ASX to fall, Wall St tumbles on renewed Trump trade wars
The Dow Jones Industrial Average tumbled near 650 points near 2.30pm in New York.
The president sent each nation a letter detailing his plans; he's expected to send about 12 letters on Monday (Tuesday AEST). At a White House briefing, his spokeswoman said the deadline for trade deals will formally later on Monday be pushed to August 1 from July 9.
The tariff rates for Japan and South Korea are in line with what Trump initially proposed. In a Truth Social post, he warned each nation not to retaliate.
Market highlights
ASX futures are pointing down 32 points or 0.4 per cent to 8541.
All US prices as of 2.30pm New York time.
Today's agenda
The RBA meets on Tuesday and it's widely expected that policymakers will vote for a 25 basis point cut.
Top stories
Billions for Made in Australia program 'may look protectionist' | The Productivity Commission has warned the government that its subsidies for domestic industry could be considered protectionism and suggested slashing tariffs on 300 imported goods.
Trump to levy 25pc tariffs on Japan, South Korea in August | The US president warned the nations against retaliation in his letters to them, saying any actions would be met with a response from the US.
Why the RBA's rate cuts won't fuel essential investment | Lower interests rate will not be enough to rev the engines of Australia's economy. The reform roundtable cannot come quickly enough, writes Paul Brennan.
| New research suggests a 40 per cent fall in analysts dialling in. In Australia, veterans say it's down to fewer, more junior, sell-side researchers.
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Tax big businesses that don't invest in new technology, science body argues
Billions of dollars in incentives to get Australian businesses to invest in innovation have not shifted a low level of research and development (R&D). Having tried a carrot, one of the nation's top scientific bodies wants to try the stick: whacking big business with a levy if they don't invest a minimum amount in R&D. 'Research and development underinvestment by both government and business had been long term and is now intolerable," said Anna-Maria Arabia, chief executive at the Australian Academy of Science. As the government searches for ideas to boost the nation's flagging productivity and economic growth, the Australian Academy of Science is calling for a rebatable levy on businesses with annual revenue of more than $100 million. The idea is to force them to spend up on R&D — say 0.25 per cent or 0.5 per cent of their revenue — or cop a levy equal to that, with the money invested by the government in innovation. The academy is arguing that a massive boost in research and development is needed to boost productivity. "It's not just me saying it, it's the Treasury, it's the Productivity Commission," said Ms Arabia, who blasted the complacency of Australian businesses. And it is not just them either. The Lowy Institute's Jenny Gordon was chief economist at the Department of Foreign Affairs and Trade (DFAT) and supports the push to fund R&D more effectively. "I don't know whether I'd call it a stick, I mean, you could also call it an incentive scheme," she said. "This is an alternative way to say, 'Well, we need to raise funding, reliable funding for R&D'. So that is not at the whim of government and whatever the budget decides to allocate. Australia spends vastly less than similar nations on R&D. In 2023, the Productivity Commission wrote that Australian businesses were not "keeping pace" with innovation. Prior to the pandemic, the Harvard Growth Lab Atlas of Economic Complexity ranked Australia 93rd in terms of the complexity of its economy. At the time that was lagging Kazakhstan, Uganda and Senegal, and only just ahead of Pakistan and Mali. The academy, an organisation representing Australia's top research scientists, argues sustained underinvestment by the business sector means there is now a gap of $32.5 billion when compared with the OCED average (we spend 0.89 per cent of GDP, less than half the OECD average of 1.99 per cent). It is proposing the levy to push business to go harder on innovation: to secure the future of Australian business. "Our back is up against a wall now," Ms Arabia said. Professor Roy Green knows about the benefits of innovation, as a special innovation advisor at the University of Technology Sydney and on the board of the Commonwealth Scientific and Industrial Research Organisation (CSIRO). He believes Australian business has been coasting on the research done by tertiary institutions and government. What that means now, he says, is that we "have very poor productivity performance that the government is now trying to address … largely because of our failing research and development support system". The amount spent on R&D has fallen in all sectors: universities, public institutions and private businesses. "Public R&D barely makes a dent," Professor Green said. "And that's combined with a massive fall in business expenditure in R&D. The only institutions that are holding it up are universities, and that's only because of increased funding from overseas students — which we've just cut." Levies to push business to take up beneficial activities — such as the training guarantee in the 1990s — show it can be done, he added. The government's looming Economic Reform Roundtable will bring together business groups, unions, community sector representatives and experts in Canberra next month. Ahead of the event, groups like the academy are making suggestions for changes they would like to see, and submissions on what they see as key issues. The submission from the Australian Chamber of Commerce and Industry (ACCI) was released before the suggestion by the academy to put a levy on business, and so does not include a response to it. What it does do is note how much we lag other nations and make suggestions for how to fix that. "This underperformance is closely tied to broader issues in the business environment, including weak private investment and an outdated tax and regulatory framework that discourages innovation," the ACCI submission noted. ACCI wants to see a long-term policy commitment and a clear strategy from Commonwealth and state governments. 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"Everything must be on the table. There can be no sacred cows. "Simply calling for R&D spending to reach 3 per cent of GDP [gross domestic product] isn't enough. As a start, we must address fundamental issues around commercialising public sector research and how to strengthen industry-research collaboration." As the roundtable approaches and more big ideas are thrown out, the future structure of R&D could be undergoing development of its own.
ABC News
26 minutes ago
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Jeffrey Epstein accomplice Ghislaine Maxwell grilled by top US Justice Department official
A top US Justice Department official has spent hours grilling Ghislaine Maxwell, the imprisoned accomplice of sex offender Jeffrey Epstein, as President Donald Trump struggles to tamp down a furore over his handling of the explosive case. Warning: This story contains references to sexual abuse and suicide. David Markus, Maxwell's attorney, said the former British socialite answered every question she was asked during a day-long meeting with Deputy Attorney-General Todd Blanche at a courthouse in Tallahassee, Florida. "She never invoked a privilege. She never declined to answer," Mr Markus said. Mr Markus said he was not going to comment on the "substance" of the meeting with Mr Blanche, Mr Trump's former personal lawyer for his hush money trial and two federal criminal cases, or whether there would be further discussions. Maxwell, 63, is serving a 20-year sentence after being convicted in 2021 of recruiting underage girls for Epstein, who died in a New York jail in 2019 while awaiting trial in his own sex trafficking case. Earlier this week, Mr Blanche said if Maxwell had "information about anyone who has committed crimes against victims, the FBI and the DOJ will hear what she has to say". "No one is above the law — and no lead is off-limits," he said. Mr Trump, 79, was once a close friend of Epstein and The Wall Street Journal reported on Wednesday that the president's name was among hundreds found during a DOJ review of the so-called "Epstein files", though there has not been evidence of wrongdoing. Mr Trump filed a $US10 billion ($15 billion) defamation suit against the Journal last week after it reported that he had penned a sexually suggestive letter to Epstein for his 50th birthday in 2003. Maxwell is the only former Epstein associate convicted in connection with his activities, which right-wing conspiracy theorists allege had included trafficking young models for VIPs. The meeting with Maxwell marks another attempt by the Trump administration to defuse anger among the Republican president's own supporters over what they have long seen as a cover-up of sex crimes by Epstein, who was a wealthy financier with high-level connections. Democratic Senate minority leader Chuck Schumer said the meeting between Maxwell and a Justice Department official who used to be Mr Trump's own lawyer smacked of a "corrupt deal so that [Attorney-General Pam Bondi] can exonerate Donald Trump". Democratic Senator Sheldon Whitehouse said it raised some troubling questions. "Is he really going as [deputy attorney-general] or is he going de facto as Trump's personal criminal attorney, Tom Hagen style?" the senator said in a reference to the Corleone family lawyer in The Godfather. "Will he promise her a pardon for silence, or for a Trump-friendly tale?" Senator Whitehouse asked. Many of the president's core supporters want more transparency on the Epstein case, and Mr Trump had promised to deliver that on retaking the White House in January. But he has since dismissed the controversy as a "hoax" and a "witch hunt", and the DOJ and FBI released a memo this month claiming the Epstein files did not contain evidence that would justify further investigation. Epstein committed suicide while in jail and was not murdered, did not blackmail any prominent figures, and did not keep a "client list", according to the July 7 FBI-DOJ memo. Epstein was found hanging dead in his New York prison cell while awaiting trial on charges that he sexually exploited hundreds of victims at his homes in New York and Florida. AFP
ABC News
26 minutes ago
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What does lifting trade restrictions on US beef mean for Australia?
It might not be on our plates or menus just yet, but US beef has been a hot topic of conversation across the nation after this week's decision to lift import restrictions that had been in place for more than two decades. Australia banned beef imports from the US in 2003 after the fatal neurological disease bovine spongiform encephalopathy (BSE), also known as mad cow disease, was discovered in American cattle. The blanket ban was lifted in 2019, however restrictions remained on beef that was sourced from Canada or Mexico and slaughtered in the US, amid concerns it could carry the disease. "The Americans were unwilling to … do the traceability work to make sure that beef that was coming to Australia wasn't actually rebranded from somewhere else," veterinarian and former NSW Farmers Association president, James Jackson, said. "We don't want foot and mouth disease in this country, we don't want our consumers to eat beef and get Creutzfeldt-Jakob disease, which is the disease you get from eating cattle with mad cow disease." While some in the industry were optimistic that lifting the restrictions would open up trade opportunities for Australian producers, others raised concerns that Australia's biosecurity could be compromised. The federal government said the move was the result of a decade-long biosecurity review that found more robust movement controls had been introduced in the US. "The Department of Agriculture, Fisheries and Forestry is satisfied the strengthened control measures put in place by the US effectively manage biosecurity risks," Agriculture Minister Julie Collins said. "The Albanese Labor government will never compromise on biosecurity." Nationals leader David Littleproud questioned the timing of the decision, saying it looked as though it was a trade to appease US President Donald Trump. The biosecurity restrictions on beef imports from the United States were one of the key grievances that led the Trump administration to impose tariffs on Australia. Red Meat Advisory Council chair John McKillop said while the decision may have been pushed through "slightly quicker" than expected, he was confident it was the result of a long-running assessment. Global AgriTrends analyst Simon Quilty said the risk of US beef imports introducing diseases to Australia was now much lower. "They have improved their traceability methods within America and I think, in all honesty, that the degree of risk is significantly low," he said. Mr McKillop said any risk would also be mitigated by the limited amount of beef Australia was likely to import from the US. "They have the lowest beef herd in 70 years in the US at the moment [due to drought]," he said. "The most [beef] that was ever brought in, and this was pre-BSE … was 210 tonnes … in contrast to the 395,000 tonnes we exported to the US last year." Mr McKillop said the US was also experiencing near-record beef and cattle prices, and it was unlikely Australians would want to pay high prices for their product. While the amount of beef coming into Australia from the US may be limited, Mr Jackson said there could be a market for it. "There may be some lines [of product] come into Australia, people who want to sell American beef on a restaurant menu or something like that," he said. Mr Jackson said Australia must be open to accepting American beef if it wanted to maintain a trade relationship with the US. "Part of a trade deal is that you're willing to take product from other countries," he said. "Are we happy with Australian consumers eating American beef? Well, probably we're not that happy, but the reality is that if you trade, you've got to be happy to take other people's product as well." The trade restriction on US beef has been a key grievance for the Trump administration, which placed a 10 per cent tariff on all Australian imports earlier this year. Professor Ben Lyons, from the University of Southern Queensland's Rural Economies Centre of Excellence, said it was difficult to know how the move would impact that tariff. "Nothing would surprise us at the moment because that's the new paradigm under the Trump administration — full of surprises," he said. Dr Lyons said he was confident the Australian beef industry would maintain a strong export market, regardless of US-imposed tariffs. "If past performance is the best indicator of the future, we always seem to find a way with our export markets," he said. "Even the announcement of this tariff on Australian beef at the beginning of the year hasn't really had any economic impact as yet on our exports. "I think we should just carry on calmly and do what we do best. I don't really see this as being a long-term issue for Australian agriculture."
