER: We read Trump’s posts so you don’t have to. This is comedy meets market data, not financial advice. Not political advice either – we just like charts and chaos.
Elana Harper is a seasoned financial editor and market analyst with over a decade of experience covering global equities, economic trends, and corporate earnings. Known for her sharp insights, Elana specializes in making complex financial topics accessible to a broad audience. She now serves as the Senior Financial Editor at Stock Market Watch, where she oversees daily market coverage and political commentary.