Latest news with #DeborahElms
India Today
2 days ago
- Business
- India Today
From ban to profit sharing: Inside US deal with Nvidia, AMD on China chip sales
In a first-of-its-kind move, the US government will take a 15% cut from the sales Nvidia and AMD make in China for certain advanced chips. The arrangement is part of a deal that lets the two American tech giants resume exports of powerful AI chips to the world's second-largest economy, sales that had been banned over national security is not a tax and not a fine. It is a negotiated condition for securing special export licences. The deal effectively makes the US a direct financial beneficiary of sensitive technology sales to a geopolitical THE DEAL WORKSUnder the agreement, Nvidia will pay 15% of its China revenue from its H20 AI chips to the US government, while AMD will do the same for its MI308 chips. Both chips are among the most powerful processors used in artificial intelligence and supercomputing. Nvidia told the BBC that while it has not shipped H20 chips to China for months, it hopes 'export control rules will let America compete in China and worldwide.' The company also warned that 'America cannot repeat 5G and lose telecommunication leadership,' adding that the US AI tech stack could become 'the world's standard if we race.'These payments apply only to chips that require special export licences, not to all products sold in China. Both companies must keep detailed sales records and report them regularly to US authorities. The money will be channelled into US chip research, technology security, and enforcement of export UNPRECEDENTED TRADE-OFFThe US has long restricted the sale of its most advanced chips to China, fearing they could be used to enhance military capabilities. But an outright ban risked killing off a lucrative market for US companies and handing the advantage to Chinese Dai, vice president at Forrester Research, told the BBC the agreement is 'unprecedented' and warned it 'creates substantial financial pressure and strategic uncertainty for tech vendors.'Critics, however, say the deal blurs the line between national security and commercial interest. 'You either have a national security problem or you don't,' Deborah Elms, head of trade policy at the Hinrich Foundation, told the BBC. 'If you have a 15% payment, it doesn't somehow eliminate the national security issue.'THE POLITICS BEHIND THE DEALThe H20 chip was designed specifically for the Chinese market after the Biden administration's export restrictions in 2023. Its sale was later banned under the Trump administration earlier this year. Nvidia's CEO Jensen Huang has reportedly spent months lobbying both Washington and Beijing for a resumption of sales, even meeting President Donald Trump last agreement comes as US-China trade tensions show tentative signs of easing. Beijing has relaxed rare earth export controls, while the US has lifted certain restrictions on chip design software in China. Both countries agreed to a 90-day truce in their tariff war in May, though it is unclear if this pause will be extended beyond the 12 August NVIDIA AND AMD MATTER IN CHINAadvertisementNvidia and AMD are not just chipmakers. They are at the cutting edge of AI and supercomputing hardware. The H20 and MI308 chips are essential for training large AI models and running high-performance systems. Without them, China's AI and data processing ambitions could face delays, giving the US and its allies more time to consolidate their regaining access to China, even at a cost, the companies protect billions in potential revenue and keep their technology embedded in a key market. But China may see this as a push to accelerate its own chip THIS MEANS FOR THE FUTUREFor Washington, this is more than a cash grab. It is a new model for controlling high-tech exports while profiting from them. If it works, the approach could spread to other strategic sectors such as green technology or the tech industry, it sets a precedent: governments may no longer be just regulators, but profit-sharing partners in sensitive trade. For China, it is another reminder that access to cutting-edge US tech will now come with a high political and financial 15% deal may be the first of its kind, but it almost certainly will not be the last.(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)- Ends
Mint
3 days ago
- Business
- Mint
Why poor nations got hit with higher tariffs than rich ones
President Trump's tariffs barrage has landed the heaviest blow on the very nations that global trade was supposed to help: poor countries. For decades, the U.S. and other rich countries have granted special trading privileges to many poor countries, cutting tariffs and boosting market access to lend emerging countries a helping hand. That hasn't been Trump's approach. While his administration placed tariffs of 10% to 15% on imports from many of the world's wealthiest countries, such as South Korea, Japan and European Union member states, it slapped goods from developing countries such as Vietnam, Bangladesh, South Africa and Iraq with duties of 20% or higher. Two of Asia's poorest countries, Myanmar and Laos, were hit with tariffs of 40%, a potential death knell for their U.S. exports, which include goods such as furniture and garments. On Wednesday, Trump said he would raise tariffs on India to 50%, as Washington and New Delhi scuffled over India's continued imports of Russian oil. In a new era of gloves-off trade negotiations, these poorer countries had the least leverage with a country the size of the U.S. Low wages have turned some of them, such as Bangladesh and Vietnam, into manufacturing powers, but their citizens can't afford expensive American products, meaning they often run the sort of large trade surpluses with the U.S. that have drawn Trump's ire. Moreover, the president has demanded that trading partners invest in the U.S., but few developing countries have the financial firepower to match the hundreds of billions of dollars that Japan, South Korea and the EU have pledged to sink into the American economy. Some countries that carry geopolitical or economic weight with the U.S. were spared the worst of the tariffs. The U.S. didn't levy tariffs higher than the baseline 10% on Saudi Arabia, Qatar or the United Arab Emirates—oil and gas producers whose leaders are close to Trump. 'It's left developing countries with very high tariffs," said Deborah Elms, head of trade policy at the Hinrich Foundation, an Asia-based think tank. 'It's a significant change especially for treatment of least developed countries." Until 2020, many poor countries, such as Cambodia and Bangladesh, benefited from a special arrangement known as the Generalized System of Preferences that eliminated trade duties on products from more than 100 of the world's poorest countries and territories. The arrangement hasn't been renewed. Now poor countries' access to the U.S. has diminished further. Take Cambodia. The small country, a large garment exporter to the U.S., was hit with 19% tariffs, causing widespread worry in the country's clothing industry. 'We are a poor country. Our purchasing power is not the same as a rich country," said Sun Chanthol, Cambodia's deputy prime minister who led the tariff talks with the U.S., in an interview. Cambodia has slashed its own tariffs on U.S. imports to zero. Its national airline has promised to buy 10 planes from Boeing, with an option to buy 10 more—a modest proposition compared with financial pledges of rich countries such as Japan, which agreed to buy 100 jets from the U.S. aerospace company. Although the 19% tariff Cambodia ended up with was slightly better than that of some other developing countries, the government had been pushing for a lower rate. 'I was hoping to at least get 15% like Korea or Japan," Sun Chanthol said. Now, companies are worried about the fallout of higher tariffs on their exports to a market as crucial as the U.S. Bernhard Wewengkang, an executive at PT Great Giant Pineapple, one of the world's largest canned pineapple exporters, based on the island of Sumatra in Indonesia, expects demand will soften in the U.S., the company's largest market, given the 19% tariff on Indonesian exports to the American market. He is hoping to offload more canned pineapple into other markets—but so is everybody else in the industry. Great Giant Pineapple's margins are too small to lower its prices, meaning U.S. importers will face higher costs that they may pass along by raising prices for shoppers. Wewengkang worries that will hit canned pineapple sales and hurt the company's revenue. 'It's a lot," he said of the tariffs. Economists and trade officials are often left scratching their heads about why certain countries have dodged the bullet while others get slammed. Algeria and Libya face tariffs of 30% on their exports to the U.S., while Iraq's goods will be charged a duty of 35%. Among the highest tariffs was the 41% levy placed on goods from Syria. Having lived under punishing sanctions for years, the country exports very little to the U.S. Its tariff rate is higher even than the 39% tariff on Switzerland, one of the rare rich countries to get hit hard. In some cases, such as with Vietnam, developing countries have come under scrutiny from the White House because of their close trade and diplomatic ties with China. Other times Trump has expressed anger about their domestic politics. Trump placed 50% tariffs on certain Brazilian products, such as coffee. In justifying the levies, he cited legal action against former right-wing President Jair Bolsonaro and against U.S. tech firms. Last week, the White House confirmed that South Africa would be hit with 30% tariffs, despite monthslong efforts by South African officials to reduce them. In May, South African President Cyril Ramaphosa met with Trump at the White House to try to salvage a deteriorating relationship with the U.S. over issues ranging from race relations to Israel and trade. But the Oval Office visit devolved into a tense exchange over perceived threats to white farmers in South Africa. South Africa's exports are mostly platinum and cars. But senior South African officials say many exports—particularly the country's citrus fruit—don't pose a threat to American producers because they are counterseasonal, meaning they fill gaps in the U.S. market rather than replacing domestic products. Hundreds of thousands of cartons of citrus have already been packed and are awaiting shipment to the U.S. in the coming weeks, the Citrus Growers' Association of Southern Africa said in a statement. 'The implementation of a 30% tariff…will mean most of this fruit will be left unsold," it said. Write to Jon Emont at and Alexandra Wexler at
CNA
04-08-2025
- Business
- CNA
CNA Correspondent - Why the world can't quit the US despite the highest trade tariffs in decades
The US accounts for less than 15 percent of world trade but President Donald Trump has managed to force levies on America's biggest trading partners. Arnold Gay speaks to trade expert Deborah Elms, along with Leong Wai Kit and Toni Waterman, to understand why many countries caved to Mr Trump's demands.
Irish Independent
01-08-2025
- Business
- Irish Independent
Global markets tumble as Trump's tariff reality starts to bite
Japan and the European Union have locked in tariffs at 15pc but many economies have been hit with even higher trade barriers – including Canada (35pc) and India (25pc). The average levy on imports to the world's largest economy is now coming in at 15pc, the steepest since the 1930s. "It's a very high tariff wall," said Deborah Elms, head of trade policy of the Hinrich Foundation. "The cost is going to be significantly higher for American companies and American consumers who will respond surely by buying less," she said. Meanwhile, exporters outside the US are set to see demand fall. "For the rest of the world, this is a serious demand shock," Raghuram Rajan, former India central bank governor and chief economist of the International Monetary Fund, who is now a professor at the University of Chicago Booth School of Business, told Bloomberg TV. On Friday, Asian shares fell 0.7pc, Europe's Stoxx 600 benchmark fell more than 2pc and is on track for its biggest weekly drop since Trump announced his first major wave of tariffs on 'Liberation Day' back in April. In Dublin, the Iseq was down more than 3pc by Friday afternoon. AIB (-5.11pc) and Bank of Ireland (-3.69pc) were among the biggest decliners despite announcing profits this week. Both are seen as barometers of the wider Irish economy. In the US weaker than expected jobs number further darkened investor sentiment. It prompted money market traders to add bets for a rate cut from the Fed at its September meeting. MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.5pc, bringing the total loss this week to roughly 2.7pc. Japan's Nikkei closed 0.7pc lower. The US dollar, which had been on a strengthening streak earlier in the week reversed course after the bad jobs data. The dollar index, which measures the currency against six others, was last down 1pc on the day.
Bloomberg
01-08-2025
- Business
- Bloomberg
Trash Haulers to Carmakers Are Feeling the Pain of Trump's Tariffs
To get Industrial Strength delivered directly to your inbox, sign up here. The biggest reset of international trading relationships in a century is starting to hurt — particularly in the manufacturing industry that President Donald Trump's sweeping tariff policy is meant to help. For those countries who haven't yet brokered agreements on tariff rates with the White House — including Canada, Taiwan and Switzerland — the clock ran out on Friday for a temporary reprieve from higher levies. The deals that have been reached include tariffs that range from 15% to 20% — lower than what Trump had threatened but enough to boost the average tax on goods imported to the US to more than six times what it was in the year before he took office, according to Bloomberg Economics. Such a significant across-the-board increase is pinching profit margins and wreaking havoc on supply chains. Moreover, the trade deals that have been announced are merely bare bones frameworks, with certain important terms still under negotiation and partners offering varying descriptions about what exactly was agreed upon. Deborah Elms, the head of trade policy at the Hinrich Foundation, has aptly dubbed them ' napkin deals ' — as in the kind of thing one might jot down on a cocktail napkin and about as durable under scrutiny.
