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CBS News
2 days ago
- Business
- CBS News
China says U.S. violated tariff truce as trade war heats up
China on Monday said the Trump administration is undermining the temporary May 12 trade agreement between the two nations by issuing AI chip export control guidelines, stopping the sale of chip design software to China and by planning to revoke Chinese student visas. The Trump administration's actions "seriously undermine the existing consensus reached at the Geneva economic and trade talks, and seriously damage China's legitimate rights and interests," China's Commerce Ministry said in the June 2 statement. China's claims come after President Trump on Friday said that Beijing is violating a trade agreement with the U.S., just weeks after the two countries announced on May 12 a temporary but significant easing of tariffs imposed on each other's imports earlier in the year. The escalation of rhetoric heightens concerns that the two largest global economies may encounter further stumbling blocks as they pursue trade negotiations, experts say. "Fresh hostilities between the U.S. and China show that the many questions left hanging after the Geneva ceasefire in mid-May still have no satisfactory answers," Arthur Kroeber, a China analyst at Gavekal Research, said in a report. "It is not clear whether U.S. trade policy is being run by President Donald Trump, his trade negotiators or his national security team." He added, "The overall objectives of the trade aggression, other than the display of raw power, are as muddled as ever." Meanwhile, Treasury Secretary Scott Bessent on Sunday said he's "confident" a U.S.-China trade dispute "will be ironed out" when Mr. Trump and Chinese President Xi Jinping have a conversation. "I believe we'll see something very soon," Bessent said on "Face the Nation with Margaret Brennan." May 12 tariff pause The May 12 deal lasts 90 days, creating time for U.S. and Chinese negotiators to reach a more substantive agreement. But the pause still leaves tariffs higher than before Trump started ramping them up last month. Businesses and investors must also contend with uncertainty about whether the truce will last. U.S. Trade Representative Jamieson Greer said the U.S. agreed to drop the 145% tax Mr. Trump had imposed on China to 30%. China agreed to lower its tariff rate on U.S. goods to 10% from 125%. On Monday, the Commerce Ministry said China held up its end of the deal, canceling or suspending tariffs and nontariff measures taken against the U.S. "reciprocal tariffs" following the agreement. But it alleged that the Trump administration has "unilaterally provoked new economic and trade frictions and exacerbated the uncertainty and instability" in trade relations between the two nations. The Trump administration stepped up the clash with China last week, announcing that it would start revoking visas for Chinese students in the U.S. American campuses host more than 275,000 students from China. The turmoil between the U.S. and China raises economic risks, given the links between the two nations and their importance in global trade, experts added. "If the United States and China were to disengage completely in another blitz of escalating tariffs, it would be a really big deal for the global economy," Carl Weinberg, chief economist at High Frequency Economics, told investors in a client note. "Demand for industrial commodities would plummet. Supply chains spanning multiple borders would shut down." contributed to this report.
Gulf Today
08-05-2025
- Business
- Gulf Today
Asian investors' trust in dollar faces problems
A wave of dollar selling in Asia is an ominous sign for the greenback as the world's export powerhouse starts to question a decades-long trend of investing its big trade surpluses in US assets. Ripples from Friday and Monday's record rally in the Taiwan dollar are now spreading outward, driving surges for currencies in Singapore, South Korea, Malaysia , China and Hong Kong. The moves sound a warning for the dollar because they suggest money is moving in to Asia at scale and that a key pillar of dollar support is wobbling, according to Reuters. While Tuesday brought a measure of stability, following a stunning 10% two-day leap for Taiwan's currency, Hong Kong's dollar was testing the strong end of its peg and the Singapore dollar has soared close to its highest in more than a decade. 'To me, it has a very sort of Asian-crisis-in-reverse feel to it,' said Louis-Vincent Gave, founding partner of Gavekal Research, in a podcast, due to the speed of the currency moves. In 1997 and 1998, capital flight sank currencies from Thailand to Indonesia and South Korea and left the region determined to accumulate dollars in the aftermath. 'Since the Asian crisis, Asian savings have not only been massive, but they've had this tendency to be redeployed into US Treasuries. And now, all of a sudden, that trade no longer looks like the one-way slam dunk that it had been for so long,' said Gavekal's Gave. Traders in Taiwan had reported difficulty executing trades, such was the one-sided wave of dollar selling, and speculated it had been at least tacitly endorsed by the central bank. Dealers said volumes were heavy in other Asian markets. At its heart, the break has been triggered by US President Donald Trump's aggressive tariffs, analysts said, rattling investors' confidence in the dollar and upending the flow of trade dollars into US assets in two places. First, exporters especially in China can expect fewer receipts as tariffs cut access to US customers. Second, fear of a US downturn casts a shadow over US asset returns. Some are speculating on what markets have termed a 'Mar-a-Lago agreement,' he said, or a deal – named after Trump's gilded Florida resort – to weaken the dollar. Taiwan's Office of Trade Negotiations denied tariff talks in Washington last week had involved the topic of foreign exchange. Asia's biggest piles of dollars sit in China, Taiwan, South Korea and Singapore, which combined number in the trillions. In China alone, foreign currency deposits at banks – mostly dollars and largely held by exporters – were $959.8 billion at the end March, the highest in nearly three years. On top of that are layered investments funded in these currencies, which have low borrowing costs by global standards and investments in US stocks and bonds by pension and insurance funds, which have tended to keep foreign exchange hedges small due to the costs involved. Hong Kong's de-facto central bank said on Monday it has been reducing duration in its US Treasury holdings and diversifying currency exposure into non-US assets. Rallies in Asia's bond markets suggests exporters' and long-only money may be coming home, too. To be sure, Taiwan's central bank has vowed to stabilise the local currency and even the island's president took the unusual step of recording a video message to insist the exchange rate was not part of US trade talks. Still, the market seems to be voting with its wallet.'USD/TWD is a canary in the coal mine,' said Brent Donnelly, veteran trader and president at analytics firm Spectra Markets. 'Asian demand for US dollars and Asian central bank desire to support the US dollar is waning.'
CNBC
07-05-2025
- Business
- CNBC
"Eat like a bird but poop like a cow" - China expert on FX carry trade
Louis-Vincent Gave, cofounder of Gavekal Research talks about how investors playing the carry trade in Taiwan lost two years worth of gains in 72 hours and how the latest steps by the PBoC could help prop up Chinese stocks.
The Hindu
06-05-2025
- Business
- The Hindu
'Asian crisis in reverse' as currencies soar on the dollar
Ripples from Friday and Monday's record rally in the Taiwan dollar are now spreading outward, driving surges for currencies in Singapore, South Korea, Malaysia , China and Hong Kong. The moves sound a warning for the dollar because they suggest money is moving in to Asia at scale and that a key pillar of dollar support is wobbling. While Tuesday brought a measure of stability, following a stunning 10% two-day leap for Taiwan's currency, Hong Kong's dollar was testing the strong end of its peg and the Singapore dollar has soared close to its highest in more than a decade. "To me, it has a very sort of Asian-crisis-in-reverse feel to it," said Louis-Vincent Gave, founding partner of Gavekal Research, in a podcast, due to the speed of the currency moves. In 1997 and 1998, capital flight sank currencies from Thailand to Indonesia and South Korea and left the region determined to accumulate dollars in the aftermath. "Since the Asian crisis, Asian savings have not only been massive, but they've had this tendency to be redeployed into U.S. Treasuries. And now, all of a sudden, that trade no longer looks like the one-way slam dunk that it had been for so long," said Gavekal's Gave. Traders in Taiwan had reported difficulty executing trades, such was the one-sided wave of dollar selling, and speculated it had been at least tacitly endorsed by the central bank. Dealers said volumes were heavy in other Asian markets. At its heart, the break has been triggered by U.S. President Donald Trump's aggressive tariffs, analysts said, rattling investors' confidence in the dollar and upending the flow of trade dollars into U.S. assets in two places. First, exporters especially in China can expect fewer receipts as tariffs cut access to U.S. customers. Second, fear of a U.S. downturn casts a shadow over U.S. asset returns. "Trump's policies have weakened the market's confidence in the performance of U.S. dollar assets," said Gary Ng, senior economist at Natixis. Some are speculating on what markets have termed a "Mar-a-Lago agreement," he said, or a deal - named after Trump's gilded Florida resort - to weaken the dollar. Taiwan's Office of Trade Negotiations denied tariff talks in Washington last week had involved the topic of foreign exchange. Talk becomes reality Asia's biggest piles of dollars sit in China, Taiwan, South Korea and Singapore, which combined number in the trillions. In China alone, foreign currency deposits at banks - mostly dollars and largely held by exporters - were $959.8 billion at the end March, the highest in nearly three years. On top of that are layered investments funded in these currencies, which have low borrowing costs by global standards and investments in U.S. stocks and bonds by pension and insurance funds, which have tended to keep foreign exchange hedges small due to the costs involved. There are signs the dollar view is shifting from all corners. Goldman Sachs said in a note on Tuesday that investor clients had recently flipped from short yuan positions, to long positions, or in other words, they are shorting the U.S. dollar expecting further weakness. Robin Xing, Morgan Stanley's chief China economist, said Trump's April 2 "Liberation Day" tariff announcement was the wake-up call that forced investors to at least hedge, if they weren't selling, U.S. assets. "Over the mid- and long-term, I think people start thinking: how to diversify assets in the future, rather than be stuck in the outdated mentality of dollar supremacy." A popular trade that involved buying cheap U.S. dollars in the Hong Kong dollar forwards market, known in markets as the gift that never stopped giving, also went into reverse since it rested on the Hong Kong dollar staying still. "Macro funds and leveraged players have hundreds of billions of dollars in the HKD forwards free-money trade, and now they are unwinding," said Mukesh Dave, chief investment officer at Aravali Asset Management, a global arbitrage fund based in Singapore. Hong Kong's de-facto central bank said on Monday it has been reducing duration in its U.S. Treasury holdings and diversifying currency exposure into non-U.S. assets. Rallies in Asia's bond markets suggests exporters' and long-only money may be coming home, too. "Repatriation talk is becoming reality," said Parisha Saimbi, Asia-Pacific rates and FX strategist at BNP Paribas in Singapore, as investors and exporters are either unwinding or rushing to hedge. "Whichever format it comes in, it suggests that the support for the dollar is shifting and it's turning lower ... I think it speaks to this idea that there is a de-dollarization in action." UBS estimates that if Taiwan's insurance companies increased hedging ratios to their 2017-2021 averages, it could be worth some $70 billion in U.S. dollar selling. To be sure, Taiwan's central bank has vowed to stabilise the local currency and even the island's president took the unusual step of recording a video message to insist the exchange rate was not part of U.S. trade talks. Still, the market seems to be voting with its wallet. "USD/TWD is a canary in the coal mine," said Brent Donnelly, veteran trader and president at analytics firm Spectra Markets. "Asian demand for U.S. dollars and Asian central bank desire to support the U.S. dollar is waning."
The Star
06-05-2025
- Business
- The Star
'Asian crisis in reverse' as currencies soar on the dollar
SINGAPORE/SHANGHAI: A wave of dollar selling in Asia is an ominous sign for the greenback as the world's export powerhouse starts to question a decades-long trend of investing its big trade surpluses in U.S. assets. Ripples from Friday and Monday's record rally in the Taiwan dollar are now spreading outward, driving surges for currencies in Singapore, South Korea, Malaysia, China and Hong Kong. The moves sound a warning for the dollar because they suggest money is moving in to Asia at scale and that a key pillar of dollar support is wobbling. While Tuesday brought a measure of stability, following a stunning 10% two-day leap for Taiwan's currency, Hong Kong's dollar was testing the strong end of its peg and the Singapore dollar has soared close to its highest in more than a decade. "To me, it has a very sort of Asian-crisis-in-reverse feel to it," said Louis-Vincent Gave, founding partner of Gavekal Research, in a podcast, due to the speed of the currency moves. In 1997 and 1998 capital flight sank currencies from Thailand to Indonesia and South Korea and left the region determined to accumulate dollars in the aftermath. "Since the Asian crisis, Asian savings have not only been massive, but they've had this tendency to be redeployed into U.S. Treasuries. And now, all of a sudden, that trade no longer looks like the one-way slam dunk that it had been for so long," said Gavekal's Gave. Traders in Taiwan had reported difficulty executing trades, such was the one-sided wave of dollar selling, and speculated it had been at least tacitly endorsed by the central bank. Dealers said volumes were heavy in other Asian markets. At its heart, the break has been triggered by U.S. President Donald Trump's aggressive tariffs, analysts said, rattling investors' confidence in the dollar and upending the flow of trade dollars into U.S. assets in two places. First, exporters, especially in China can expect fewer receipts as tariffs cut access to U.S. customers. Second, fear of a U.S. downturn casts a shadow over U.S. asset returns. "Trump's policies have weakened the market's confidence in the performance of U.S. dollar assets," said Gary Ng, senior economist at Natixis. Some are speculating on what markets have termed a "Mar-a-Lago agreement," he said, or a deal - named after Trump's gilded Florida resort - to weaken the dollar. Taiwan's Office of Trade Negotiations denied tariff talks in Washington last week had involved the topic of foreign exchange. TALK BECOMES REALITY Asia's biggest piles of dollars sit in China, Taiwan, South Korea and Singapore, which combined number in the trillions. In China alone, foreign currency deposits at banks - mostly dollars and mostly held by exporters - were $959.8 billion at the end March, the highest in nearly three years. On top of that are layered investments funded in these currencies, which have low borrowing costs by global standards and investments in U.S. stocks and bonds by pension and insurance funds, which have tended to keep foreign exchange hedges small due to the costs involved. There are signs the dollar view is shifting from all corners. Goldman Sachs said in a note on Tuesday that investor clients had recently flipped from short yuan positions, to long positions, or in other words, they are shorting the U.S. dollar expecting further weakness. A popular trade that involved buying cheap U.S. dollars in the Hong Kong dollar forwards market, known in markets as the gift that never stopped giving, also went into reverse since it rested on the Hong Kong dollar staying still. "Macro funds and leveraged players have hundreds of billions of dollars in the HKD forwards free-money trade, and now they are unwinding," said Mukesh Dave, chief investment officer at Aravali Asset Management, a global arbitrage fund based in Singapore. Hong Kong's de-facto central bank said on Monday it has been reducing duration in its U.S. Treasury holdings and diversifying currency exposure into non-U.S. assets. Rallies in Asia's bond markets suggests exporters' and long-only money may be coming home, too. "Repatriation talk is becoming reality," said Parisha Saimbi, Asia-Pacific rates and FX strategist at BNP Paribas in Singapore, as investors and exporters are either unwinding or rushing to hedge. "Whichever format it comes in, it suggests that the support for the dollar is shifting and it's turning lower ... I think it speaks to this idea that there is a de-dollarisation in action." UBS estimates that if Taiwan's insurance companies increased hedging ratios to their 2017-2021 averages, it could be worth some $70 billion in U.S. dollar selling. To be sure, Taiwan's central bank has vowed to stabilise the local currency and even the island's president took the unusual step of recording a video message to insist the exchange rate was not part of U.S. trade talks. Still, the market seems to be voting with its wallet. "USD/TWD is a canary in the coal mine," said Brent Donnelly, veteran trader and president at analytics firm Spectra Markets. "Asian demand for U.S. dollars and Asian central bank desire to support the U.S. dollar is waning." - Reuters
