United States Agrees in Principle with Japan for Bilateral Trade Deal

Donald J. Trump promised America that by the time he was finished in office (at this point it looks like 2024), that the nation will be tired of winning. While we are not getting tired of riding the wave of success after success that President Trump has brought this nation, it is becoming difficult to keep track of the wins and promises kept by this President, mainly because there are so many.

It looks like the markets tomorrow will be greeted with an excellent futures market, and it might be a good time to buy grain.

Sunday at the G7 in France, President Trump scored a big win for the United States in its trade war with the government of China, all the while securing the protections of the defunct TPP in a preliminary trade deal with China. The good news is that when Japan agrees to a contract, they follow it- unlike another significant economy in the Sino-Pacific region. Two of the major areas that the new trade deal is dealing with are E-commerce and electronics in the region and agriculture, things which have been suffering during the prolonged trade dispute with China.

Japan Deal Eases Pain of Tariffs

With reports exposing Huawei as a potential espionage risk, the United States is turning back to reliable Japanese electronics; reliable in performance and in the fact that they are not secretly sending our information to a hostile government. Further, many Japanese electronic components are made or assembled in the United States, which means a renewed partnership with Japan could mean jobs in the United States.

Also, through easing restrictions on e-commerce between the United States and Japan, the President has struck a significant blow against Chinese “drop shipping,” which could result in better products for American buyers and an economic windfall for Japanese/American Entrepreneurs. In this area, it was a win-win. The media has made no secret that the tariffs have hurt industrial farmers in the United States, now the wheat, beef, and corn will have a significant market with eased trade restrictions in Japan.

New Markets For American Ranchers

This new deal opens up the Japanese market to beef, something that has been difficult for American ranchers to enter (especially against the Wagyu and Kobe products). The opening of the market creates a feed market for millions of cattle to be shipped to Japan, something that will come as a relief to soy farmers across the country (note that these can only be used with adult cattle). Further, the preliminary agreement on wheat and corn can help farmers plan to move away from the industrial soy and back to “food-based” farming.

While the Japanese market is nowhere near as large as the Chinese market, each bilateral agreement created by the President eases the pressure on farmers affected by the Trade War and helps renew farmers’ faith that they chose the right guy in President Trump. With the massive shift in the stock market last week caused by China’s ill-conceived tariff threat, President Trump has shown the reason why having a businessperson as the CEO of the United States is a good thing. Politicians worry about “what might be,” while President Trump seems to be working in the business world, something that made America great in the past and is Keeping America Great today.

Each new trade agreement shows China that it is not in control of the globe, the world is a community, and understandings between nations keep that community running actively. Each bilateral agreement allows the United States to create something that is in the best interests of both countries, not just the loudest country in the region. It looks like the markets tomorrow will be greeted with an excellent futures market, and it might be a good time to buy grain.