Wanted: New trade partners

Aug. 1 is fast approaching, the day when the window will close on countries hoping to negotiate with Washington over tariffs. Wes Kosova writes today about why dealmakers are looking elsewhere to open new markets. Plus: Job switching is hard to do, which hurts those new to the hunt, why people in the richest nation on Earth still lack water, and how the media company that brought us Godzilla wants to expand.

If this email was forwarded to you, click here to sign up.

As Donald Trump's tariff threats unleash the kind of global turmoil the president clearly enjoys and US trading partners clearly don't, I've been thinking about something Katherine Tai told me in a recent interview. Tai was the chief US trade negotiator when Joe Biden was president. She oversaw dealmaking with allies and adversaries on everything from soybeans to semiconductors, and she knows what it takes to reach a durable agreement both sides can live with. Tai warned there's a significant downside to using America's massive economic leverage to force countries into deals they dislike and consider unfair.

"When they don't feel good about how they got to yes, because they didn't feel like they had been respected at the table," Tai said, "the tendency is to try to get out from under the agreement."

Tai. Photographer: Tuane Fernandes/Bloomberg

She illustrated the point with the unglamorous but contentious example of dairy exports to Canada. US dairy farmers have long wanted easier access to Canada's market, and Canadian dairy farmers have long fought against it. When Trump was president the first time, he pressed Canada's government to accept terms that were more favorable to the US. They agreed, at least on paper. In reality, Canada never fully lived up to the deal, the US has argued, despite repeated actions to try to enforce it. (Since returning to the White House, Trump has once again threatened steeper tariffs on Canadian dairy products.) As Tai put it, "The evidence suggests they never regarded that as a true commitment."

Something similar appears to be happening now, on a larger scale. While countries rush to patch together tentative deals with the Trump administration to ward off imminent tariffs, they're looking to offset the economic pain by forming ties among themselves that would feature lower or no tariffs—and that don't include the US.

Bloomberg reports that "some of America's economic allies are rethinking their long-standing dependence on low trade barriers to the world's biggest economy." Amid negotiations with the US, the European Union is "also forging ahead with existing bilateral talks and weighing new ways that align with the rules-based global trading system."

That dry sounding term, "rules-based," is aimed directly at Trump's habit of unilaterally changing the terms of existing trade agreements or announcing he'll simply no longer abide by them. His attempts to seal deals with some Asian nations, including South Korea and Japan, have been hung up in part because the US president has said he may still tack on separate tariffs for cars or other products in the future.

Nations around the world are starting to look for new markets for goods that are subject to Trump's high tariffs. The EU is talking to Canada as well as to Japan, and the bloc is also engaged in ongoing talks with India. The EU also reached a tentative economic agreement with Indonesia. Brazil's government has said it's actively looking for new customers for its products. This month, India and Brazil agreed to a 70% increase in mutual trade. China, of course, is eager to take advantage of discontent with Trump to strengthen its own ties with other nations.

"I support the [European] Commission in its efforts to form global partnerships, alliances with other countries that are threatened by US tariffs," Wolfgang Hattmannsdorfer, Austria's economy minister, said on Monday. "Together we can raise the pressure exerted on the US."

There is, of course, no replacing the US with any combination of novel trade deals. It's the world's largest market for imported goods, and few trading partners would toy with losing access to it. As a result, leaders may agree to terms they don't like to keep goods flowing to the US. Yet Trump is testing the limits of how hard they're willing to be pushed before they decide to take as much business as they can elsewhere.

In Brief

Uber is teaming up with electric-vehicle maker Lucid and self-driving tech startup Nuro to launch a robotaxi fleet.
US retail sales rebounded in June in a broad advance, potentially tempering some concerns about a retrenchment in consumer spending.
President Trump's decision to allow Nvidia to export some chips to China could open the door to redefining the economic relationship between the two nations.

First Jobs Are Harder to Find

Photo illustration: Andre Rucker for Bloomberg Businessweek

It's been a long time since the dream of working your way up from the mail room to the corner office was a plausible outcome, but it might now be officially dead. Some of the reasons are obvious—for one, the internet long ago made the mail room almost obsolete. But as new college graduates have headed out into the job market this summer, they're reporting a different problem: They can't get a foot in the door at all.

Landing that first job is trickier right now in some fields than in others, but even in sectors with low unemployment, new entrants to the white-collar labor market describe a far steeper climb than they'd anticipated. The unemployment rate for recent grads sat at 5.8% in March, according to the US Bureau of Labor Statistics—more than twice that for all degree holders and 50% higher than in the spring of 2022.

This much, at least, everyone agrees on. Exactly how worrying this trend is and what's to blame are the subject of far greater confusion. According to an analysis of BLS data by Ernie Tedeschi, director of economics at the Budget Lab at Yale University, hiring rates for new grads are down from their post-pandemic highs, but they're still in line with the latter half of the 2010s. And in population-level numbers, things in the labor market look placid. "We still see low unemployment, and we do see pretty solid job gains," says Allison Shrivastava, an economist at the hiring platform Indeed. Young adults are getting spat out into a job market that isn't nearly as bad as, say, that of the Great Recession, but it also isn't as lush as it was in the recent past, when they might have watched older friends and siblings get snapped up before graduation. Being in that position would certainly feel terrible, though in the long arc of a professional life, it could be worse.

Yet those numbers don't tell the whole story, Amanda Mull writes: What the Tough Job Market for New College Grads Says About the Economy

'Plumbing Poverty' Is an American Problem

Across the world, access to clean running water has long been considered a key marker of economic advancement. Yet in several of the most prosperous cities in the richest nation on Earth, the share of households living without that critical service is climbing—a trend that researchers say demands attention, particularly as President Donald Trump moves to sharply pare back federal funding for water infrastructure.

Katie Meehan, a professor of environmental justice at King's College London, has for years been studying what she and other researchers call "plumbing poverty" in the US. Utility shut-offs because of nonpayment or substandard housing where landlords fail to properly maintain properties are the main factors behind the problem.

For decades a lack of running water was mostly endemic to rural America. But it started to shift to cities in the 1990s with changes in the housing market, Meehan showed in a paper published in December in the journal Nature Cities. Low interest rates and an explosion in subprime lending pushed up home values and rents, curbing the stock of affordable housing. Low-income Americans, particularly those of color, were forced into more decrepit accommodations, while others fell behind on bills. The urbanization of plumbing poverty accelerated after the 2008 recession, and today 72% of US households lacking running water live in metropolitan areas, more than double the proportion from the early 1970s.

Laura Bliss and Klara Auerbach take a look at plumbing poverty in a series of charts here: Why Access to Running Water Is a Luxury in Wealthy US Cities

Making More Room for Godzilla

Illustration: Nichole Shinn for Bloomberg Businessweek

Godzilla, arguably the most famous symbol of Tokyo's storied film industry, has appeared in more than three dozen movies since its 1954 debut. The films have grossed billions of dollars at the box office, spawning legions of merchandise, from thermoses to plushies, and turning the fictional creature into a global household name.

But outside Japan, few can name Toho Co., the media company that put the havoc-wreaking monster on the big screen more than 70 years ago. Chief Executive Officer Hiroyasu Matsuoka, great-grandson of the company's founder, is trying to change that.

For decades the country's biggest domestic filmmaker and theater owner was content to focus on its home market, the world's fifth-largest economy. But Matsuoka, who assumed his role in 2022, wants Toho to more closely follow the paths of better-known Japanese entertainment exporters such as Sony Group Corp. and Nintendo Co. Expanding into new markets will help the company weather the shrinking of Japan's population and take advantage of an exploding global appetite for anime, one of Toho's major businesses. Netflix Inc. and Sony's Crunchyroll, two leaders in the genre, have generated enviable sales exporting popular anime titles all over the world, and Toho wants a bigger slice.

Sohee Kim writes about its ambitious expansion plans: Godzilla Conquered Japan. Now Its Owner Plots a Global Takeover

Unconvinced

61%

That's the share of Americans who oppose President Trump's sweeping tax, health and spending bill, according to a new poll. The $3.4 trillion fiscal package narrowly squeaked through Congress, but Trump has yet to convince the public that the law's sweeping tax cuts and reductions to social safety-net programs are good policy.

Angry Customers

"With rich people, if you tell them they can't have something—they want it. It's called the psychology of billionaires."

Oliver Müller

Luxury watch consultant based in Aubonne, Switzerland

Tiffany & Co. bungled the release of a coveted Nautilus timepiece, alienating some customers and fracturing its relationship with Patek Philippe. Read the full story here.