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Time of India
7 days ago
- Business
- Time of India
Trump deals bring some clarity for world's manufacturing base
Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads After months of uncertainty, President Donald Trump 's latest tariff deals are providing clarity on the broad contours of a new trade landscape for the world's biggest manufacturing on Tuesday announced a deal with Japan that sets tariffs on the nation's imports at 15%, including for autos — by far the biggest component of the trade deficit between the countries.A separate agreement with the Philippines set a 19% rate, the same level as Indonesia agreed and a percentage point below Vietnam's 20% baseline level, signaling that the bulk of Southeast Asia is likely to get a similar rate.'We live in a new normal where 10% is the new zero and so 15% and 20% doesn't seem so bad if everyone else got it,' said Trinh Nguyen, senior economist for emerging Asia at Natixis. At a 15%-20% tariff level, it's still profitable for US companies to import from abroad rather than produce similar goods at home, she US Treasury Secretary Scott Bessent said he'll meet his Chinese counterparts in Stockholm next week for their third round of talks aimed at extending a tariff truce and widening the discussions. That suggests a continuing stabilization in ties between the world's two largest economies after the US recently eased chip curbs and China resumed rare earths exports.'We're getting along with China very well,' Trump told reporters on Tuesday. 'We have a very good relationship.'Throw it all together and a level of predictability is finally emerging after six months of tariff threats that had at one point jacked up tariff levels to 145% on China and near 50% on some smaller Asian exporters. Investors cheered the moves, with Asian shares rising the most in a month and contracts for the S&P 500 up 0.2%. The Nikkei-225 index in Japan jumped 3.2%, with Toyota Motor Corp. and other carmakers leading the gains.'What's been interesting to me is that equity markets still have been fairly rosy about the changes,' Albert Park, chief economist at the Asian Development Bank, said in a Bloomberg Television interview. 'I'm not sure they've priced in fully all of the effects that are likely to occur from the disruption of higher tariff rates.'Back in April, Trump hit the pause button on the steepest levies after a rare combination of weakening US stocks, bonds and the dollar showed investors were unnerved by his protectionist salvos. That bought time for policymakers from Tokyo, Manila and across the globe to negotiate more palatable the latest deals bring some relief, key questions remain. The Trump administration is still considering a range of sectoral tariffs on goods like semiconductors and pharmaceuticals that will be critical for Asian economies including Taiwan and India — both of which have yet to announce tariff agreements with the Korea is also more exposed to sectoral tariffs, even though the Japan deal provides a potential template for new President Lee Jae Trump moves quickly on talks with countries accounting for the bulk of the US trade deficit, he has said he may hit around 150 smaller countries with a blanket rate of between 10% and 15%.With some certainty on tariff levels now emerging, businesses with complex supply chains across Asia and still reliant of the US consumer can start to game out how they'll shift operations to minimize the hit to like the first trade war in 2018, the latest tariff announcements are likely to spur companies to increasingly shift production outside of China. The average tariff rate on the world's second-largest economy remains the highest in the region, and continued White House pressure on the nation's technology and trade ambitions means companies may find more stability and industry groups have been flagging for months that uncertainty is worse than tariffs for investment. The manufacturing sector across the ASEAN region saw the most notable weakening since August 2021, according to S&P PMI, led by a sharper decrease in new orders, major job cuts and weaker purchasing front-loading of shipments from Asia to the US to get ahead of the incoming levies will likely slow once the new rates kick in. While there's relief that tariff rates for Southeast Asian economies and 15% for Japan are lower than some of Trump's earlier threats, the reality is that they're far higher than they were before he took latest deals 'continue the trend of tariff rates gravitating towards the 15-20% range that President Trump recently indicated to be his preferred level for the blanket rate instead of 10% currently,' Barclays Plc analysts including Brian Tan wrote in a note. That skews risks to GDP growth forecasts for Asia 'to the downside,' they US consumers who have so far been spared the tariff ticket shock, economists warn there's likely to be some pass through in the months ahead. Goldman Sachs Group Inc. economists now expect the US baseline 'reciprocal' tariff rate will rise from 10% to 15% — an outcome that threatens to fuel inflation and weigh on economic Reserve Chair Jerome Powell has argued he wants to see where tariffs land and how they filter through the economy before cutting interest rates — much to the annoyance of now, the US president is hailing a win on trade, and investors seem overall relieved.'I just signed the largest trade deal in history — I think maybe the largest deal in history — with Japan,' Trump said at an event at the White House on Tuesday after announcing the deal on social media. 'It's a great deal for everybody.'
Business Times
7 days ago
- Business
- Business Times
Trump tariff deals bring some clarity for Asia, the world's manufacturing base
[HONG KONG] After months of uncertainty, US President Donald Trump's latest tariff deals are providing clarity on the broad contours of a new trade landscape for the world's biggest manufacturing region. On Tuesday (Jul 22), he announced a deal with Japan that sets tariffs on the nation's imports at 15 per cent, including for autos —– by far the biggest component of the trade deficit between the countries. A separate agreement with the Philippines set a 19 per cent rate, the same level as Indonesia agreed and a percentage point below Vietnam's 20 per cent baseline level, signaling that the bulk of South-east Asia is likely to get a similar rate. 'We live in a new normal where 10 per cent is the new zero and so 15 per cent and 20 per cent doesn't seem so bad if everyone else got it,' said Trinh Nguyen, senior economist for emerging Asia at Natixis. 'At a 15-20 per cent tariff level, it's still profitable for US companies to import from abroad rather than produce similar goods at home, she said. Meanwhile, US Treasury Secretary Scott Bessent said he will meet his Chinese counterparts in Stockholm next week for a third round of talks aimed at extending a tariff truce and widening the discussions. That suggests a continuing stabilisation in ties between the world's two largest economies after the US recently eased chip curbs and China resumed rare earths exports. 'We are getting along with China very well,' Trump told reporters on Tuesday. 'We have a very good relationship.' BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Throw it all together and a level of predictability is finally emerging after six months of tariff threats that had at one point jacked up tariff levels to 145 per cent on China and near 50 per cent on some smaller Asian exporters. Investors cheered the moves, with Asian shares rising the most in a month and contracts for the S&P 500 up 0.2 per cent. The Nikkei-225 index in Japan jumped 3.2 per cent, with Toyota Motor and other carmakers leading the gains. 'What's been interesting to me is that equity markets still have been fairly rosy about the changes,' said the Asian Development Bank's chief economist Albert Park. 'I'm not sure they have priced in fully all of the effects that are likely to occur from the disruption of higher tariff rates.' Back in April, Trump hit the pause button on the steepest levies after a rare combination of weakening US stocks, bonds and the dollar showed investors were unnerved by his protectionist salvos. That bought time for policymakers from Tokyo, Manila and across the globe to negotiate more palatable deals. Although the latest deals bring some relief, key questions remain. The Trump administration is still considering a range of sectoral tariffs on goods like semiconductors and pharmaceuticals that will be critical for Asian economies including Taiwan and India – both of which have yet to announce tariff agreements with the US. South Korea is also more exposed to sectoral tariffs, even though the Japan deal provides a potential template for new President Lee Jae Myung. As Trump moves quickly on talks with countries accounting for the bulk of the US trade deficit, he has said he may hit around 150 smaller countries with a blanket rate of between 10 per cent and 15 per cent. With some certainty on tariff levels now emerging, businesses with complex supply chains across Asia and still reliant of the US consumer can start to game out how they will shift operations to minimize the hit to sales. Just like the first trade war in 2018, the latest tariff announcements are likely to spur companies to increasingly shift production outside of China. The average tariff rate on the world's second-largest economy remains the highest in the region, and continued White House pressure on the nation's technology and trade ambitions means companies may find more stability elsewhere. Companies and industry groups have been flagging for months that uncertainty is worse than tariffs for investment. The manufacturing sector across the South-east Asian region saw the most notable weakening since August 2021, according to S&P PMI, led by a sharper decrease in new orders, major job cuts and weaker purchasing activity. The front-loading of shipments from Asia to the US to get ahead of the incoming levies will likely slow once the new rates kick in. While there is relief that tariff rates for South-east Asian economies and 15 per cent for Japan are lower than some of Trump's earlier threats, the reality is that they are far higher than they were before he took office in January. The latest deals 'continue the trend of tariff rates gravitating towards the 15-20% range that Trump recently indicated to be his preferred level for the blanket rate instead of 10% currently,' Barclays analysts including Brian Tan wrote in a note. That skews risks to GDP growth forecasts for Asia 'to the downside', they wrote. For US consumers who have so far been spared the tariff ticket shock, economists warn there's likely to be some pass through in the months ahead. Goldman Sachs economists now expect the US baseline 'reciprocal' tariff rate will rise from 10 per cent to 15 per cent – an outcome that threatens to fuel inflation and weigh on economic growth. US Federal Reserve chairman Jerome Powell has argued he wants to see where tariffs land and how they filter through the economy before cutting interest rates – much to the annoyance of Trump. For now, Trump is hailing a win on trade, and investors seem overall relieved. 'I just signed the largest trade deal in history – I think maybe the largest deal in history – with Japan,' Trump said at an event at the White House on Tuesday after announcing the deal on social media. 'It's a great deal for everybody.' BLOOMBERG
Business Times
7 days ago
- Business
- Business Times
Trump deals bring some clarity for world's manufacturing base
[HONG KONG] After months of uncertainty, US President Donald Trump's latest tariff deals are providing clarity on the broad contours of a new trade landscape for the world's biggest manufacturing region. Trump on Tuesday (Jul 22) announced a deal with Japan that sets tariffs on the nation's imports at 15 per cent, including for autos, by far the biggest component of the trade deficit between the countries. A separate agreement with the Philippines set a 19 per cent rate, the same level as Indonesia agreed and a percentage point below Vietnam's 20 per cent baseline level, signalling that the bulk of South-east Asia is likely to get a similar rate. At the same time, US Treasury Secretary Scott Bessent said he will meet his Chinese counterparts in Stockholm next week for their third round of talks aimed at extending a tariff truce and widening the discussions. That suggests a continuing stabilisation in ties between the world's two largest economies after the US recently eased chip curbs and China resumed rare earths exports. 'We are getting along with China very well,' Trump told reporters on Tuesday. 'We have a very good relationship.' Throw it all together and a level of predictability is finally emerging after six months of tariff threats that had at one point jacked up tariff levels to 145 per cent on China and nearly 50 per cent on some smaller Asian exporters. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Investors cheered the moves, with Asian shares rising the most in a month and contracts for the S&P 500 up 0.2 per cent. The Nikkei-225 index in Japan jumped 3.2 per cent, with Toyota Motor and other carmakers leading the gains. Back in April, Trump hit the pause button on the steepest levies after a rare combination of weakening US stocks, bonds, and the US dollar showed investors were unnerved by his protectionist salvos. That bought time for policymakers from Tokyo, Manila and across the globe to negotiate more palatable deals. Although the latest deals bring some relief, key questions remain. The Trump administration is still considering a range of sectoral tariffs on goods such as semiconductors and pharmaceuticals that will be critical for Asian economies, including Taiwan and India, both of which have yet to announce tariff agreements with the US. South Korea is also more exposed to sectoral tariffs, even though the Japan deal provides a potential template for new President Lee Jae Myung. As Trump moves quickly on talks with countries accounting for the bulk of the US trade deficit, he has said he may hit around 150 smaller countries with a blanket rate of between 10 per cent and 15 per cent. With some certainty on tariff levels now emerging, businesses with complex supply chains across Asia and still reliant of the US consumer can start to game out how they will shift operations to minimise the hit to sales. For US consumers who have so far been spared the tariff ticket shock, economists warn there's likely to be some pass-through in the months ahead. The front-loading of shipments from Asia to the US to get ahead of the incoming levies will likely slow once the new rates kick in. While there's relief that tariff rates for South-east Asian economies and 15 per cent for Japan are lower than some of Trump's earlier threats, the reality is that they are far higher than they were before he took office. The latest deals 'continue the trend of tariff rates gravitating towards the 15 to 20 per cent range that US President Donald Trump recently indicated to be his preferred level for the blanket rate instead of 10 per cent currently', Barclays analysts including Brian Tan wrote in a note. That skews risks to GDP growth forecasts for Asia 'to the downside', they wrote. US Federal Reserve chair Jerome Powell has argued he wants to see where tariffs land and how they filter through the economy before cutting interest rates – much to the annoyance of Trump. For now, Trump is hailing a win on trade, and investors seem overall relieved. 'I just signed the largest trade deal in history, I think maybe the largest deal in history, with Japan,' Trump said at an event at the White House on Tuesday after announcing the deal on social media. 'It's a great deal for everybody.' BLOOMBERG
Economic Times
7 days ago
- Business
- Economic Times
Asian stocks, US futures rise on Japan trade deal
Asian shares rose at the open after President Donald Trump said the US reached a trade deal with Japan, an agreement with a key trading partner that will ease concerns about the tariff war. ADVERTISEMENT The MSCI gauge of Asian shares gained 0.7% with the Nikkei-225 in Japan jumping as much as 1.8%. The yen fluctuated after initially gaining on Trump's announcement. Contracts for the S&P 500 rose 0.2% on the deal. The US benchmark closed at a record high in the last session. A gauge of the dollar edged up 0.1% while yields on the 10-year Treasury advanced 1 basis point to 4.36%. 'We just completed a massive Deal with Japan, perhaps the largest Deal ever made,' Trump said in a Truth Social post. On Tuesday, Trump also unveiled an agreement with the Philippines setting a 19% tariff on the country's exports. The deal with Japan will see the key American ally invest $550 billion into the US and will set tariffs on Japanese imports at 15%, Trump wrote. Stocks have run up since their April slump on expectations countries will strike agreements with the US ahead of the Aug. 1 deadline, and help avoid significant damage to company earnings and the economy.'In addition to lowering tariffs on Japan from 25% to 15%, the deal removes an element of uncertainty for the market,' said Tim Waterer, chief market analyst at KCM Trade. 'This deal is good for market sentiment across Asia on expectations that others may follow.'Investors are also focused on megacap companies this week. Big tech's strength will be on full display over the next few weeks as the group begins unveiling quarterly earnings. Tesla Inc. and Alphabet Inc. are reporting Wednesday. ADVERTISEMENT The so-called Magnificent Seven companies are expected to post a combined 14% rise in second-quarter profits, while earnings for the rest of the US equity benchmark are predicted to be relatively flat, according to Bloomberg Intelligence in Japan will also be on the 40-year government bond auction on Wednesday. That will be the first test of appetite for super-long debt following a historic election defeat for Prime Minister Shigeru Ishiba. Investors remain concerned over the outlook of bonds in one of the most indebted developed nations amid expectations of higher government spending as Ishiba tries to placate disaffected voters. ADVERTISEMENT Ishiba will soon decide on his future after assessing the status of negotiations on tariffs with the US, Yomiuri reported before Trump's US Treasury Secretary Scott Bessent said he will meet his Chinese counterparts for trade talks in Stockholm next week, and will 'be working out what is likely an extension' to the current Aug. 12 deadline for negotiations. He also said that the negotiations with China can now take on a broader array of topics, potentially including Beijing's continued purchases of 'sanctioned' oil from Russia and Iran. ADVERTISEMENT Bessent told Fox Business he saw no reason for Fed Chair Jerome Powell to step down. Meanwhile, Trump stressed his belief that the Fed's benchmark rate should be 3 percentage points lower. Bessent, in the same Oval Office event, said that 'based on the way they cut rates last fall, they should be cutting rates now.' (You can now subscribe to our ETMarkets WhatsApp channel)
Time of India
7 days ago
- Business
- Time of India
Asian stocks, US futures rise on Japan trade deal
Asian shares rose at the open after President Donald Trump said the US reached a trade deal with Japan, an agreement with a key trading partner that will ease concerns about the tariff war . The MSCI gauge of Asian shares gained 0.7% with the Nikkei-225 in Japan jumping as much as 1.8%. The yen fluctuated after initially gaining on Trump's announcement. Contracts for the S&P 500 rose 0.2% on the deal. The US benchmark closed at a record high in the last session. A gauge of the dollar edged up 0.1% while yields on the 10-year Treasury advanced 1 basis point to 4.36%. Explore courses from Top Institutes in Please select course: Select a Course Category Healthcare Management Data Science Cybersecurity Design Thinking PGDM healthcare Operations Management Artificial Intelligence others Data Analytics Product Management CXO Project Management Leadership MCA Degree Data Science Technology MBA Others Digital Marketing Finance Public Policy Skills you'll gain: Financial Analysis in Healthcare Financial Management & Investing Strategic Management in Healthcare Process Design & Analysis Duration: 12 Weeks Indian School of Business Certificate Program in Healthcare Management Starts on Jun 13, 2024 Get Details by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like 15 Most Beautiful Female Athletes in the World Click Here Undo 'We just completed a massive Deal with Japan, perhaps the largest Deal ever made,' Trump said in a Truth Social post. On Tuesday, Trump also unveiled an agreement with the Philippines setting a 19% tariff on the country's exports. The deal with Japan will see the key American ally invest $550 billion into the US and will set tariffs on Japanese imports at 15%, Trump wrote. Stocks have run up since their April slump on expectations countries will strike agreements with the US ahead of the Aug. 1 deadline, and help avoid significant damage to company earnings and the economy. 'In addition to lowering tariffs on Japan from 25% to 15%, the deal removes an element of uncertainty for the market,' said Tim Waterer, chief market analyst at KCM Trade. 'This deal is good for market sentiment across Asia on expectations that others may follow.' Live Events Investors are also focused on megacap companies this week. Big tech's strength will be on full display over the next few weeks as the group begins unveiling quarterly earnings. Tesla Inc. and Alphabet Inc. are reporting Wednesday. The so-called Magnificent Seven companies are expected to post a combined 14% rise in second-quarter profits, while earnings for the rest of the US equity benchmark are predicted to be relatively flat, according to Bloomberg Intelligence data. Attention in Japan will also be on the 40-year government bond auction on Wednesday. That will be the first test of appetite for super-long debt following a historic election defeat for Prime Minister Shigeru Ishiba. Investors remain concerned over the outlook of bonds in one of the most indebted developed nations amid expectations of higher government spending as Ishiba tries to placate disaffected voters. Ishiba will soon decide on his future after assessing the status of negotiations on tariffs with the US, Yomiuri reported before Trump's announcement. Meanwhile, US Treasury Secretary Scott Bessent said he will meet his Chinese counterparts for trade talks in Stockholm next week, and will 'be working out what is likely an extension' to the current Aug. 12 deadline for negotiations. He also said that the negotiations with China can now take on a broader array of topics, potentially including Beijing's continued purchases of 'sanctioned' oil from Russia and Iran. Bessent told Fox Business he saw no reason for Fed Chair Jerome Powell to step down. Meanwhile, Trump stressed his belief that the Fed's benchmark rate should be 3 percentage points lower. Bessent, in the same Oval Office event, said that 'based on the way they cut rates last fall, they should be cutting rates now.'
