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2 hours ago
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Oil Trade Caught in Trump's Global Tariff Crossfire
The Trump-Putin meeting this Friday and the oil trade spat with India have been hogging the headlines these days, but meanwhile, the tariff war continues—and it may end with a complete rearrangement of global supply chains. The central target, of course, is China. Amid the latest negotiations between Beijing and Washington, China faces a 30% blanket tariff on goods sold to the United States. And in a positive turn of events, the deadline for the entry of these tariffs into effect has been pushed back by 90 days. This has provided space for some hope that any disagreements about trade balance could be resolved without blood being spilled, figuratively. But if the tariffs do take effect, there will be blood. All Asian countries became targets for Trump's tariff offensive, as did India and Brazil, and every other trade partner that the United States has. Yet Asia is one of the most important parts of the trade equation due to its lead role as exporter to the U.S.—mostly of Chinese goods. The Financial Times recalled in a recent analytical piece how Chinese companies had spent billions on building manufacturing capacity in neighboring countries in Southeast Asia with the precise purpose of insulating themselves against a potential tariff war initiated by the White House. Yet Trump has easily seen through that and imposed tariffs on all those Southeast Asian countries as fairness, those tariffs are lower than the ones for China, but the so-called transshipment tariffs for goods originating in China but being routed via third countries before getting shipped to the United States are not. Those are at a hard 40%. 'It's a gut punch to these countries and they need to try to negotiate it lower,' Dan Ives, global head of research at financial services provider Wedbush Securities, told CNN this week. 'The worry is US is trying to cut off China's export routes and it speaks to the high tariffs facing these nations.' If the U.S. is trying to cut off China's export routes, Chinese exporters would have to work hard to forge new ones, and that may well start by returning home. 'The China plus one strategy is going to come under tremendous stress,' Louise Loo, Asia economist at Oxford Economics, told the Financial Times. 'The upfront cost to move to new markets is going to be exorbitantly high,' Loo added, noting that the tariff pressure will prompt many to retrench. This means that Chinese investments overseas, notably in Southeast Asia, would diminish, if not dry up completely, affecting the economies of these countries, including Vietnam, Malaysia, Cambodia, and Indonesia, and not in a positive way because there isn't a line of companies from other countries waiting their turn to pour some billions into, say, solar panel manufacturing capacity in Vietnam. This means that, if implemented, all these tariffs may well spark a race for new low-cost manufacturing locations in low-tariff jurisdictions, wherever they might be. Some analysts suggest Mexico. Others note that the tariffs might actually do what Trump wants them to do, namely, revive local manufacturing in the United States. Or Chinese manufacturers will get more creative. 'The new punitive treatment would either short-circuit this Southbound shift in manufacturing we'd seen over the past decade, or incentivise more creative ways of rerouting by Chinese manufacturers,' Oxford Economics' Louise Loo told CNN. None of this, however, would make goods cheaper. This means that whichever way supply chains shift, chances are that imported goods will likely become more expensive for U.S. buyers in the near future—if all those tariffs enter into effect, of course. By Irina Slav for More Top Reads From this article on
Yahoo
4 hours ago
- Yahoo
Report unlocks mystery of why Chinese bombers flew near Alaska in 2024
Deploying military forces is the strongest of political signals, and the most potent of these deployments is to move nuclear weapons or launch platforms near a potential adversary. So when nuclear-capable Chinese bombers joined their Russian counterparts in joint patrols near Alaska in 2024, as well as similar flights deep into the Pacific, Western observers assumed there was a political message. Russia had been conducting such provocative flights dating back to the Cold War, but this is something new for China. Was Beijing signaling its displeasure with America over Taiwan, or warning NATO not to get involved in Asia? Was invoking the specter of Chinese bombers over America a reminder that the vast Pacific was no barrier to the long arm of Chinese power? However, China may have had other motives for these flights, according to a U.S. expert. Beijing may have been demonstrating that nuclear bombers were now a fully functional part of its strategic triad, alongside ICBMs and ballistic missile submarines. 'It is clear that their true significance lies in China's years-long effort to complete its nuclear triad,' Derek Solen, a researcher at the U.S. Air Force's China Aerospace Studies Institute, wrote in a report for the Japan Air Self-Defense Force's Air and Space Studies Institute. Another possibility is that the flights were intended as a warning to the U.S. not to engage in 'nuclear sharing,' in which America would station nuclear weapons in non-nuclear allies, especially Japan and South Korea. 'China probably fears that the limited exchange between NATO and America's Asian allies will eventually lead to the integration of America's European and Asian alliance networks, resulting in the formation of a global, nuclear-armed anti-China alliance,' Solen wrote. Deciphering Beijing's intentions behind the bomber missions isn't easy. There have been just nine Sino-Russian flights since the first mission in 2019, when two Chinese H-6K and two Russian Tu-95MS bombers flew over the Sea of Japan and East China Sea. Though the actual number of flights is somewhat larger — China counts multiple flights on the same day as a single flight — this leaves a small dataset to analyze. The joint flights were mostly confined to the Sea of Japan and East China Sea until July 24, 2024, when two H-6Ks and two Tu-95s flew near Alaska. Though they didn't penetrate U.S. airspace, they did enter the air defense identification zone, triggering interception by U.S. and Canadian fighters. 'This represented the first time that PLAAF [People's Liberation Army Air Force] aircraft participating in a combined patrol sortied from a foreign country as well as the first time that PLAAF aircraft approached U.S. territory,' Solen noted. A few days later came more joint flights over the Sea of Japan, East China Sea and Western Pacific, which included more advanced H-6N bombers from the 106th Brigade in Henan province, which is primarily tasked with delivering nuclear weapons. The H-6N has a range of 3,700 miles and can launch KD-21 air-launched cruise missiles with an estimated range of up to 1,300 miles. Particularly ominous was a Nov. 30, 2024, flight in which H-6Ns came within cruise missile range of Guam in what Solen believes may have been 'the first serious training to conduct a nuclear strike against Guam from the air.' Solen told Defense News that he initially believed that the flights were a political signal. 'I thought that Beijing was signaling two things simultaneously,' he said. 'It was signaling that its relationship with Russia was tight and, by using the H-6, sending an indirect message to Washington that it possesses the means and the will to counter what it perceived as Washington's moves with respect to nuclear sharing.' But Solen was troubled by some inconsistencies. For example, the Chinese government was incensed by a July 2024 NATO summit that criticized China for supporting Russia's invasion of Ukraine, as well as suggestions that NATO might expand its focus to Asia. Yet if the November 2024 flights near Guam were intended as a signal, then why wait until four months after the summit? The joint flights also coincided with the deployment of the long-range and nuclear-capable H-6N. 'In 2019 the PLAAF officially adopted the H-6N, and in the same year renovations to the 106th Brigade's base were likely finished,' Solen wrote. 'It is interesting that the Sino-Russian combined patrols began that same year.' Of course, the Alaska flights may have both a military and political purpose. However, Solen thinks that purely military training flights would have been confined to the East China Sea or the Sea of Japan. Perhaps the West may never know China's true motivations. Nonetheless, the question remains: Will China again send bombers near — or into — American airspace? China continues to be an indispensable supplier of Russia's campaign in Ukraine, and the Chinese and Russian navies have just announced joint patrols in the Pacific. A Chinese government spokesman last year urged 'relevant countries to abolish the nuclear sharing arrangement, withdraw the large number of nuclear weapons deployed in Europe, and refrain from replicating such arrangements in any form in the Asia-Pacific region.' For now, China isn't provoking the Trump administration, especially in the midst of a fight over tariffs. 'The fact that China and Russia still haven't done any combined flights this year is probably a political decision,' Solen said. 'At a time when they are trying to work things out with the new administration, they probably decided that it's best to avoid action that may agitate Washington or distract from the agenda in the negotiations.' Regular flights near U.S. territory are unlikely 'because the training juice won't be worth the squeeze,' Solen added. On the other hand, China has an incentive to practice long-range bomber flights, even just for non-nuclear missions like striking ships and bases. 'I suppose that once they've either resolved things with Washington or just given up on negotiations, we'll see the combined flights resume and eventually see regular flights without the Russians,' Solen said.
Yahoo
4 hours ago
- Yahoo
Tariff Ticker: Clock Winds Down on China-US Tariff Truce
Importers are waiting with bated breath as the clock runs down on the 90-day tariff truce between Washington and Beijing. Slated to expire Tuesday, the bilateral pause on duties could be extended, and some administration officials have hinted that outcome is likely. But should United States and China trade officials fail to solidify new terms, tariffs on China-originating products will escalate sharply overnight. More from Sourcing Journal Trump Administration Extends China Tariff Pause for 90 Days Tariffs to Push US-Bound Ocean Cargo Down 5% in 2025, NRF Says Trade Tensions Dent Lenzing's Recovery Plans President Donald Trump's most pointed threat against China took place in April, when a trade spat with Chinese officials resulted in a ping-ponging escalation of duties that saw the American Commander in Chief raise tariffs to 145 percent. Shortly after, a three-month cooling-off period was instituted wherein those duties were reduced to 30 percent. In return, China drew down its own tariffs on U.S. goods to 10 percent and agreed to pull down trade barriers and access to rare earth minerals. But as the weeks of negotiations have worn on, officials have been unable to reach a lasting consensus. A meeting in Stockholm between China's foremost trade authorities and Trump cabinet members including Treasury Secretary Scott Bessent and U.S. Trade Representative (USTR) Ambassador Jamieson Greer late last month came and went without a formalized plan for the future of the trade relationship. At the time, Greer hinted that a 'potential pause' on tariffs was being discussed (though he also said tariffs on Chinese imports could boomerang back to a higher rate of 80 percent in the absence of an agreement). Bessent appeared more optimistic, calling the talks 'very productive.' On July 30, Trump also expressed confidence that an agreement could be reached, saying, 'I think we're going to have a very fair deal with China.' But there are some prominent sticking points appear to have hindered progress. For one, Trump has repeatedly criticized China and other BRICS Alliance nations for what he perceives as the formation of an anti-U.S. trade clique intent on dismantling the dollar's influence. Meanwhile, U.S. officials including the president have warned China's government to stop purchasing Russian oil as the country's assault on Ukraine rages on. Last week, Trump saying he'd stack 25-percent duties on India's already steep 25-percent tariff rate over its Russian oil purchases. On Sunday, Vice President JD Vance confirmed to Fox News that Trump is considering penalizing China in a similar fashion if it doesn't divest from Russia financially. 'The president said he's thinking about it, but he hasn't made any firm decisions,' he said. Vance called the relationship with China 'complicated,' explaining that America's trade relationship with the country 'affects a lot of other things that have nothing to do with the Russian situation.' 'So the president's reviewing his options and, of course, going to make that decision when he decides,' he added. The president also remains focused on shrinking China's sizable trade surplus with the U.S., the original factor that prompted his decision to levy duties. On Monday, he Truthed, 'I hope China will quickly quadruple its soybean orders' from U.S. farmers, noting that the country is facing a shortage. 'This is also a way of substantially reducing China's Trade Deficit with the USA. Rapid service will be provided,' he wrote. Asked by reporters Monday afternoon about the state of negotiations, Trump invoked a familiar catchphrase. 'We'll see what happens,' he said. 'We've been dealing very nicely with China. As you probably have heard, they have tremendous tariffs that they're paying to the United States of America,' he told reporters. 'The relationship is very good with President with President Xi and myself.' Sign in to access your portfolio
