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Yahoo
4 days ago
- Business
- Yahoo
Trump Tariffs Leave Costly China Supply Question Unanswered
(Bloomberg) -- President Donald Trump's recent flurry of trade deals have given Asian exporters some clarity on tariffs, but missing are key details on how to avoid punitive rates that target China's supply chains. Trump Awards $1.26 Billion Contract to Build Biggest Immigrant Detention Center in US The High Costs of Trump's 'Big Beautiful' New Car Loan Deduction Can This Bridge Ease the Troubled US-Canadian Relationship? Salt Lake City Turns Winter Olympic Bid Into Statewide Bond Boom Trump Administration Sues NYC Over Sanctuary City Policy Trump unveiled tariffs of 20% for Vietnam and 19% for Indonesia and the Philippines, signaling those are the levels the US will likely settle on for most of Southeast Asia, a region that ships $352 billion worth of goods annually to the US. He's also threatened to rocket rates up to 40% for products deemed to be transshipped, or re-routed, through those countries — a move largely directed at curbing Chinese goods circumventing higher US tariffs. But still unclear to manufacturers is how the US will calculate and apply local-content requirements, key to how it will determine what constitutes transshipped goods. Southeast Asian nations are highly reliant on Chinese components and raw materials, and US firms that source from the region would bear the extra tariff damage. That's left companies, investors and economists facing several unanswered questions about Trump's tariffs that appear aimed at squeezing out Chinese content, according to Deborah Elms, head of trade policy at the Hinrich Foundation in Singapore. 'Is that raw materials? All raw materials? Above a certain percentage?' she said. 'How about parts? What about labor or services? What about investment?' In an agreement with Indonesia last week, the White House said the two countries would negotiate 'rules of origin' to ensure a third country wouldn't benefit. The deal with Vietnam earlier this month outlined a higher 40% tariff rate for transshipped goods. And Thai officials, who have yet to secure a deal, detailed that they likely need to boost local content in exports to the US. Missing Details The Trump administration isn't providing much clarity on the matter right now. US officials are still working out details with trading partners and looking at value-based local content requirements, to ensure exports are more than just assembled imported parts, according to a person familiar with the matter, who didn't want to be identified discussing private talks. A senior Trump administration official also said this week that details on the approach to transshipment are expected to be released before Aug. 1, the deadline for when higher US tariffs kick in. Some factories are already adjusting their supply chains to comply with rules that will require more locally-made components in production. Frank Deng, an executive at a Shanghai-based furniture exporter with operations in Vietnam — and which gets about 80% of business from the US — said in an interview his firm is making adjustments as authorities appear to be more strictly enforcing country-of-origin rules. Vietnam has always had specific local content requirements for manufacturers, Deng added, including that a maximum of 30% of the volume of raw materials originates from China, and the value after production in Vietnam must be 40% higher than the imported raw materials. 'We've been struggling to meet all the standards so that we can still stay in the game,' Deng said. 'But I guess that's the only way to survive now.' For most of Southeast Asia, reducing the amount of Chinese-made components in manufacturing will require a complete overhaul of their supply chains. Estimates from Eurasia Group show that Chinese components make up about 60% to 70% of exports from Southeast Asia — primarily industrial inputs that go into manufacturing assembly. About 15% of the region's exports now head to the US, up about four percentage points from 2018. Local Content The US has become increasingly vigilant about China's ability to bypass US trade tariffs and other restrictions through third countries since Trump's first trade war in 2017. Thailand signaled its frustration over the lack of clarity for how much local content is needed in goods exported to the US to avert transshipment rates, but noted it will likely be much higher than a traditional measure of 40%. 'From what we've heard, the required percentage could be significantly higher, perhaps 60%, 70%, or even 80%,' Deputy Prime Minister Pichai Chunhavajira said July 14. 'Emerging countries or new production bases are clearly at a disadvantage,' he said, as their manufacturing capabilities are still at an early stage and must rely on other countries for raw goods. Vietnam, Thailand and Malaysia have all taken steps this year to address Trump's concerns, increasing scrutiny of trade that passes through their ports including new rule-of-origin policies that centralize processing and imposing harsh penalties on transshippers. Developing nations may still struggle to enforce Trump's rules or comply with the rules if it means going up against China, their largest trading partner and geopolitical partner. 'The reality is it's not enforceable at all,' said Dan Wang, China director at Eurasia Group. 'Chinese companies have all kinds of ways to get around it and those other countries have no incentive to enforce those measures, or capacity to collect the data and determine local content.' --With assistance from Patpicha Tanakasempipat, Skylar Woodhouse and Nguyen Dieu Tu Uyen. Burning Man Is Burning Through Cash Confessions of a Laptop Farmer: How an American Helped North Korea's Wild Remote Worker Scheme It's Not Just Tokyo and Kyoto: Tourists Descend on Rural Japan Elon Musk's Empire Is Creaking Under the Strain of Elon Musk A Rebel Army Is Building a Rare-Earth Empire on China's Border ©2025 Bloomberg L.P.
Bloomberg
7 days ago
- Business
- Bloomberg
BNP Paribas Beats as Fixed-Income Traders Offset Equities Slump
BNP Paribas SA reported better-than-expected profit as the French lender got a boost from its fixed-income traders while equities slumped in the volatility triggered by the US tariff announcements. Revenue from trading debt securities and currencies jumped 27% from a year earlier, BNP Paribas said in a statement Thursday, beating estimates as well as Wall Street. Equities income declined 15%, a stark contrast with double-digit gains at the biggest US firms.
Yahoo
7 days ago
- Business
- Yahoo
Deals, but no details: Trump's trade negotiations are big on numbers, light on specifics
President Donald Trump has begun announcing a suite of new bilateral trade agreements. The details of the deals — and who, if anyone, stands to benefit — remain largely unknown. On Tuesday, Trump heralded three new agreements with Indonesia, the Philippines and Japan. The announcements came with no information about enforcement or guarantees, outside of tariff levels stated by Trump — 19% for the first two, 15% for Japan — and promises of eliminating barriers on imports of U.S. products. Instead, the deals have been overshadowed by warnings from U.S. firms about the impact of Trump's tariffs to their bottom lines, prolonging a cloud of uncertainty over a U.S. economy already operating at stall speed. While recession odds have been dialed back in recent weeks, economists surveyed by The Wall Street Journal still see 33% odds of one coming within a year, compared with 22% at the start of 2025. Meanwhile, earnings estimates for the S&P 500 compiled by research group FactSet are 3% lower since then, the Journal said. And even as major stock indexes continue to churn higher to near-records, analysts say the gains are increasingly driven by an ever-narrower band of companies, like tech firms, that are largely unaffected by the tariffs. Reuters reported this week that out of 68 U.S. companies that have provided explicit reactions to tariffs, 26 have issued profit margin warnings, while 24 have announced price hikes. It is not clear how any of the new deals will improve matters. The most significant new agreement recently announced by Trump is with Japan. It imposes a 15% tax on products imported from that country, with Japan pledging to 'open' itself to more U.S. products 'including cars and trucks, rice and certain other agricultural products and other things.' Trump also announced an unspecified investment worth $500 billion, of which the U.S. would take 90% of profits. Commerce Secretary Howard Lutnick said Wednesday the $500 billion would be able to be used for 'anything' — from manufacturing pharmaceuticals to building semiconductor factories or mining critical minerals. Japan 'will finance the project and then we'll give it to an operator who will run it and the profits will be split — 90% to the taxpayers of the United States and 10% to the Japanese,' he said. Asked if the billions were just loan guarantees, Lutnick said it encompassed 'equity, loans and loan guarantees.' He added that Japan would 'be the banker' for projects the U.S. wanted to pursue. Lutnick said the investment was proposed along with lowering tariffs to 15% because 'the Japanese are never going to really open their market the way Donald Trump wants them to open it.' Shortly after Lutnick made those comments on Bloomberg Television, Trump wrote on his Truth Social platform, saying that 'Japan is, for the first time ever, OPENING ITS [MARKET] TO THE USA,' adding that the deal includes 'cars, SUV's, Trucks, -and everything else.' Setting aside the contradictory remarks, the deal serves to massively increase the effective tax rate charged to companies importing Japanese products, from 2% to 15%. With most analysts agreeing that the importing firm — and, in many cases, the end consumer — ultimately pays the tariff, it translates to nearly $23 billion in lost private spending power in the U.S. economy given the approximately $150 billion worth of goods the U.S. imports from Japan. Early Wednesday, Detroit's Big Three automakers expressed their concerns about the Japan deal, saying that if nothing changes, Japanese auto imports now face a lower tariff rate than those imported from Canada and Mexico, where the trio still maintain much of their production capacity. The warning came after GM announced a $1 billion hit to its profits from tariffs already being collected. 'Any deal that charges a lower tariff for Japanese imports with virtually no U.S. content than the tariff imposed on North American built vehicles with high U.S. content is a bad deal for U.S. industry and U.S. auto workers,' Matt Blunt, who heads the American Automotive Policy Council, said in a statement. Investors are also reacting, but not the way they used to. Unlike at the outset of his second term, when Trump's tariffs rollout caused one of the sharpest sell-offs in history, markets now shrug when Trump announces new deals — simultaneously waiting for the impact from tariffs to show up in the economy, while also unsure that what Trump announced will actually end up sticking. In a note to clients published Wednesday, analysts with Piper Sandler financial group said they doubt the deals being cut will last. 'These deals are made under duress,' they wrote. 'Instead of being based on fixed principles of free or fair trade — or you might say, reciprocity — these deals are all about leverage. But leverage shifts all the time.' For now, they said, it is clear that any agreements Trump announces will include higher import duties. 'Investors should expect higher tariffs after August 1,' they wrote. This article was originally published on Sign in to access your portfolio
Irish Times
10-07-2025
- Business
- Irish Times
Irish politics on a rollercoaster ride
Good morning, Two stories in the paper this morning neatly illustrate the rollercoaster ride Irish politics is on, largely due to geopolitical events and conflict. Firstly, Pat Leahy reports on an analysis of risks for US firms operating in Ireland stemming from the proposed Occupied Territories Bill. The paper, which has been shared with the government and the Oireachtas Foreign Affairs Committee, was drawn up by New York attorneys and sent to the committee and government by B'nai B'rith International, a US-based advocacy and social service organisation with operations around the world. It argues that the Irish law conflicts with US federal and State laws designed to prohibit Boycott, Divestment and Sanctions directed at the state of Israel - which require companies to certify they will not boycott Israel. It flags a host of other issues too. Advocates for the bill may dismiss the analysis, but it is clear these fears play on the government's mind here - Taoiseach Micheál Martin flagged the BDS laws in recent weeks as a potential reason not to include trade in services in the bill. READ MORE The submission is an analysis of US law, rather than what might be possible under the constitution, Irish or European law, which is the most narrowly applicable set of concerns when drawing up Irish legislation. But at its core, this piece of legislation is not purely about what's technically or legally possible, nor what is domestically politically opportune. There is a wider realpolitik, and against that backdrop, the government has to weigh the balance between its interests and its values. On the front page, Jack Power and Pat report that the EU and US are on the brink of a trade deal which would go a long way towards defusing the risk of the tariff dispute escalating into a full-blown trade war. If it proceeds, it will likely leave EU-US trade damaged, relative to a pre-Trump 2.0 world, but it would at least provide a modicum of stability - a precious commodity these days. The Government here remains on standby, and is wary of the erratic nature of the Trump administration. Nonetheless, if it lands, even if it is light on details and beckons in more complex sector-level negotiations while the threat of pharma tariffs remains, it would be a reprieve of sorts. Best reads The Seanad heard poignant stories of pregnancy loss as it debated a bill from Sinn Féin's Senator Nicole Ryan as the party pushes for paid leaving following miscarriage. 'Really scary territory': AI's increasing role in undermining democracy. As we approach July 12th, Dr Amanda Dylina Morse looks at the bonfire as a source of division and cohesion. Miriam Lord on the Taoiseach's moment of clarity on insurance payout hikes - and avoiding an addition to the Government's embarrassment of glitches. Harry McGee has the latest on the opposition's slow bicycle race towards a presidential candidate. The weekend is looming into view and the sun is out. Indulge in a bit of property daydreaming and think if you had a spare €6 million or €2.85 million to splash around. Playbook In the Dáil, Simon Harris opens proceedings at 8.47am with oral questions, followed by Dara Calleary on the same beat. At midday there will be a minute's silence for the victims of the Srebrenica massacre, with Leaders' Questions to follow, after which there will be Other Members' Questions and Questions on Policy or Legislation. In the afternoon, Government Business is given over to data protection and statements on domestic, sexual and gender based violence. Topical issues is at 5.18pm, followed by the second stage of a bill from Labour's Duncan Smith on noise regulations at Dublin Airport - which would make the Environmental Protection Agency responsible, rather than Fingal County Council. The full schedule is here. The Seanad sits from 9.30am, with commencement matters followed by the order of business. Government Business takes up most of the day, with statements on transport matters followed by the second stage of the Planning and Development (Amendment) Bill. The full schedule is here. The weekly meeting of the Public Accounts Committee is at 9.30am, with the Department of Public Expenditure likely to face a grilling over the miscalculation of pensions for civil servants and politicians revealed last month. Tusla are at the Committee on Children and Equality at the same time. Education unions are at the Committee on Education and Youth at 9.30, before principals from four schools come in to discuss the redesignation of schools for children with mild general learning disabilities. The Defence Committee continues pre-legislative scrutiny of the Defence Amendement Bill. The full schedule is here.
