Asian businesses anticipate Trump tariff deadline
Tags:
To embed this content on your own webpage, cut and paste the following:
See terms of use.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
RNZ News
an hour ago
- RNZ News
Defence spending is like insurance – how will NZ pay the higher premiums?
By Stephen Hickson* of NZ Army Bushmaster 5.5 armoured vehicles. Photo: Supplied/ NZ Defence Force Analysis : Defence spending is like insurance - you have to pay for it but you hope you never have to use it. And the higher the risk you face, the higher your premium will be. New Zealand has now committed to paying those higher defence insurance premiums. The government's 2025 Defence Capability Plan , released in April, includes NZ$9 billion in extra funding over the next four years. That's a sizable increase on a current annual budget of just under $5 billion. Read more: The multibillion-dollar boost for New Zealand's military: What you need to know New Zealand is not alone, of course. Driven by geopolitical tensions and US President Donald Trump's demand that other countries spend a higher proportion of their GDP on defence, global military spending rose for the tenth year in a row to US$2718 billion (NZ$4530b) in 2024, with huge increases in Europe and the Middle East. How much "insurance" a country should buy in the form of defence spending will vary. Too little, and it cannot respond when it needs to; too much, and resources are needlessly wasted. For New Zealand, it is a matter of finding the right balance. The country needs to find the right balance for its spending on defence. Photo: Supplied/ NZ Defence Force Economically, however, defence spending is more complicated than simply buying weapons and recruiting more personnel. There can be benefits beyond basic security considerations. One involves what economists call "technology spillovers". Past innovations developed for military use - such as jet engines, GPS and the internet - often found important civilian applications. The challenge is to design defence investments to deliberately build skills and technologies with wider economic benefit: advanced manufacturing, cybersecurity or clean tech. New Zealand's defence plan includes this kind of spending, including between $100 million and $300m on cybersecurity. On the other hand, promises of new jobs from large projects are often overstated, with New Zealand's best known example being the "Think Big" policy of the 1970s. Rather, there can be job substitution as people move from civilian roles into military ones. A NZ Defence Force Vector Scorpion drone. Photo: You Tube / NZ Defence Force In the end, of course, increased defence spending must be funded - through higher taxes, more debt or reduced spending on other items. Higher GDP growth would make the expenditure more affordable, but even then we face the same tradeoffs. It's not possible to have lower taxes and debt as well as higher government spending. Most of the expenditure set out in the defence plan will be on equipment. But any increase in the output of the defence industry will likely crowd out other consumer and investment goods. While clearly an extreme example, one only has to look at how defence spending rose during WWII. The increase in military output came at the expense of other goods, leading to shortages and rationing. New Zealand doesn't face that scale of change, but there is still likely to be some shift in production from "butter to guns". We might also see a shift in how businesses spend their research and development money, towards military and away from civilian applications. New Zealand does not have a large defence industry and will need to import much of the new equipment. This implies a need for higher exports to pay for those imports, meaning fewer goods for New Zealanders to consume. A New Zealand Defence Force plane arrives in the Middle East earlier this year during the Iran-Israel conflict. Photo: Supplied / New Zealand Defence Force Most countries are understandably reluctant to cut spending on health, education and other things voters care about in order to boost defence. Hence, governments can be tempted to label new expenditures as "defence" when it could otherwise be classified as "updated infrastructure". Spending on dual-purpose capital works is likely to increase, therefore, with projects earmarked for defence more likely to be funded. The New Zealand defence plan already allows for housing, airfield and port facilities that can all have multiple uses. There are also ethical considerations. Many consumers prefer not to invest in the arms trade, but components used in weapons manufacture often have non-military uses as well. Similarly, many consumer items, such as phones, vehicles and food, can be purchased by the military but clearly have non-military uses. We may see more of the output of companies that also produce non-military items directed into defence. All of this can make it difficult to classify a company as a defence contractor, and may be challenging for large investors (such as superannuation funds) with ethical investment policies. At the same time, the cost of not investing in defence firms might also rise as demand for their products or services increases and they become better investments. Like people in general, countries prefer lower insurance premiums. But when risks increase, so too does the price of insurance. Voters will disagree on how much should be spent on defence, but that is largely a political question. What economics teaches us, however, is that if you want to reduce your insurance premium, then reduce your risk. And that is something easier said than done. *Stephen Hickson is a Lecturer in Economics and Director, Business Taught Masters Programme, University of Canterbury. This article was originally published by The Conversation .
RNZ News
3 hours ago
- RNZ News
Trump promised 200 deals by now. He's gotten 3, and 1 more is very close
By Phil Mattingly and David Goldman , CNN US President Donald Trump holds a chart titled 'Reciprocal Tariffs' during a press conference at the White House in Washington, DC, on 2 April 2025. Photo: AFP / Brendan Smialowski At the conclusion of his first 100 days in office in late April, President Donald Trump made a stunning statement about his progress on tariff negotiations: He had completed trade deals with 200 countries. More than two months later, Trump has announced just three of those agreements - with China , the United Kingdom and Vietnam. So what happened? Wednesday (US time) marks the day that Trump had set three months ago as a deadline for all countries to reach a deal or face higher "reciprocal" tariffs. Trump has since publicly acknowledged that pausing those "Liberation Day" tariffs until 9 July left insufficient time to negotiate with practically every country around the world. Trump had initially expected to complete more trade deals by Wednesday's deadline, but in recent weeks he's been convinced that landing those deals can't happen more swiftly, sources familiar with the matter tell CNN. That's why his public rhetoric has shifted in recent weeks to saying he would send out letters that set higher tariffs on America's trading partners , effectively getting results on the board while talks continue. So Trump agreed to push the deadline back to 1 August to give countries that are close to a deal a little more time for talks - particularly the European Union, which is on the verge of announcing a trade deal with the United States. EU and US trade negotiators are nearing a framework agreement that would set in place 10 percent tariffs and lay out the parameters for extensive trade discussions in the future, according to three officials familiar with the matter. The progress in negotiations with the EU, in particular, was a key consideration in extending the deadline beyond 9 July. Treasury Secretary Scott Bessent pointed to the EU talks, as well as the view that several other key negotiations were in their final stages, as he advocated for more time, according to two people familiar with the matter. US Treasury Secretary Scott Bessent Photo: AFP / AL DRAGO Trump still needs to sign off on any final agreement and talks between the two sides are ongoing, but the officials said the agreement would be announced before the end of the week. Olof Gill, trade spokesperson for the European Commission, confirmed in a press briefing on Wednesday that EU trade negotiators were in active discussions with US Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer and that a deal was expected to be announced in the coming days. US businesses are under mounting pressure to import goods while President Donald Trump's higher tariffs are on pause, and they're simultaneously navigating increasingly complex filing rules when their cargo crosses the border. The progress marks a dramatic turn in Trump's long-standing, long-public disdain for the EU, a view that served as the backdrop to months of frustrating and intractable trade discussions this year. But Trump's tone - and behind the scenes, the tenor and tempo of the negotiations - shifted dramatically in the weeks since he threatened 50 percent tariffs on the EU in a morning social media post in late May. That unexpected and dramatic threat sparked an immediate response from the EU and set the stage for an urgent effort to reach some form of an agreement before Trump's "reciprocal" tariffs snapped into place. EU officials have been in the midst of briefing member countries about the framework and proposed negotiating process, one of the EU officials said, adding that despite the often-divergent equities of the bloc's nations, the deal has been presented as the best and likely only way to avoid a dramatic escalation in tariffs on 1 August. Trump's negotiators have maintained a hardline on the EU's push for exemptions to sectoral tariffs already in place or forthcoming, the officials said. For instance, a push to reduce Trump's 25 percent tariff on autos is a central late-stage focus of the discussions, as has an effort to cut the 50 percent levies on steel. US negotiators have indicated some willingness to consider key EU industries and products for possible rate reductions, including airplanes, alcoholic beverages and some agricultural products. But it would require Trump's final sign-off, the officials said. EU officials have also pledged to significantly increase purchases of US energy and defense sector goods. If a deal can't be reached, the EU has vowed to introduce countermeasures targeting billions of dollars' worth of US exports to the bloc. Those retaliatory steps have been due to come into force on 14 July. It is not yet clear if the EU will push back that date to account for Trump's extension of his "reciprocal" tariffs deadline to 1 August. "If no agreement is reached by the stated deadline, the EU is prepared to activate targeted and proportionate countermeasures in defence of its legitimate interest," Marie Bjerre, Denmark's minister of European affairs, reminded the European Parliament on Wednesday, noting that there were limits to the bloc's patience. Trump has been frustrated by a lack of progress on trade. During a cabinet meeting on Tuesday, he said his tariff threats have successfully brought trading partners to the table - but the deals other countries have offered the United States were unacceptable. "They say … 'We will give you total access, and you don't have to pay any tariffs, but please don't charge us tariffs,' and we don't like that deal," Trump said. "We're not hard-line, but it's about time the United States of America started collecting money from countries that were ripping us off - ripping us off - and laughing behind our back at how stupid we were." Trump this week has sent out several letters setting new tariffs, including 25 percent tariffs on Japan and South Korea. Other letters were expected to be publicised on Wednesday. Other deals have been harder to come by. India has long been viewed as the most likely major partner to sign onto a framework with the US. But Indian trade negotiators have hardened their positions in recent days, according to US officials. India is also a member of the BRICS group, so it's unclear what Trump's 10 percent tariff threat on BRICS countries on Sunday means for trade negotiations. South Korea had also been viewed for weeks as likely to reach an agreement, though Trump's auto tariffs remain a key sticking point in those talks, and Trump's letter on Monday may have thrown a wrench in those gears. Japan steadily moved further away from an outcome in recent weeks, and Trump cast significant doubt on talks that once seemed on a path to a certain agreement. Japanese trade negotiators, who just weeks ago were scrambling to lay the groundwork for an announcement by last month's Group of Seven summit, have delivered far more pessimistic messages in their public statements in recent days. Japan's Prime Minister Shigeru Ishiba said on Tuesday that despite "earnest and sincere discussions," Japan has been unable to reach a deal, according to remarks translated by CNN. "We deeply regret that the US government has imposed additional tariffs and announced plans to raise tariff rates," Ishiba said. Indonesia, Cambodia and Thailand have all delivered substantial offers to their US counterparts in the last two weeks in an effort to move to the front of the line for an agreement and were likely candidates for any near-term deal in the next few days, US officials said. Brazil has ramped up its efforts to secure an agreement, including bilateral talks at the end of last week designed to expand on an earlier offer to sharply reduce tariffs on certain US products, American administration officials said. The most prevalent point of contention among foreign trade teams has been a lack of clarity on what their US counterparts envision for any final agreement. But the biggest roadblock in the more expansive negotiations has been the existence - or promised imposition - of Trump's sectoral tariffs on autos, steel and pharmaceuticals, US officials said. CNN's Alayna Treene, James Frater and Anna Cooban contributed to this report. -CNN
RNZ News
11 hours ago
- RNZ News
Taiwan launches biggest war drills with simulated attacks against military command
By Yimou Lee , Reuters Taiwanese reservists participate in pre-combat training on the first day of the annual Han Kuang military exercise in Miaoli on July 9, 2025. Photo: AFP / I-HWA CHENG Taiwan launched its largest ever military drills on Wednesday, starting with simulated attacks on its command systems and infrastructure ahead of a Chinese invasion, senior defence officials said. The early stages of the annual Han Kuang exercises will focus on testing how Taiwan's military can decentralise command in the event of a crippling communications attack. Over the next 10 days, the drills will expand to assess Taiwan's combat readiness against a full-scale attempt to seize the island. "We are learning from the situation in Ukraine in recent years and realistically thinking about what Taiwan might face ... in real combat," said one senior defence official, highlighting the need to protect command and communication systems. "Commanders have to think what issues their troops might face and they need to pass them down to their subordinates," the official said, speaking on condition of anonymity due to the sensitivity of the operation. Cyber attacks and misinformation campaigns are seen by Taiwan as high-intensity "grey zone" actions that are likely to precede a broader Chinese assault. The annual Han Kuang exercises will this year mobilise the largest number of reservists, some 22,000, and for the first time feature new High Mobility Artillery Rocket Systems, or HIMARS, made by Lockheed Martin, along with Taiwan-developed Sky Sword surface-to-air missiles. Some 300 reserve troops were seen moving into classrooms of a junior high school in the city of Taoyuan emptied for summer holidays, receiving instruction in mortars and rifles. China views democratically governed Taiwan as its own and has intensified military pressure around the island over the last five years, including a string of war games and daily patrols. Beijing has never renounced the use of force to bring the island under its control, and any attack on Taiwan could ignite a broader regional war. Taiwanese defence officials said they believed that the Chinese military would be closely monitoring the drills. By 6am, Taiwan had detected 31 Chinese aircraft sorties and seven naval ships, the defence ministry said in a statement. Some 24 of the aircraft crossed the median line, the unofficial barrier between the two sides. China's Ministry of Commerce added eight Taiwan firms to its export control list, banning exports of dual-use products, the state news agency Xinhua reported on Wednesday. The list includes the Aerospace Industrial Development Corporation (AIDC). As they evolve, the drills will feature 24-hour army, naval and air operations to defend Taiwan's coasts. Civil defence elements will also be tested, including the creation of emergency supply stations as well as the use of Taiwan's recently-expanded air-raid shelters. Asked about the drills and Taiwan's use of US-supplied HIMARS, Chinese foreign ministry spokesperson Mao Ning said in Beijing on Wednesday that "our opposition to US-Taiwan military ties is consistent and very firm". Taiwan's "attempt to seek independence through force or relying on foreign (actors) will never succeed," Mao said. China's defence ministry said on Tuesday that Taiwan's Han Kuang military exercises were "nothing but a bluff". "No matter what weapons are used, Taiwan can't resist the People's Liberation Army's sharp sword against independence," ministry spokesperson Jiang Bin was quoted as saying by state broadcaster CCTV. The Taiwanese senior defence official said they wanted to show the international community that Taiwan was determined to defend itself. Regional military attaches and analysts say the drills are being closely watched, both for China's response and to gauge improvements in Taiwanese resilience. Taiwan's President Lai Ching-te and his government strongly object to China's sovereignty claims, saying it is up to the island's people to decide their future. - Reuters
