BOJ should continue to tighten policy, US Treasury says
TOKYO, June 6 (Reuters) - The Bank of Japan should continue to proceed with monetary tightening, which would support a "normalization of the yen's weakness" and rebalancing of bilateral trade, the U.S. Treasury Department said on Thursday.
"BOJ policy tightening should continue to proceed in response to domestic economic fundamentals including growth and inflation, supporting a normalization of the yen's weakness against the dollar and a much-needed structural rebalancing of bilateral trade," the Treasury said in its exchange-rate report to Congress.
"Treasury also stresses that government investment vehicles, such as large public pension funds, should invest abroad for risk-adjusted return and diversification purposes, and not to target the exchange rate for competitive purposes," the report said on Japan.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Guardian
an hour ago
- The Guardian
Trump trade deal shows how vital China's rare-earth metals are to US defense firms
The draft trade agreement with China announced by Donald Trump on Wednesday would ease concerns from top US military suppliers about rare-earth metals and magnets that, if cut off permanently, could hobble production of everything from smart bombs to fighter jets to submarines and other weapons in the US arsenal. While the deal has not yet been finalised, it may reassure major defense companies such as Lockheed Martin, the largest US user of samarium – a rare-earth metal used in military-grade magnets – whose supply is entirely controlled by China. The issue of China's export restrictions on the metals and magnets was so important that Trump specifically mentioned them as part of his announcement of a broader trade agreement with China that would reduce US tariffs to 55% and Chinese tariffs to 10%. 'Our deal with China is done, subject to final approval with President Xi and me,' Trump wrote. 'Full magnets, and any necessary rare earths, will be supplied, up front, by China.' Rare earths are crucial to the production of F-35 fighter jets, Virginia- and Columbia-class nuclear-powered submarines, Tomahawk missiles, radar systems, unmanned aerial vehicles and smart bombs, according to Gracelin Baskaran of the Center for Strategic and International Studies, a thinktank. China in April imposed export restrictions on seven rare earth elements during the tough negotiations over Trump's new tariffs. China also targeted the aerospace and defense industries by limiting 15 US entities with ties to the industry from receiving dual-use goods. 'The United States is already on the back foot when it comes to manufacturing these defense technologies,' Baskaran said in an interview published by CSIS. 'China is rapidly expanding its munitions production and acquiring advanced weapons systems and equipment at a pace five to six times faster than the United States. While China is preparing with a wartime mindset, the United States continues to operate under peacetime conditions.' Trump has amassed a team of foreign policy China hawks, including a number who have warned that the US should focus more on the pacing threat posed by China over the coming decades instead of current conflicts in Ukraine or the Middle East. 'Even before the latest restrictions, the US defense industrial base struggled with limited capacity and lacked the ability to scale up production to meet defense technology demands,' she continued. 'Further bans on critical minerals inputs will only widen the gap, enabling China to strengthen its military capabilities more quickly than the United States.' China and the United States had agreed last month in Geneva to pause the implementation of sky-high tariffs that would have delivered a severe economic blow to manufacturers and consumers in the US, as well as exporters in China. But China maintained export licenses on rare-earth metals used by both defense producers and carmakers that threatened to upend global supply chains and imperil production in the United States. In particular, China has a stranglehold on the production and export of samarium, a magnet used in combination with cobalt to provide highly durable magnets used to withstand the intense temperatures in military-grade tech. China produces the entire world's supply of the rare-earth metal. Sign up to This Week in Trumpland A deep dive into the policies, controversies and oddities surrounding the Trump administration after newsletter promotion In particular, the magnets are important for the production of guided missiles, satellite-guided 'smart bombs', and aircrafts, including fighter jets, according to Apex Magnets, a supplier. Those supplies of weapons have been depleted through deliveries of missiles and other ordnance to Ukraine and to the Israeli military. Pentagon planners and other officials in the administration of Joe Biden, regularly squared off over whether foreign weapons deliveries expose a US vulnerability in case it faced off with a major military power. In order to break the deadlock, secretary of state Marco Rubio also abruptly announced plans to cancel hundreds of thousands of visas for Chinese students in the United States. While publicly that was said as a plan to root out Chinese spies in US higher education, Axios reported that the visa ban was also motivated by China's obstinance on resuming rare earths exports. The breakthrough comes as Trump is planning to display US military prowess at a parade in Washington DC this weekend that has been seen as an attempt to flex American muscle and reinforce the US president's bonafides as a supporter of the military. Trump in 2019 ordered the Pentagon to find new sources of procuring rare earth minerals, in particular samarium, because the US did not have the capacity to produce them domestically. The initiative was 'essential to the national defense', he said then.
Reuters
3 hours ago
- Reuters
Trump is receptive to contacts with North Korean leader, White House says
WASHINGTON, June 11 (Reuters) - President Donald Trump would welcome communications with North Korean leader Kim Jong Un after having had friendly relations with Kim during his first term, the White House said on Wednesday. "The president remains receptive to correspondence with Kim Jong Un," White House press secretary Karoline Leavitt told reporters. Trump and Kim held three summits during Trump's 2017-2021 first term and exchanged a number of what Trump called "beautiful" letters. In June 2019, Trump briefly stepped into North Korea from the demilitarized zone with South Korea. Little progress was made, however, at reining in North Korea's nuclear program, and Trump acknowledged in March that Pyongyang is a "nuclear power." The attempts at rapprochement come after the election in South Korea of a new president, Lee Jae-myung, who has pledged to reopen dialogue with North Korea. Analysts say, however, that engaging North Korea will likely be more difficult for both Lee and Trump than it was in the U.S. president's first term. Since then North Korea has significantly expanded its nuclear weapons and ballistic missile programs, and developed close ties with Russia through direct support for Moscow's war in Ukraine, to which Pyongyang has provided both troops and weaponry. Since Trump's first-term summitry with Kim Jong Un ended, North Korea has shown no interest in returning to talks.
Daily Mail
3 hours ago
- Daily Mail
Trump Treasury Secretary Scott Bessent issues cryptic hypersonic missile warning to China
President Donald Trump's trade guru brought up China's fearsome hypersonic missiles during tense trade talks – but in a surprising way that eased, rather than blew up, negotiations. It was a fraught topic to broach – given the strong feelings in the military establishment about advances in China's development of the state-of-the-art weapons, which can fly at more than five times the speed of sound and make course corrections in flight. That makes them a rising threat to U.S. naval superiority through its ability to project force through its fleet of powerful aircraft carriers and battleships. It was Treasury Secretary Scott Bessent, who recently butted heads with Elon Musk, who took the novel approach, according to Commerce Secretary Howard Lutnick, a fellow negotiator. Rather than provoke the Chinese negotiators, the comment broke the ice, said Lutnick. The moment came in the midst of two-day trade talks in London, where China was once again pressing for access for the most advanced U.S. microchip technology. The U.S. has resisted, fearful of watching China once again use technology developed in the U.S. to arm and leapfrog in the marketplace. 'The Chinese side always wants to remove our export controls. You know, they're always trying to remove our export controls,' Lutnick told CNBC hours after Trump announced the deal 'done.' 'And Scott Bessent gave one of my favorite lines of the whole negotiation. He said, really, no. So you want no export controls? Fine. I'd like to take home a couple of your best hypersonic missiles, please. Can I have them?' as Lutnick described it. The offer 'obviously' did not lead to such an exchange, he said. 'So it was just disarming. So the way to do it correctly was to – we were deeply respectful. There was no yelling or screaming, none of that stuff. We were just deeply respectful. Let's get down to it. Our leaders want this to be positive. They want this to go well, let's make sure we get it done,' he said. Defense Secretary Pete Hegseth warned in November, before assuming his post, that China 'can take out 10 aircraft carriers in the first 20 minutes of the conflict' – in effect destroying the entire fleet. 'China is building an army specifically designed to destroy the US,' he said in an interview. China's Defense Ministry hit back, with ministry spokesman Senior Col. Zhang Xiaogang saying, 'We hope the U.S. side will break away from persecution mania and stop using others as excuses.' Lutnick gushed about the results, while also admitting the talks codified earlier agreements reached weeks ago in Geneva. 'This feels really good. I felt really good leaving last night,' he said. 'This cleans up the Geneva deal that we had set. He said the deal vastly streamlines approvals for licenses for the U.S. to get access to China's rare earth minerals. 'We changed the model that if an American company applies, they will approve it right away, right away,' he said. President Donald Trump declared a trade deal between the U.S. and China 'done' and announced new rare earth minerals he said would be coming into the U.S. from its top trade competitor. 'Our deal with China is done, subject to final approval with President Xi and me,' Trump posted Wednesday morning. 'Full magnets, and any necessary rare earths, will be supplied, up front, by China.' He also said Chinese students would continue 'using our colleges and universities,' something he said has 'always been good with me' despite his administration's crackdown on foreign students at top universities. The president said the U.S. is 'getting a total of 55 percent tariffs from China,' without further explanation, and that the U.S. would face a 10 percent tariff from Beijing. That keeps in place tariffs between the two countries that are at historically high levels, an indication that the matter is still not settled. Trump's morning post came before markets opened in New York, and followed trade negotiators announcing they had agreed on a framework following multi-day talks in London. The initial trading response was muted, on a day when new inflation data came in lower than expected. The Dow Jones Industrial Average had ticked up by less than a quarter of a percent, while the broader S&P was up about a tenth of a percent. The markets have already been on a tear, with the S&P rising for six out of the last seven trading days. 'First we had to get sort of the negativity out and now we can go forward,' Commerce Secretary Howard Lutnick told reporters. Trump even declared: 'relationship is excellent!' That comes despite years of reports of Chinese hacking and corporate espionage activities in the U.S., along with moves to supplant U.S. influence around the globe and partnering with Russia shortly before Moscow invaded Ukraine. The 55 percent U.S. tariff incorporates the 10 percent baseline tariff Trump imposed on imports from around the world. It also adds in 25 percent tariffs on China from his first term and another 20 percent he slapped on this year after accusing China of flooding the U.S. with deadly fentanyl. The U.S. and China clashed in a trade war in Trump's first term. Tensions rose again when a Chinese spy balloon traversed North America. After months of strain President Joe Biden sat down with Xi Jinping in Woodside, California in 2024 in an effort to get relations on a more stable path. Negotiators for the two countries met in Geneva in May to negotiate a pause in new tariffs Trump had imposed, prompting retaliation from Beijing and rattling markets. The prospect of new trade structure for the world's top two economic powers was expected to send markets soaring, although Wall Street traders have been honing their ways to gauge responses to Trump's topsy-turvy pronouncements on trade and tariffs. Weeks ago Trump exploded at a reporter who asked him about the 'TACO trade,' which stands for 'Trump Always Chickens Out.' In the case of what he announced on China, it appears Trump secured access for rare earth minerals he prizes – although some have been identified as being extracted through forced labor of oppressed minorities in China's far-western Xinjiang province. Titanium, lithium – which is critical to batteries – beryllium, and magnesium are among the products considered vital to manufacturing and products. Trump's announcement came on a day when the government announced the Consumer Price Index rose 2.4 percent in May, following a 2.3 percent increase in April. The numbers reflected the inflationary impact of Trump's tariffs, which are a tax on imports, but analysts aren't seeing the signs of runaway inflation that could rock the markets. So-called 'core' inflation, which excludes volatile commodities, was at 2.8 percent. Trump's post that he was 'always good' with Chinese students clashes with a crackdown in his administration. Under a policy announced by Secretary of State Marco Rubio, the administration announced an 'aggressive' move against Chinese students, 'including those with connections to the Chinese Communist Party or studying in critical fields.' 'We will also revise visa criteria to enhance scrutiny of all future visa applications from the People's Republic of China and Hong Kong,' Rubio said. Educational ties between the two countries date to the reopening of China and President Jimmy Carter's invitation to thousands of them to study here. U.S. colleges and universities, meanwhile, have become increasingly reliant on the higher tuition rates paid by foreign students to balance the books. Four international students from the University of Iowa are suing the feds over the policy.
