Asia shares ease, euro flatlines as tariff costs counted
The initial relief over Europe's 15 per cent levy quickly soured when set against the 1 per cent to 2 per cent that stood before President Donald Trump took office. Leaders in France and Germany lamented the outcome as a drag on growth, pulling down stocks and bond yields across the continent while slugging the single currency.
Trump also flagged a "world tariff" rate of 15 per cent to 20 per cent on all trading partners that were not negotiating a deal, among the highest rates since the Great Depression of the 1930s.
"While the worst case scenario was averted, the implied EU tariff increase from 1 per cent in January is a significant tax increase on EU exports," wrote economists from JPMorgan in a note.
"This is a very big shock that unwinds a century of U.S. leadership in global free trade," they warned. "While we no longer see a U.S. recession as our baseline from this shock, the risk is still elevated at 40 per cent."
A further risk to world growth came from a sudden spike in oil prices after Trump threatened a new deadline of 10 or 12 days for Russia to make progress toward ending the war in Ukraine or face tougher sanctions on oil exports.
The air of caution saw MSCI's broadest index of Asia-Pacific shares outside Japan slip 0.8 per cent. Japan's Nikkei lost 0.9 per cent, while Chinese blue chips were flat.
European shares steadied after Monday's sell-off. EUROSTOXX 50 futures, FTSE futures and DAX futures all edged up around 0.2 per cent.
The euro was flat at $1.1587, after falling 1.3 per cent overnight in the largest drop since mid-May. It now has chart support at $1.1556.
The dollar index was up at 98.675, after the rush out of short dollar positions lifted it 1 per cent overnight, while it eased a one-week high on the yen to stand at 148.27.
Wall Street held firm on hopes for upbeat results from mega caps this week that include Apple, Meta Platforms, Microsoft and Amazon.
S&P 500 futures nudged up 0.1 per cent, while Nasdaq futures added 0.2 per cent.
Yields on 10-year Treasuries held at 4.408 per cent having crept higher on Monday as markets braced for another steady decision on interest rates from the Federal Reserve.
Futures imply a 97 per cent chance the Fed will keep rates at 4.25 per cent-4.5 per cent at its meeting on Wednesday and reiterate concerns that tariffs will push inflation higher in the short term.
Analysts also assume one, or maybe two, Fed officials will dissent in favour of a cut and supporting wagers for a move in September.
The odds could change depending on a slew of U.S. data this week including gross domestic product for the second quarter where growth is seen rebounding to an annualised 2.4 per cent, after a 0.5 per cent contraction in the first quarter.
Figures on job openings are due later on Tuesday that will help refine forecasts for the crucial payrolls report on Friday.
Canada's central bank also meets on Wednesday and again is widely expected to hold rates at 2.75 per cent as it waits to see how trade talks with the U.S. wash out.
In commodity markets, prices for copper and iron ore were under pressure while gold idled at $3,315 an ounce.
Brent was off a fraction at $69.90 a barrel, having climbed 2.3 per cent on Monday, while U.S. crude held at $66.60.
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Straits Times
an hour ago
- Straits Times
Trump is winning his trade war, but Americans will pay the price
Sign up now: Get ST's newsletters delivered to your inbox All indications are that Americans will pay more for nearly all the goods they consume when the effects of all of US President Donald Trump's tariffs kick in. - Judging from the air of concession wafting across world capitals from Tokyo to Brussels, United States President Donald Trump is prevailing in his trade war. The White House is in a celebratory mood. Almost every day, press conferences and statements catalogue the many supposed benefits flowing from Mr Trump's strategy. The strategy has brought trade partners to the negotiating table, is catalysing trillions in foreign investment commitments, protecting America's strategic industries and generating billions in revenue. So much winning, in Trump-speak. If success, however, means more jobs, more trade and a stronger economy, the evidence is more suspect. All indications are that Americans will pay more for nearly all the goods they consume when the effects of all the tariffs kick in. The universal baseline tariffs of 10 per cent have already been in effect since April and will remain in place for around 100 nations with no trade deficits with the US, like Singapore and Australia. Effective from Aug 7, more than 70 nations will face 'reciprocal' tariffs , ranging from 10 to 50 per cent. The concept of reciprocity seems questionable as Mr Trump's strategy from the start has been to exert pressure on trade partners rather than strictly mirror their tariffs. Top stories Swipe. Select. Stay informed. Singapore LTA, Singapore bus operators reviewing Malaysia's request to start services from JB at 4am Singapore Despite bag checks and warnings, young partygoers continue to vape in clubs in Singapore Singapore President Tharman meets migrant workers who saved driver of car that fell into sinkhole Singapore Now flying solo, Acres CEO Kalaivanan Balakrishnan presses ahead with wildlife rescue efforts Opinion The charm – and drawbacks – of living in a time warp in Singapore Business UMS Integration becomes first SGX company with secondary listing in Malaysia Singapore Ong Beng Seng to plead guilty on Aug 4, more than 2 years after trip to Qatar with Iswaran Business Decoupling to save on tax? You may lose right to property if ties go awry For those nations running a trade surplus with the US, the rate is at least 15 per cent. It is higher still for others, where geopolitics and personal vendettas sharpen the blade. Brazil, for instance, has no trade surplus with the US. Nevertheless, it has been slapped with a rate of 50 per cent at least partly because Mr Trump has an issue with the government prosecuting former president and Trump ally Jair Bolsonaro on coup charges. India, at a 25 per cent rate , also faces an unspecified penalty for its import of Russian energy and arms. The US has also caught on to transshipping, the sly rerouting of goods through lower-tariff nations. This practice now invites a 40 per cent penalty. More deals are to come, if the President wants them, according to Trade Representative Jamieson Greer in an Aug 1 TV interview. It is not clear what kind of deal will be struck with America's near peer rival . China poses a peculiar problem and the US is still alternating between confrontation and pressing for an advantage. 'Their economy and ours are like a square peg and a round hole, they don't really fit together very well,' Mr Greer said. But what is crystal clear is that America has just executed a major turn, reshaping the post-World War II economy to reflect Mr Trump's priorities of preserving American dominance in all spheres, from military might and manufacturing to energy. And the man is just six months into the job. Costs are more tangible than benefits As Mr Trump is never tired of pointing out, the threat of tariffs has persuaded the European Union and Japan to commit to investing US$600 billion (S$774 billion) and US$550 billion in the US, respectively. Combined with earlier investment commitments, including from Saudi Arabia, Mr Trump has touted the figure of US$12 trillion. Tariff revenues now make up 5 per cent of federal revenues, much higher than the historical average of 2 per cent. The figures are impressive – US$150 billion was collected in mere months, with projections of 'several hundred billions' by the year end. And American companies can now sell their goods – beef, rice, cars and other items – with zero tariffs in many more nations. Key American industries are sheltered through sectoral tariffs enacted in auto, steel, aluminium and copper industries. Pharmaceuticals and semiconductors are next in line. But plenty of fine print applies. Analysts caution that many pledges from foreign partners may be delayed, only partially fulfilled, or merely symbolic. Foreign investments in the US usually flow in tandem with dollars earned by companies from exports to the US. If tariffs penalise these exports, investing more dollars is challenging. The actual inflow of foreign investment will likely surpass the levels seen in recent years, say analysts at the Peterson Institute of International Economics (PIIE) in Washington. Just not, they add, by the large margins claimed publicly by Mr Trump. Dr Marcus Noland, an international trade economist at PIIE, found a clear example of the impact of Mr Trump's tariffs right in his own kitchen. The granola he has for breakfast is made by an American company with a plant in Ontario, Canada. Due to higher tariffs, the price of this granola has risen more than 40 per cent. 'Shortages and higher prices, there's no good here,' he maintains. Experts have tallied the costs. The average US tariff rate in the first quarter was 2.4 per cent, but climbed to 10 per cent in June. The latest levy announcements are set to bring that to more than 18 per cent, according to analysts at Gavekal Research. The median US household stares down an extra US$1,270 in expenses for 2025, a number projected to reach US$1,619 next year. Economic growth slowed from near 3 per cent in 2024 to about 1.2 per cent over the first half of 2025 and may be zero for the rest of the year. Some models predict wages will fall and leave scars that will stay raw for a generation. A recession now appears 'very, very likely', to quote Moody's Analytics chief economist Mark Zandi, who has been warning of this outcome since Mr Trump made his 'Liberation Day' tariffs announcement in early April. Corporate bottom lines tell a similar story. Apple's June quarter results dazzled, but only because buyers rushed to beat tariffs. The 25 per cent levy on India – where the company now produces its smartphones for the US market – darkens the next quarter. Amazon says inventories are its buffer now. But the future is 'impossible to know', says its chief executive Andy Jassy as supply chains in China, where the e-commerce giant sources its vast array of products, are in the crosshairs. Manufacturers, wholesalers and retailers increasingly report paying higher prices for the goods and services they buy and are slowly beginning to raise the prices they charge their customers, says the US Chamber of Commerce. Higher tariffs will directly punish the domestic manufacturing industry given that approximately 56 per cent of US imports are composed of raw materials and intermediary and capital goods. These will especially hit the small businesses which operate on thin margins and will find it harder to absorb the tariffs. Defined as those with fewer than 500 employees, they account for over 40 per cent of the country's economic activity. Industry insiders are also sceptical of Mr Trump's push to expand access for American products. 'I don't know that we wanted zero tariffs on American goods,' said an analyst who advises American businesses operating in South-east Asia. 'The more important things are the non-tariff barriers.' Hoover Institution economist David Henderson narrowed in on the impact of tariffs on the most important actor in the US economy – the consumer. 'For some countries, notably those in the European Union, tariff rates will be lower than they were before Trump began. That is a victory. But we should be clear about whom it's a victory for,' he noted in a July 31 commentary. 'The main gainers are European consumers, and the secondary gainers are US exporters. The big losers, though, from the high US tariffs, are US consumers and producers who use the tariffed items as inputs, and the secondary losers are foreign exporters,' he said. He noted that while US consumers will pay a 19 per cent tariff rate on goods from the Philippines and Indonesia, and a 20 per cent on those from Vietnam, their consumers will pay a zero per cent tariff on imports from the US. 'Don't get me wrong. I'm glad that people in those three countries, almost all of whom are poorer than the average American, will get the benefits of one-way free trade,' he said. 'But I feel bad for Americans, who will pay higher taxes,' he said. The deals, although heralded as victories by the Trump Administration, have not been struck in the traditional way. No formal texts bind them; and there seem to be differences in how they are regarded in Washington and overseas. In his quest for a 'good' deal, nation by nation, Mr Trump may have squeezed out some advantages. But will a refusal to consider the reality of an interdependent world come back to bite America in ways not yet apparent? And no monetary or symbolic victory can be counted as a 'good deal' if it results in squandering a precious asset that took the US years to earn – global goodwill. Can America afford to arm-twist the very same countries whose help it needs in its geopolitical rivalry with China? And if tariffs continue to be applied in purely mercantilistic terms, they may have the effect of transforming America First into America Alone.
Independent Singapore
3 hours ago
- Independent Singapore
Tourism sector welcomes heritage-focused investment zones in Johor Bahru under 13MP
JOHOR BAHRU: The tourism industry has lauded the federal government's move to introduce Special Tourism Investment Zones (STIZ) under the 13th Malaysia Plan (13MP), describing it as a timely initiative to elevate heritage-based tourism while safeguarding Malaysia's diverse cultural legacy. Malaysian Tourist Guides Council president Jimmy Leong praised the decision as both 'timely and wise', stressing that heritage-centred destinations could become educational tourism assets with lasting value, the New Straits Times reported. Heritage must be more than a trend Leong urged that the STIZ should not only serve as a vehicle to attract tourism investment but also become a platform for artistic expression and the preservation of Malaysia's cultural and natural history. According to New Straits Times , Leong said that heritage in tourism goes beyond just buildings or artefacts and includes natural landscapes, local customs, historical stories, places of worship, and traditional practices passed down through generations. He warned against treating heritage tourism as a temporary trend, instead advocating for it to be firmly embedded as a cornerstone of Malaysia's tourism identity and long-term economic strategy. See also Johor sees 13MP as strategic roadmap to 2030 development goals 'Our variegated past gives our country a unique edge,' Leong noted. 'These heritage attractions—namely museums, battlefield sites, historic towns, gardens, and wilderness areas—should be developed as protected educational tourism products.' Grassroots inclusion seen as key to success 'It's crucial that tourism players on the ground are included in the process. We need to create experiences that are not only marketable but also meaningful and authentic,' Leong said, as quoted by the New Straits Times . Heritage tourism should reflect the experiences, plights, and cultural values of the communities it seeks to portray. This will ensure that economic benefits are shared equally while traditions are kept alive. Implications for Singapore tourism and cross-border collaboration Johor has been named as one of the host states for the new STIZ; thus, the move is likely to influence cross-border tourism trends between Malaysia and Singapore. As Johor seeks to improve its heritage-based offerings, Singaporean visitors may be drawn to new cultural attractions and educational experiences just across the Causeway. The STIZ could also create joint tourism packages, festival collaborations, and heritage trail linkages that enrich the overall visitor experience on both sides. For Singapore, Johor's commitment to heritage tourism may improve regional tourism flows. Through this initiative, opportunities for partnerships and heritage-themed travels that can benefit both Johor and Singapore may further flourish. Read also: Johor sees 13MP as strategic roadmap to 2030 development goals
Straits Times
7 hours ago
- Straits Times
After a lag, US consumers begin to feel the pinch of tariffs
Sign up now: Get ST's newsletters delivered to your inbox Government data showed prices rose in June on items heavily exposed to tariffs, such as home furnishings, toys and appliances. Companies are starting to shift more tariff-related costs onto consumers. Many businesses chose to absorb the additional tax during the early days of President Donald Trump's trade war . But evidence is emerging that they are running out of options to keep prices stable in the face of deteriorating profit margins, suggesting that the tariffs could have a more pronounced effect on prices in the months ahead. Government data shows that prices rose in June on items heavily exposed to tariffs, such as home furnishings, toys and appliances. And in recent days – before Mr Trump announced tariffs for much of the world on the night of July 31 – Adidas, Procter & Gamble, Stanley Black & Decker and other large corporations told investors that they either had increased prices or planned to do so soon to offset the tariff costs. Companies like Walmart and toy makers Hasbro and Mattel had already warned that tariffs would lead to higher prices. 'We have no interest in running a lower-margin business, particularly due to tariffs,' Mr Richard Westenberger, the chief financial officer of Carter's, a children's apparel maker, said on a call with analysts July 25. 'And if this is something that's going to be a permanent increase to our cost structure, we have to find a way to cover it.' Top stories Swipe. Select. Stay informed. Singapore Despite bag checks and warnings, young partygoers continue to vape in clubs in Singapore Singapore Ong Beng Seng to plead guilty on Aug 4, more than 2 years after trip to Qatar with Iswaran Singapore LTA, Singapore bus operators reviewing Malaysia's request to start services from JB at 4am Singapore NDP 2025: Veteran Red Lion says each leap 'feels like 5km run' Business Decoupling to save on tax? You may lose right to property if ties go awry Singapore Lessons learnt from Singapore's love-hate relationship with e-scooters Opinion At UN's Wipo, Singaporean Daren Tang strives to create an equal music for haves and have-nots Asia Mass grave with over 100 skeletons in Sri Lanka brings up old wounds Economists have been watching for signs of tariff-related price increases since Mr Trump rolled out his trade policy in the spring. But inflation remained relatively muted, defying expectations and prompting the White House to declare that those who predicted the tariffs would elevate prices were mistaken. Even some forecasters are acknowledging that the tariffs have taken longer to work their way through to consumer prices than initially anticipated. Mr Jerome Powell, chair of the Federal Reserve, said on July 30 that the process might be 'slower than expected at the beginning'. 'We think we have a long way to go to really understand exactly how it will be,' he said. Ms Sarah House, an economist at Wells Fargo, said the next three to six months would be 'crunch time,' as more tariff rates solidified. 'Businesses are grappling with the fact that tariffs are here to stay, and as there's more certainty around a higher tariff environment, they are going to be more willing and able to adjust their prices,' she said. 'We're getting to a point where you're going to start to see those feed through.' NYTIMES
