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Yahoo
10-07-2025
- Business
- Yahoo
Japan's sticky problem with Trump, tariffs and rice
Donald Trump's insistence that "spoiled" Japan imports more US rice is adding to Prime Minister Shigeru Ishiba's problems ahead of elections that could sink his premiership after less than a year in office. Japan is one of more than 20 countries receiving letters this week from the US president warning of "reciprocal" tariffs from August 1 failing a trade agreement with Washington. The 25 percent across-the-board levy for Japan is separate from similar charges for cars, steel and aluminium that have already been imposed. Trump wants to get Japanese firms to manufacture more in the United States and for Tokyo to buy more US goods -- notably gas and oil, cars and rice -- to reduce the $70 billion trade deficit with the Asian powerhouse. "I have great respect for Japan, they won't take our RICE, and yet they have a massive rice shortage," Trump said on Truth Social on June 30. Rice, though, is small fry in the grand scheme of bilateral business between the countries. BMI Fitch Solutions said that it accounts for only 0.37 percent of US exports to Japan, and that even doubling that would have a "negligible" effect on overall trade. "(The) Trump administration seems more concerned with the optics of striking deals than with meaningfully narrowing the US trade deficit," BMI said. For Japan, doubling imports could be swallowed if only the economic impact is considered. It could be well worth it if such a concession could reduce or even remove Trump's damaging 25 percent tariff on Japanese autos. - Lost majority - But the politics of rice are fraught for Ishiba, whose ruling coalition disastrously lost its majority in lower house elections in October. Upper house elections on July 20 could see a similar drubbing, which might prompt Ishiba to quit, 10 months after taking the helm of the long-dominant but unloved Liberal Democratic Party (LDP). Rice Japan holds a cherished place in Japanese national culture -- samurai reputedly used to be paid in it. Relying on imports -- currently almost all rice consumed is grown domestically -- would be seen by many as a national humiliation for the country of 124 million people, and risky. "Culturally, and historically, the Japanese people are all about rice," Shinichi Katayama, the fourth-generation owner of 120-year-old Tokyo rice wholesaler Sumidaya, told AFP. "I personally welcome having an additional option for Japanese consumers. But I also feel the move (letting in lots of foreign rice) is too early from the standpoint of food security," he said. "If we become reliant on rice imports, we may face shortages again when something happens." While Japan already imports rice from the United States, many consumers see foreign, long-grain varieties as being of dubious quality and lacking the requisite stickiness of the homegrown short-grain rice. Bad memories linger from when Japan suffered a cold summer in 1993 and had to import large volumes of the grain from Thailand. American rice "tastes awful. It lacks stickiness", said Sueo Matsumoto, 69, who helps families where children have hearing difficulties. "If they (the Americans) want to export to Japan, they must work at it. They must think about consumer preference," he told AFP in Tokyo. - No sacrifice - As a result, Ishiba's government has been at pains to say it won't bend on the issue -- although this may change after the election. "We have no intention of sacrificing agriculture in future negotiations," Chief Cabinet Secretary Yoshimasa Hayashi said recently. "Ishiba is walking a narrow plank, wary of provoking powerful domestic lobbies like rice farmers, while juggling an approval rating that would make aggressive trade moves politically perilous," said Stephen Innes at SPI Asset Management. The government has already been under fire for the recent skyrocketing of rice prices, which have roughly doubled in 12 months. Factors include a very hot summer in 2023, panic-buying after a warning of an imminent "megaquake" in 2024, alleged hoarding by some traders, and a surge in rice-hungry tourists. To help ease the pain, Tokyo is tapping emergency stockpiles, and imports have risen sharply -- led by rice from California -- but these are still tiny compared with domestic production. "All these problems with rice prices show the LDP's agriculture policy has failed," retiree Yasunari Wakasa, 77, told AFP. hih-oh-stu/dan
CNA
09-07-2025
- Business
- CNA
Malaysia central bank lowers key rate to 2.75% on weaker growth outlook
KUALA LUMPUR : Malaysia's central bank cut its benchmark interest rate MYINTR=ECI for the first time in five years on Wednesday, as it looks to support the economy amid a weaker growth outlook and rising uncertainty in global trade. Bank Negara Malaysia lowered its overnight policy rate (OPR) by 25 basis points to 2.75 per cent from 3.00 per cent, where it had been since May 2023, as had been expected by 17 of 31 economists surveyed in a Reuters poll. The ceiling and floor rates of the OPR corridor are correspondingly reduced to 3 per cent and 2.5 per cent respectively, the central bank said in a statement. The rate decision came a day after U.S. President Donald Trump announced a 25 per cent tariff on Malaysian exports to the United States. BNM said the global growth outlook was weighed down by uncertainties surrounding tariffs, as well as geopolitical tensions, which could lead to greater volatility in global financial markets and commodity prices. While the Malaysian economy was on a strong footing, the central bank said external uncertainties could affect Malaysia's growth prospects. "The reduction in the OPR is... a pre-emptive measure aimed at preserving Malaysia's steady growth path amid moderate inflation prospects," the central bank said. Economists had expected at least one 25-basis-point cut this year, which would hold until the end of 2026, though there was no consensus on where the rate would be then. Estimates for the end of next year ranged from 2.25 per cent to 3.00 per cent. Malaysia has reported a string of soft economic data in recent months with growth slowing to 4.4 per cent in the first quarter, while exports unexpectedly fell in May. Inflation has also remained relatively subdued, with consumer prices rising 1.2 per cent in June, a four-year low. Prime Minister Anwar Ibrahim said in May that Malaysia was unlikely to meet its growth outlook of between 4.5 per cent and 5.5 per cent this year, while BNM has said it would have to lower its growth forecast range due to uncertainties arising from U.S. tariff policies. The central bank also lowered banks' statutory reserve requirement (SRR) ratio by 100 basis points to 1.00 per cent in May - the first SRR reduction since March 2020 at the start of the COVID-19 pandemic - reinforcing a dovish policy outlook. Malaysia's trade ministry said this week it will continue talking to its U.S. counterparts "in good faith" to address outstanding issues, and clarify the scope and impact of the revised U.S. tariffs. Headline and core inflation averaged 1.4 per cent and 1.9 per cent in the first five months of the year respectively, BNM said, adding that consumer prices are expected to remain moderate in 2025. The central bank projects headline inflation to range between 2 per cent to 3.5 per cent in 2025, and core inflation at 1.5 per cent to 2.5 per cent. Both headline and core inflation came in at 1.8 per cent in 2024.
CNA
09-07-2025
- Business
- CNA
Malaysia central bank lowers key rate to 2.75%
KUALA LUMPUR :Malaysia's central bank cut its benchmark interest rate for the first time in five years on Wednesday, as it looks to support the economy amid a weaker growth outlook and rising uncertainty in global trade. Bank Negara Malaysia lowered its overnight policy rate (OPR) by 25 basis points to 2.75 per cent from 3.00 per cent, where it had been since May 2023, as had been expected by 17 of 31 economists surveyed in a Reuters poll. The ceiling and floor rates of the OPR corridor are correspondingly reduced to 3 per cent and 2.5 per cent respectively, the central bank said in a statement. The rate decision came a day after U.S. President Donald Trump announced a 25 per cent tariff on Malaysian exports to the United States.
Al Jazeera
08-07-2025
- Business
- Al Jazeera
Trump ramps up trade war with tariff blitz targeting 14 countries
United States President Donald Trump has unveiled steep tariffs on more than a dozen countries as he ratchets up his pressure campaign aimed at winning concessions on trade. Trump's latest trade threats on Monday put 14 countries, including key US allies Japan and South Korea, on notice that they will face tariffs of 25 to 40 percent from August 1 unless they take more US exports and boost manufacturing in the US. In nearly identical letters to the countries' leaders, Trump said the US had 'decided to move forward' with their relationship, but 'only with more balanced, and fair, TRADE'. Trump warned that any retaliatory taxes would be met with even higher tariffs, but left the door open to relief from the measures for countries that ease trade barriers. 'If you wish to open your heretofore closed Trading Markets to the United States, eliminate your tariff, and Non Tariff, Policies and Trade Barriers, we will, perhaps consider an adjustment to this letter,' Trump said in the letters, using capital letters to emphasise particular words. 'These Tariffs may be modified, upward or downward, depending on our relationship with your Country.' Speaking to reporters later on Monday, Trump said the August 1 deadline was 'firm' but not '100 percent firm'. 'If they call up and they say we'd like to do something a different way, we're going to be open to that,' he said. Trump's steepest tariffs would apply to Laos and Myanmar, which are both facing duties of 40 percent. Japan, South Korea, Malaysia, Kazakhstan and Tunisia would be subject to the lowest rate of 25 percent. Cambodia and Thailand are facing a 36 percent tariff rate, Serbia and Bangladesh a 35 percent rate, and South Africa and Bosnia and Herzegovina a 30 percent rate. Indonesia would be subject to a 32 percent rate. All 14 countries, many of which have highly export-reliant economies, had previously been subject to a baseline tariff of 10 percent. Japanese Prime Minister Shigeru Ishiba called the tariff on his country 'truly regrettable', but said the Japanese side would continue negotiations towards a mutually beneficial agreement. South Korea's Ministry of Trade, Industry and Energy said in a statement that it would step up negotiations ahead of the August 1 deadline to 'reach a mutually beneficial negotiation result so as to swiftly address uncertainties stemming from tariffs'. Malaysia's Ministry of Investment, Trade and Industry said the Southeast Asian country would continue engagement with the US 'towards a balanced, mutually beneficial, and comprehensive trade agreement.' Lawrence Loh, the director of the Centre for Governance and Sustainability at the National University of Singapore Business School, said Asian countries are limited in their ability to present a united front in the face of Trump's threats due to their varying trade profiles and geopolitical interests. 'It is not possible for these countries, even for a formal pact like ASEAN, to act in a coordinated manner. It's likely to be to each country on its own,' Loh told Al Jazeera, referring to the 10-member Association of Southeast Asian Nations. 'That's the trump card for Trump.' Loh said countries in the region will feel pressure to make concessions to Trump to avoid damage to their economies. 'On balance for Asian countries, not giving concessions will turn out more harmful than playing along with the US,' he said. 'Especially for the smaller countries with less bargaining power, retaliation is out of the question.' The US stock market dipped sharply on Trump's latest tariff threats, with the benchmark S&P 500 falling 0.8 percent and the tech-heavy Nasdaq Composite dropping 0.9 percent. But Asia's major stock markets shrugged off the uncertainty, with Hong Kong's Hang Seng Index up about 0.8 percent, South Korea's KOSPI up about 1.4 percent, and Japan's Nikkei 225 up about 0.2 percent as of 05:00 GMT. While the Trump administration has ramped up pressure on its trade partners to reach deals to avoid higher tariffs, only three countries so far – China, Vietnam and the United Kingdom – have announced agreements to de-escalate trade tensions. US Secretary of the Treasury Scott Bessent earlier on Monday teased the announcement of 'several' agreements within the next 48 hours. Bessent did not elaborate on which countries would be involved in the deals or what the agreements might entail. White House press secretary Karoline Leavitt told a media briefing that Trump would send more letters this week and that the administration was 'close' to announcing deals with other countries. Calvin Cheng, the director of the economics and trade programme at the Institute of Strategic and International Studies (ISIS) in Kuala Lumpur, Malaysia, said that while US partners will be eager to negotiate relief from the tariffs, many governments may be resigned to higher taxes on their exports going forward. 'In my view, many will likely be under greater pressure to deploy every available institutional and political lever to address legitimate US trade concerns, particularly around tightening rules of origin and legitimate IP [intellectual property] concerns,' Cheng told Al Jazeera. 'However, there could also be a cognisance that current tariff lines are more durable than expected, so measures could shift towards targeted accommodation, while preparing domestic exporters and industries for a future of trade where a significant proportion of this tariff barrier is likely to remain.' 'My personal view is that the bulk of the current tariff rate is stickier than perhaps initially assumed,' Cheng added. 'Future concessions could be within single-digit percentage points off the average rate.' Eduardo Araral, an associate professor at the Lee Kuan Yew School of Public Policy in Singapore, expressed a similar view. 'Unless Tokyo, Seoul and key ASEAN capitals can bundle tariff relief with credible paths on autos, agriculture, digital trade and – in some cases – security alignment before 1 August, the higher rates will likely stick, adding another layer of uncertainty to an already litigated and politically fraught tariff regime,' Araral told Al Jazeera.
Bloomberg
08-07-2025
- Business
- Bloomberg
EU Wants Quick Framework Deal With US
Welcome to the Brussels Edition, Bloomberg's daily briefing on what matters most in the heart of the European Union. The European Union is aiming to clinch a preliminary trade deal with the US this week, a move that would allow it to lock in a 10% tariff rate beyond an Aug. 1 deadline as the two sides negotiate a permanent agreement. There's a range of products that the EU would like to see exempted from the rate, such as aircraft, aircraft parts as well as wine and spirits, we're told. Some form of relief is expected as part of the agreement in principle. The universal US tariffs that were due to kick in on July 9 would be delayed until at least the beginning of August, the White House announced on Monday. For the EU, tariffs on nearly all its exports to the US will jump to 50% on that date if it doesn't strike a deal beforehand.
