Japan-U.S. talks hit a wall, Tokyo not backing down
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CNBC
32 minutes ago
- CNBC
China says it 'drove away' U.S. destroyer near the disputed Scarborough Shoal
China said Wednesday it warned and "drove away" a U.S. destroyer that had sailed near the coast of the disputed Scarborough Shoal in the South China Sea — one of the most valuable shipping lanes globally. The destroyer, USS Higgins, "illegally entered China's territorial waters off Huangyan Island without the approval of the Chinese government," the country's defense ministry said, according to a CNBC translation of the statement in Mandarin. Huangyan Island is the name China uses to refer to the shoal, which has been the subject of a maritime dispute between China and the Philippines. China accused the U.S. military of "seriously" infringing its sovereignty, adding that America's actions "severely undermine peace and stability in the South China Sea, and violate international law and basic norms governing international relations." The USS Higgins is a destroyer with the U.S. Seventh Fleet, based in Yokosuka, Japan, which did not immediately respond to CNBC's request for comment. The incident comes at a time when Washington and Beijing are locked in a trade spat that has seen the two issue incendiary statements, with China in March warning that it was prepared for "a trade war or any other type of war," with the U.S., before tensions subsided. On Tuesday, a Chinese warship had crashed into one of its own coast guard vessels as it chased a patrol boat belonging to the Philippines. China claims almost all of the South China Sea as its own under its "nine-dash-line," which rejects a 2016 ruling by an international arbitration court in the Netherlands, that found no legal or historical basis for Beijing's claims. There have been several clashes between Chinese and Filipino ships in the South China Sea, with the Philippines accusing Beijing's forces last year of pursuing Philippine vessels and directing lasers at patrolling aircrafts near another contested reef. Clashes which have involved boat collisions, water cannons and injuries to Filipino sailors, according to Filipino officials. In May 2024, Philippine President Ferdinand Marcos Jr. said that should a Filipino citizen be killed in the South China Sea via an incident with the Chinese Coast Guard, it would almost certainly be a "red line" and come "very, very close to what we define as an act of war." He added that "our treaty partners I believe, also hold that same standard," referring to U.S. forces. Washington has a mutual defense treaty with Manila since 1951, which states that an attack on either the Philippines or the U.S. in the Pacific is deemed to be an attack on the other.
Bloomberg
an hour ago
- Bloomberg
Japan's Akazawa Says Would Support Ishiba in Another LDP Race
Japan's chief trade negotiator and Prime Minister Shigeru Ishiba's right hand man said he'll support Ishiba if the ruling Liberal Democratic Party calls an early leadership race. 'I'm honored to be a lieutenant to commander-in-chief Ishiba,' said Ryosei Akazawa Wednesday in a TV program. If he decides to run, 'I'll support him,' he said.
Yahoo
4 hours ago
- Yahoo
Will tariffs cause a Great Depression style crash?
Will tariffs cause a Great Depression style crash? originally appeared on TheStreet. U.S. stocks have been fairly battered by recent events, particularly in response to evolving tariff news. On April 2, President Donald Trump announced potentially draconian tariffs on the U.S.'s major trading partners on "Liberation Day." Mr. Market did not like it. 💵💰💰💵 Major indices lost over 12% in the next six days, until President Trump backtracked and said tariffs would only apply for 90 days, pending negotiations, etc. The S&P 500 index then recovered an amazing 28% from the low, creating the so-called TACO trade (Trump Always Chickens Out, meaning he offers harsh trade terms and pulls back, leading to stocks falling and bouncing). While tariffs are on pace to settle lower than feared in April, they'll still pose a surprisingly significant drag on the US economy, leading to worries over another Great Depression-style stock market reckoning. What is a tariff anyway? For starters, what is a tariff? A tariff is an import duty, or a tax, on imported goods to a country, the U.S. in this case. So, to be clear, a tariff is a tax paid by the importer, which then has to pass the tax (or part of it) on to somebody else or absorb it. That "somebody else" ultimately is the consumer. And there's the rub.U.S. personal consumption (private spending) accounts for more than two-thirds of the nation's GDP, which measures its total economic output. With higher tariffs come increases in costs of goods and services (inflation), leaving the consumer holding the bag, so to speak. Lower disposable income translates to reduced consumer spending overall, which is a poor omen for the economic situation generally, and a problem for corporate profits and potentially, stock prices. Tariff rates are much higher than last year As of August 7, the president's various tariff deals have gone into effect, with a base rate of 10% or more, depending on the deals reached with the Trump administration. This compares to negligible zero and 2.5% tariff rates for most countries that preceded President Trump's tariffs. That's a big jump, no matter how you slice the major U.S. trading partners, tariffs range from 10% for the UK to 50% for India. But most major U.S. trading partners (e.g., Japan & the European Union) settled on a 15% tariff rate, and made concessions for foreign direct investments (FDIs) into the U.S. Still other nations, such as China, Canada, and Mexico (the three largest U.S. trading partners), are in a negotiation period, with tariffs currently set at around 30% for all of them. Negotiations with China are set to conclude in November, so plenty of drama has yet to play out on that stage. Meanwhile, about 95% of Canadian and Mexican imports are exempt from the 30% tariffs due to the MCA (Mexican-Canadian-American trade agreement) negotiated by Trump in his first term. In the end, it may all be much ado about nothing if U.S. courts strike down the Trump administration's legal rationale for imposing the tariffs. Smoot-Hawley tariffs coincided with Great Depression The last time tariff rates were this high was nearly a hundred years ago, when the dreaded Smoot-Hawley Tariff Act was implemented in 1930 to protect farmers and other key U.S. industries during the height of the Great Depression. Tariffs of around 20% were applied to most goods, leading to retaliatory tariffs by other nations. This sparked a global trade war, which saw trade fall by 65% between 1929 and 1934. Did the Smoot-Hawley tariffs cause the stock market crash of October 1929? Not directly, but the passage of the legislation by the U.S. House in May of 1929, approximately five months before the crash, caused the market to begin to wobble. More on tariffs: Billionaire fund manager explans why tariffs may not be a big deal after all EU and US automakers both lose big in latest tariff deal Tariffs will cost the liquor industry over $2 billion in sales All this set the stage for an era of protectionism, which augured poorly for an already nervous and overextended stock market. Excess leverage — that is, borrowing to speculate on stocks- was rampant. All of this unfolded against the backdrop of a global depression, and voila: Black Tuesday of October 1929. President Herbert Hoover signed the Smoot-Hawley tariffs into law in June 1930. Stocks limped along for years and hit new lows in 1932, before bottoming around FDR's inauguration in March 1933. The Smoot-Hawley tariffs were largely reversed in June 1934 in favor of bilateral trade agreements, and stocks continued to recover. Are we heading toward another market crash? The outlook for stocks is far from clear. On the one hand, President Trump's tariff regime has yet to show up materially in the data. Hence, stocks have not experienced a pronounced negative reaction since August 7, when President Trump's tariff pause officially ended, and tariffs took effect. However, stocks remain extremely jittery on tariff-related news, not unlike the stock market run-up to the 1929 the other hand, we have a market that is marking new all-time highs. In recent weeks, over two-thirds of companies have reported second-quarter earnings, and 82% of them beat EPS expectations, allowing the market to grind back from recent jobs-related losses. With most of the positive earnings data in the rearview mirror, however, one wonders what might fuel further upside in stocks. Overall, the macro picture is biased to the downside, what with the tariffs' effect still to be felt in real time, a weak jobs number for July, and an uptick in jobless claims recently raising fresh concerns about the U.S. economic trajectory. Is a crash like 1929's imminent? Hardly likely, given the absence of excess leverage or borrowing to speculate on stocks. Still, the market is overvalued by most measures of healthy price-to-earnings ratios (P/E) at 29.4; more normal market P/E ratios are on the order of 15 to 20. A look at the () (SPDR S&P 500 ETF Trust) chart shows a solid rebound from August 1's disappointing NFP (non-farm payrolls) report (red oval). But price is still below the pre-NFP high, potentially setting up a double-top formation. (A double top formation is created when price makes two attempts to surpass a particular price level and fails, resulting in a subsequent price decline.) An alternative view is highlighted by the faster Tenkan Line (blue) still holding above the slower Kijun line (red). A move above the recent highs would suggest the uptrend is resuming, with price well above the cloud indicating that an overall uptrend remains in place. Active investors will want to pay close attention to the coming days' price action to see if a new pre-NFP high can be made, or if it's only a bear flag correction higher, with more downside in store and a potential major double-top reversal pattern forming tariffs cause a Great Depression style crash? first appeared on TheStreet on Aug 12, 2025 This story was originally reported by TheStreet on Aug 12, 2025, where it first appeared. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
