Asian stocks post modest gains, dollar edges down
Asian markets showed caution due to worries about President Trump's tariffs. Nikkei-225 in Japan experienced a dip. Trump threatened new tariffs on Japan, citing trade issues. The European Union is open to a tariff accord with exemptions. The US jobs report is expected soon. The Federal Reserve may consider rate cuts if the labor market weakens.
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Asian shares opened cautiously and Japanese equities dipped on lingering concerns over the impact from President Donald Trump's tariff agenda.The Nikkei-225 index fell 0.9% at the open as Trump threatened to impose a fresh tariff level on the Asian country. The MSCI Asia-Pacific Index rose 0.2%. Contracts for the S&P 500 were flat after the index notched its best quarter since December 2023 and closed at a record high on Monday. Hong Kong has a public holiday Tuesday.Wall Street's bulls drove stocks to all-time highs at the end of a solid quarter amid hopes the US is moving closer to reaching concrete deals with its top trading partners. Bets the Federal Reserve will resume rate cuts powered the best first-half stretch for Treasuries in five years.Trump threatened to impose a fresh tariff level on Japan. The president's latest round of brinkmanship with Tokyo on Monday comes just over a week before a July 9 deadline for higher tariffs to restart for dozens of trading partners, including Japan. He cited what he said was the country's unwillingness to accept US rice exports.With Trump's trade deadline fast approaching, the European Union is willing to accept an accord that includes a 10% universal tariff on many of the bloc's exports, but seeks key exemptions. Trump's top economic adviser said the White House aims to finalize deals with partners after the July 4 holiday.Just days ahead of the US jobs report , bonds rose Monday. Treasury Secretary Scott Bessent indicated it wouldn't make sense to ramp up sales of longer-term debt given where yields are, though he held out hope that rates across maturities will drop as inflation slows. Goldman Sachs Group Inc. projects a Fed cut in September as the inflationary effects of tariffs 'look a bit smaller' than expected.The June employment report, due on Thursday, given the July 4 holiday on Friday, is forecast to show growth in the workforce easing to about 110,000 new jobs from 139,000 the prior month, according to economists surveyed by Bloomberg. The unemployment rate is seen nudging up to 4.3%.For a Fed awaiting more clarity on the potential inflationary impact from tariffs, any pronounced deterioration in the labor market would likely lead to more pressure on officials to lower rates.
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Business Standard
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Nvidia, AMD to pay 15% of China chip sale revenue to US, says report
Nvidia and AMD have agreed to give the US government 15 per cent of revenue from sales to China of advanced computer chips, a US official said on Sunday, in an unusual move likely to faze American companies. US President Donald Trump's administration halted sales of H20 chips to China in April, but Nvidia announced last month Washington had said it would allow the company to resume sales and it hoped to start deliveries soon. Another US official said on Friday the Commerce Department had begun issuing licenses for the sale of H20 artificial intelligence chips to China. Both the US officials declined to be named because details have not been made public. The new levy could also hurt margins for the two companies, analysts warned. Shares of Nvidia and AMD fell about 1 per cent and nearly 2 per cent, respectively, in premarket trade on Monday. The deal to pay the US government from sales in China is unusual for a president, and marks Trump's latest intervention in corporate decision-making. Trump harangues company executives to invest in America to shore up domestic jobs and manufacturing, and last week, he demanded new Intel CEO Lip-Bu Tan immediately resign, calling him "highly conflicted" due to his ties to Chinese firms. The US official said the Trump administration did not feel the sale of H20 and equivalent chips was compromising national security. "It's wild," said Geoff Gertz, a senior fellow at Center for New American Security, an independent think tank in Washington, D.C. "Either selling H20 chips to China is a national security risk, in which case we shouldn't be doing it to begin with, or it's not a national security risk, in which case, why are we putting this extra penalty on the sale?" When asked if Nvidia had agreed to pay 15 per cent of revenues to the United States, an Nvidia spokesperson said in a statement: "We follow rules the US government sets for our participation in worldwide markets." "While we haven't shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide." Nvidia has warned that being unable to supply H20 chips to China could slice $8 billion off sales from its July quarter, while AMD had forecast a $1.5 billion hit to revenue this year owing to the curbs. AMD did not respond to a request for comment on the news that was first reported by the Financial Times earlier on Sunday. "The Chinese market is significant for both these companies so even if they have to give up a bit of the money, they would otherwise make it looks like a logical move on paper," AJ Bell investment director Russ Mould said. "That said, it is unprecedented and there is always the risk the revenue take could be upped or that the Trump administration changes its mind and re-imposes export controls." The US Department of Commerce did not immediately respond to a request for comment. China's foreign ministry, approached for comment on Monday, said the country had repeatedly expressed its position on the issue of US chip exports. The ministry in the past has accused the US of using technology and trade issues to "maliciously contain and suppress China". The Financial Times said the chipmakers agreed to the arrangement as a condition for obtaining the export licenses for their semiconductors, including AMD's MI308 chips. The report said the Trump administration had yet to determine how to use the money. US Commerce Secretary Howard Lutnick said last month the planned resumption of sales of the AI chips was part of US negotiations with China to get rare earths and described the H20 as Nvidia's "fourth-best chip" in an interview with CNBC. Lutnick said it was in US interests to have Chinese companies using American technology, even if the most advanced was prohibited from export, so they continued to use an American "tech stack". The US official who spoke about the 15 per cent levy said they did not know when the agreement would be implemented nor exactly how, but said the administration would be in compliance with the law. Alasdair Phillips-Robins, who served as an adviser at the Commerce Department during former President Joe Biden's administration, criticized the move. "If this reporting is accurate, it suggests the administration is trading away national security protections for revenue for the Treasury," Phillips-Robins said. Nvidia generated $17 billion in revenue from China in the fiscal year ending January 26, representing 13 per cent of total sales. AMD reported $6.2 billion in China revenue for 2024, accounting for 24 per cent of total revenue. Giving away some revenue from these chips to the USgovernment would bring the gross margins for these processors down by 5 to 15 percentage points, resulting in an impact of "a point or so" to their overall gross margins, Bernstein analysts said in a note.
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First Post
7 minutes ago
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Chips for concessions? China using tech leverage in US trade negotiations as deal deadline looms
China has pressed US President Donald Trump to relax export controls on AI chips. Even as Trump has adopted a muscular trade policy elsewhere, he appears set to accept China's demand to avoid the embarrassment of not reaching a trade deal and to ensure access to China-controlled rare earths. read more US property mogul Donald Trump leads a media event on the sand dunes of the Menie estate, the site for Trump's proposed golf resort, near Aberdeen, north east Scotland, May 27, 2010. File Image/Reuters China has pressured US President Donald Trump for concessions in the export controls regarding advanced semiconductors. Irrespective of his tough posturing, the president is likely to buckle as China has leveraged its near-monopoly over rare earth supplies to bend him to his will. Notably, Trump has already been forced to undo his tough posturing and allow the export of Nvidia's chips needed for artificial intelligence (AI) applications in China. But China appears to be looking for more relaxations and it has been joined in the lobbying by Western chipmakers Nvidia and AMD. STORY CONTINUES BELOW THIS AD The 90-day trade truce between the United States and China reached in May will expire on Tuesday (August 12). Unless they agree to an extension, they two will revert to high tariffs — the United States had imposed 145 per cent tariffs on Chinese goods and China had imposed 125 per cent tariffs on US goods. However, analysts have said that Trump is likely to buckle on China's demand of relaxing export controls to avoid the embarrassment of not reaching a trade deal. The resumption of sales to China of Nvidia's H20 chips signaled a 'modest course correction rather than a strategic shift' and Trump may consider offering concessions on export controls that others in his administration consider 'excessive' in order to conclude a deal with Beijing, Gabriel Wildau, the Managing Director at political consultancy Teneo, told CNBC. US firms push for export control relaxations as well Trump is also being lobbied by American companies to relax export curbs. Nvidia CEO Jensen Huang has persuaded Trump to approve his company's AI chips' sales to China by arguing that preventing such sales would hurt American companies as that would allow Chinese companies like Huawei to not just dominate the Chinese chips' market but also incentivise them to pump more money into research and development to bridge the gap with the likes of Nvidia and AMD, according to The New York Times. However, there are serious reservations about the sale of such chips to China. In July, two former Trump administration officials joined 18 others with national security and economics background to write a letter to the administration and call such a sale 'a strategic misstep that endangers the United States' economic and military edge in artificial intelligence' that could be 'a potent accelerator of China's frontier A.I. capabilities, not an outdated chip', as per The Times. STORY CONTINUES BELOW THIS AD However, as Trump has already previously blinked over China's near-monopoly of rare earth supplies, which are essential to make nearly everything today from household electronics to cars and fighter planes, it is likely he will accept China's terms. Moreover, Trump has wanted a bilateral meeting with Chinese leader Xi Jinping for months and Financial Times reported on Sunday that such a meeting would not take place until Trump's relaxation of export controls on AI chips.
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First Post
7 minutes ago
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Trump tariffs to impact 55% of Indian exports to US: Govt tells Parl ‘will secure national interest'
Majority of Indian exports to the US have been hit by tariffs. Reuters The government on Monday told Parliament that more than half of the country's shipments to its largest export market will face sharply higher duties after Washington's latest trade move. About 55 per cent of India's merchandise exports to the United States are subjected to a reciprocal tariff rate of 25 per cent from August 7, 2025. This follows US President Donald Trump's decision last week to impose an additional 25 per cent tariff on Indian goods, effectively doubling total duties to 50 per cent for most products. STORY CONTINUES BELOW THIS AD Minister of State for Finance Pankaj Chaudhary confirmed in a written reply that the estimate factored in the 25 per cent tariff Washington had already imposed earlier. He stressed that the Department of Commerce was in constant touch with exporters, industry representatives and other stakeholders to gauge the likely damage and to shape an appropriate response. Tariffs linked to Russian oil purchases The trigger for the escalation, US officials have said, was India's continued purchase of Russian oil despite repeated warnings from Washington. Trump's administration described the move as a punitive measure, targeting a key trade partner over what it sees as a breach of geopolitical discipline. Industry watchers have noted that the new levy pushes India into the same high-tariff bracket as Brazil, with both countries now facing 50 per cent duties on most exports to America. Many of India's competitors in the US market will be much better placed: Myanmar's duties stand at 40 per cent, Thailand and Cambodia at 36 per cent, Bangladesh at 35 per cent, Indonesia at 32 per cent and China and Sri Lanka at 30 per cent. Even Malaysia's 25 per cent and Vietnam's 20 per cent look comparatively modest. Government pledges to 'secure national interest' In its statement to Parliament, the government stressed upon the fact that it attaches the highest importance to protecting the interests of farmers, entrepreneurs, exporters and MSMEs. The government assured that all necessary steps would be taken to secure national interest in the face of the tariff shock. Consultations with affected sectors are underway, with the aim of mitigating losses and identifying alternative market opportunities. The Commerce Department has been tasked with collecting feedback from exporters to assess how factors such as product differentiation, contractual obligations and demand cycles will influence the eventual impact. Exporters warn of severe setback The Federation of Indian Export Organisations (FIEO) called the US decision 'extremely shocking' and warned that it could inflict significant damage on sectors such as textiles, marine products and leather goods. FIEO Director General Ajay Sahai said the higher duties would make Indian products between 30 per cent and 35 per cent less competitive than those from countries with lower tariff rates, a PTI report said earlier. Sahai noted that several export orders had already been paused while American buyers reconsidered sourcing plans in light of higher landed costs. For MSME-dominated sectors, he argued, absorbing the sudden escalation was not viable given already thin margins, and many risked losing long-standing clients. Trade volumes and economic stakes The dispute comes against the backdrop of a large and growing trade relationship. According to government estimates, goods trade between the two economies—the world's largest and fifth-largest—was worth about $87 billion in the last fiscal year. Other data put total bilateral trade in 2024–25, including services, at $131.8 billion, with India exporting goods worth $86.5 billion and importing $45.3 billion from the United States. Economists said that given the size of the US market for Indian exporters, the new duties could dent overall export growth and put additional pressure on the current account. The affected sectors, they added, would need either quick relief through negotiation or support in diversifying their markets. STORY CONTINUES BELOW THIS AD A search for solution New Delhi has signalled that it will continue to explore diplomatic and trade avenues to address the situation, but exporters have warned that without rapid intervention, shipments will slow, and market share could erode quickly. Whether the standoff leads to a negotiated solution or ushers in a prolonged period of higher trade barriers will determine how much of India's export basket can be salvaged from the impact of this steep tariff escalation.
