Asian shares edge up as Trump open to tariff talks

Asian shares edged higher after President Donald Trump suggested that he was still open to additional negotiations after imposing new tariff rates on partners including Japan and South Korea.

The MSCI regional stock benchmark posted a modest gain as shares in Japan and South Korea rose as much as 0.3%. Contracts for the S&P 500 index edged lower. The yen gained slightly after posting its biggest loss in almost two months in the prior session.

After announcing higher levies on several countries, Trump said he was still open to additional negotiations and pushed off increased duties until at least Aug. 1. The president also teased the possibility of additional negotiations and delays later Monday at the White House, saying the notifications were “not 100% firm.”

“This is carrot and stick play - stretch the deadline, tighten the grip, and remain focusing on a deal to be made,” said Hebe Chen, a market analyst at Vantage Markets in Melbourne. “Despite the theatrics, it’s not far from market expectations, and a deal within two weeks still looks likely on the table.”

Trump released the first in a series of tariff warning letters, just two days before agreements are due on countries facing his April 2 so-called reciprocal levies. The new rates include 25% duties on goods from Japan, South Korea, and Malaysia; 32% on Indonesia; 35% on Bangladesh; 36% on Thailand and Cambodia; and 40% on Laos and Myanmar.

Despite the market turmoil from Trump’s tariffs, stocks globally have rebounded from their April lows, reflecting optimism that Japan and other countries will strike deals with the US to avoid derailing growth.

So far, the US economy has held up under the threat of a spiralling global trade war. Hiring is healthy and inflation has remained tame. The Federal Reserve is wary about tariffs and wants to see how they feed through to output in the next few months.

A gauge of the dollar retreated slightly Tuesday. The currency had jumped the most in three weeks Monday in a sign investors are confident the US economy can largely withstand the impact of trade disputes.

The latest tariff headlines are “a perfect storm for a recovery in the dollar especially as data continues to keep the Fed on the sidelines”, according to Aroop Chatterjee, a strategist at Wells Fargo in New York.

White House Press Secretary Karoline Leavitt said there would be around a dozen countries that receive notifications about their tariffs Monday directly from the president. Additional letters will be sent in the coming days, she said.

“Investors should be alert to headline risk,” said Fawad Razaqzada at City Index and Forex.com. “The scope for last-minute deals is high, but so too is the possibility of renewed trade tensions.”

One positive to be taken away from the latest trade developments was that the higher tariffs won’t be in place during July. That means “an indirect extension” of the original 90-day pause that would expire on Wednesday, said Ian Lyngen and Vail Hartman at BMO Capital Markets.

“The outcome could certainly have been more dire for the economic outlook had the additional window of relief not been included in the latest trade-war salvo,” they noted.

Indian officials familiar with the matter said the nation had made its best offer on trade and the fate of an interim deal now lies in the hands of Trump. Negotiators conveyed to Washington the red lines they were unwilling to breach in finalizing an agreement, including allowing the US to export genetically modified crops to India, and opening up India’s dairy and automobile sectors to America.

In commodities, oil steadied Tuesday after rising Monday as Saudi Arabia surprised customers in Asia by hiking prices for its main crude grade.