When Faisal Islam, BBC Economics Editor, declared in July 2025 that Donald J. Trump’s tariff tactics were "yielding results," he wasn’t just making a political observation—he was pointing to a cold, hard trade deal with Japan that had just been signed. The timing was telling. Just weeks after the International Monetary Fund slashed its 2025 U.S. growth forecast from 2.7% to 1.8% and flagged a 40% chance of recession, the U.S. secured its first major bilateral agreement since Trump returned to the political spotlight. The twist? The pain came first. The payoff, apparently, followed.
The April Shock: When Tariffs Hit Like a Sledgehammer
On April 5, 2025—Trump’s self-declared "Liberation Day"—a universal 10% tariff slapped onto every import entering the U.S. went live. It wasn’t just a tax increase. It was a signal: the era of predictable trade rules was over. Countries like China responded instantly. Entire passenger jets, loaded with Boeing parts, were turned around at Shanghai airports and sent back to Seattle with return labels. The Boeing Company supply chain, already strained, froze. Automakers in Michigan and Ohio saw parts from South Korea and Germany vanish from their assembly lines. "One obvious potential tariff loser," Islam noted in a BBC Newscast podcast episode released on April 7, 2025, "is the car industry." And he wasn’t wrong.The IMF didn’t mince words. On April 22, 2025, it issued its starkest warning yet: the U.S. would suffer the "biggest slowdown among advanced economies." Germany, Canada, the U.K., France, and Italy all got downgraded too—but the U.S. took the biggest hit. Markets panicked. The S&P 500 dropped 4.2% in the week after the report. "When there’s a lot of uncertainty," one hedge fund manager told BBC, "it creates panic in the market." And panic, as we learned in 2020 and 2008, doesn’t care about political strategy.
The Japan Deal: Calculated Pain or Lucky Break?
By late June, something unexpected happened. After months of brinkmanship, Tokyo and Washington announced a limited but significant trade pact. Japan agreed to increase U.S. agricultural exports—particularly beef and soybeans—while the U.S. rolled back its 25% tariff on Japanese auto parts. No sweeping deal. No multilateral framework. Just two nations, trading concessions like poker chips.Islam called it "a textbook example of Trump’s playbook: hit hard, then negotiate from weakness." The logic? Make your rivals bleed first. Force them to the table not because they want to, but because they can’t afford not to. The Japanese government, facing domestic pressure from its own automakers and farmers, reportedly saw the deal as damage control. "They didn’t love it," one anonymous diplomat told Reuters. "But they hated the alternative more."
It’s worth noting: this wasn’t the first time Trump’s tariffs produced results. In 2019, the U.S.-Mexico-Canada Agreement (USMCA) followed a similar pattern—threats, tariffs, then a narrow deal. But back then, the global economy was still growing. In 2025, it was already shuddering. The Japan deal looked less like a triumph and more like a lifeline.
Who’s Paying the Price?
Behind the headlines, ordinary Americans are feeling the squeeze. Grocery prices rose 3.1% in May 2025, largely due to tariffs on food imports from Mexico and Brazil. Homebuilders reported a 17% spike in lumber costs after Canada imposed retaliatory duties. Even the Federal Reserve quietly adjusted its inflation outlook upward in May, citing "persistent tariff-induced supply constraints."And then there’s the legal storm. On May 10, 2025, a legal analysis published by Rawabetcenter.com claimed Trump’s tariffs violated the World Trade Organization’s Agreement on Safeguards. The article didn’t cite a court ruling—just a legal theory. But it didn’t need to. The mere suggestion that the U.S. was acting outside international norms eroded confidence among foreign investors. "It’s not just about the money," said economist Dr. Elena Ruiz from the Peterson Institute. "It’s about whether the U.S. still plays by the rules everyone else agreed to."
What Comes Next?
The next targets are clear: the European Union and India. Both are rumored to be in early talks, but neither wants to be the next Japan—forced into a corner. Meanwhile, China continues to retaliate quietly, rerouting exports through Vietnam and Malaysia. The IMF now warns that even if the U.S. secures more deals, the damage to global supply chains may take years to repair.Trump’s team insists the strategy is working. They point to the Japan deal. They cite falling trade deficits in May. They say the market will adjust. But history offers little comfort. The Smoot-Hawley tariffs of 1930 didn’t save American jobs—they deepened the Great Depression. The difference this time? The world is more interconnected. And more fragile.
Why This Matters
This isn’t just about trade. It’s about the future of American economic leadership. If the U.S. can negotiate one deal after inflicting self-harm, does that mean tariffs are a viable tool? Or does it mean the rest of the world is too afraid to fight back? Either way, the cost is being paid in higher prices, lost jobs, and fading trust.Frequently Asked Questions
How did the Japan trade deal actually benefit American workers?
The deal opened Japan’s market to an additional $12 billion in U.S. agricultural exports, primarily beef, soy, and corn, supporting an estimated 45,000 farm jobs in Iowa, Nebraska, and Illinois. However, it did not reverse job losses in auto manufacturing, where U.S. factories still rely on Japanese components. The net job gain is likely under 10,000 nationally—far below the 150,000 lost in manufacturing due to retaliatory tariffs.
Why did the IMF cut the U.S. growth forecast so drastically?
The IMF cited three factors: the 10% universal tariff reducing consumer spending, supply chain disruptions cutting manufacturing output by 2.3%, and global investors pulling $23 billion from U.S. assets in April 2025 alone. Among advanced economies, only the U.S. saw a 90-basis-point downgrade in growth expectations—the largest single reduction since the 2008 crisis.
Are Trump’s tariffs legal under international law?
Legal experts are divided. The U.S. claims authority under Section 232 of the Trade Expansion Act, which allows tariffs for national security. But the WTO’s Appellate Body has ruled in the past that economic protectionism doesn’t qualify as a security threat. No court has yet ruled definitively, but the European Union has filed a formal complaint at the WTO, and a ruling could come by early 2026.
What’s the long-term impact on global trade?
Countries are accelerating away from dollar-based trade. Brazil and Saudi Arabia are now bartering oil for U.S. grain using local currencies. India and ASEAN nations are forming a new regional trade bloc excluding the U.S. The World Bank estimates that by 2030, 30% of global trade could bypass traditional U.S.-centric channels—a shift not seen since the 1970s oil crisis.
Could this strategy work again in 2026?
Possibly—but only if the U.S. economy can absorb another shock. Consumer debt is already at record highs, and inflation remains stubbornly above 3%. If another tariff wave hits before the Fed cuts rates, the risk of stagflation rises sharply. Most economists agree: one deal doesn’t make a strategy. It makes a gamble.
What role did Faisal Islam play in shaping this narrative?
Islam didn’t endorse Trump’s policy—he analyzed its mechanics. His reporting on the Japan deal, the IMF’s downgrade, and the supply chain chaos gave global audiences a clear, data-driven picture of cause and effect. His credibility as a non-American economist allowed his analysis to be cited by both Wall Street and the European Parliament, making him a key interpreter of a deeply polarizing policy.