Latest news with #economicstatecraft
Yahoo
a day ago
- Business
- Yahoo
Trump Bid for Cut of Nvidia, AMD Revenue Risks ‘Dangerous World'
(Bloomberg) -- Even in an administration that has repeatedly pushed the legal limits of using economic statecraft to reshape the global business landscape, a new deal with two tech giants is raising alarm bells among trade experts. Sunseeking Germans Face Swiss Backlash Over Alpine Holiday Congestion New York Warns of $34 Billion Budget Hole, Biggest Since 2009 Crisis Three Deaths Reported as NYC Legionnaires' Outbreak Spreads Chicago Schools' Bond Penalty Widens as $734 Million Gap Looms A New Stage for the Theater That Gave America Shakespeare in the Park Nvidia Corp. and Advanced Micro Devices Inc. agreed to pay the US government 15% of revenue from some chip sales to China. The chips — Nvidia's H20 AI accelerator and AMD's MI308 chips — were earlier banned by the Trump administration and require export licenses to sell. 'To call this unusual or unprecedented would be a staggering understatement,' said Stephen Olson, a former US trade negotiator now with the Singapore-based ISEAS – Yusof Ishak Institute. 'What we are seeing is in effect the monetization of US trade policy in which US companies must pay the US government for permission to export. If that's the case, we've entered into a new and dangerous world.' The chip-payment arrangement is the latest legally questionable, heavy-handed government intervention into business since US President Donald Trump returned to the Oval Office in January. Along with his chaotic tariff campaign and persistent criticism of a sitting Federal Reserve chairman, Trump has used his Truth Social platform for everything from calling on CEOs to resign to offering commentary on corporate advertising campaigns. Trump's transactional policy approach saw him approve the sale of United States Steel Corp. to Japan's Nippon Steel Corp. in a $14.1 billion deal that included caveats such as agreeing to US national security rules and a 'golden share' for the US government. Japan, South Korea and the European Union all pledged to invest billions in the US, helping secure tariff rates of 15%, while companies such as Apple Inc. have also skirted levies by promising to invest hundreds of billions of dollars. The Nvidia and AMD revenue-sharing deals may now prompt the White House to target other industries and goods, according to Deborah Elms, head of trade policy at the Hinrich Foundation in Singapore. 'The sky is the limit,' she said. 'You could come up with all sorts of company-specific, country-specific combinations that would say, 'No one else can trade, but if you pay us directly, then you get the ability to trade.'' Although Nvidia and AMD agreed to the terms, there are questions about the legality of the agreement, Elms said. The arrangement looks like an export tax, which is forbidden by the US Constitution. The Trump administration is already in the midst of a lawsuit related to his use of the International Emergency Economic Powers Act to levy what he called 'reciprocal' tariffs on the world. On Friday, Trump warned of a 'GREAT DEPRESSION' if US courts ruled that his tariffs were illegal. Chips are at the heart of the US-China battle to dominate industries of the future such as AI and automation. The Biden administration restricted the sale of advanced chips to China, prompting Nvidia to develop the H20, which skirted such restrictions. Trump administration officials tightened export controls in April by barring Nvidia from selling the chips without a permit. Last month, however, the White House decided to allow Nvidia and AMD to resume sales of chips designed specifically for the Chinese market, which are several rungs below the most advanced artificial intelligence accelerators. Commerce Secretary Howard Lutnick said the administration wanted Chinese developers 'addicted' to American technology. China has grown increasingly hostile to the idea of Chinese firms deploying the H20, particularly after the US called for the chips to be installed with tracking technology to better enforce export controls. Yuyuantantian, a social media account affiliated with state-run China Central Television that regularly signals Beijing's thinking about trade, on Sunday slammed the chip's supposed security vulnerabilities and inefficiency. Still, Chinese companies could use the H20s because domestic firms can't produce enough AI chips to meet demand. That potentially provides an opportunity for Nvidia and AMD to sell more — and now for the US government to earn additional revenue as well. Trump has yet to extend a 90-day trade truce between the US and China, which is set to expire on Aug. 12. Lutnick said last week that the detente was 'likely' to continue as the world's biggest economies continue to engage in talks ahead of a possible meeting between Trump and Chinese President Xi Jinping later this year. 'There's clearly a shift by the administration to take a lighter national security stance as these negotiations are ongoing,' said Drew DeLong, lead in geopolitical dynamics practice at Kearney, a global strategy and management consulting firm. China Draws Red Lines on US Chip Tracking With Nvidia Meeting While the US has intervened before, including by taking stakes in private companies after the 2008 financial crisis, a similar deal like the one struck with Nvidia and AMD is hard to remember and — without proper oversight — could lead to a 'crony capitalism state,' according to Scott Kennedy, senior adviser at the Center for Strategic and International Studies in Washington. 'It represents a huge shift in the way the American economy is supposed to operate,' Kennedy said. 'It won't make anyone happy except maybe the Chinese, who will get their chips and watch the US political system go through gyration and domestic tensions.' The Game Starts at 8. The Robbery Starts at 8:01 The Pizza Oven Startup With a Plan to Own Every Piece of the Pie Digital Nomads Are Transforming Medellín's Housing It's Only a Matter of Time Until Americans Pay for Trump's Tariffs Russia's Secret War and the Plot to Kill a German CEO ©2025 Bloomberg L.P. Sign in to access your portfolio
Bloomberg
a day ago
- Business
- Bloomberg
Trump Bid for Cut of Nvidia, AMD Revenue Risks ‘Dangerous World'
Even in an administration that has repeatedly pushed the legal limits of using economic statecraft to reshape the global business landscape, a new deal with two tech giants is raising alarm bells among trade experts. Nvidia Corp. and Advanced Micro Devices Inc. agreed to pay the US government 15% of revenue from some chip sales to China, Bloomberg reported, citing a person familiar with the matter. The chips — Nvidia's H20 AI accelerator and AMD's MI308 chips — were earlier banned by the Trump administration and require export licenses to sell.
Malay Mail
10-07-2025
- Business
- Malay Mail
Tariffs: Intended or unintended tool for regime change? — Phar Kim Beng
July 10 — The sudden imposition of sweeping tariffs by President Donald Trump in early July — well ahead of the anticipated deadline — signals more than an effort to rectify trade imbalances. It reflects a calibrated exercise of economic statecraft where tariffs become not only tools of negotiation, but instruments of political pressure. When viewed in their broader context, these tariffs, despite exempting key sectors such as semiconductors and integrated circuits, are capable of precipitating political instability, policy reversals, and potentially even regime change in targeted states. Exemptions that signal strategic intent Significantly, the tariffs exclude semiconductors, motherboards, and integrated circuits — components that form the backbone of both global supply chains and bilateral trade between the US and countries such as Malaysia, South Korea, and Japan. This is no coincidence. These sectors constitute the bulk of US trade — estimated at nearly two-thirds of total trade volume — making their exemption a tactical calculation rather than an economic oversight. By sparing these industries, Trump avoids disrupting American corporate interests and consumer markets while still signalling political dissatisfaction. In Malaysia's case, this pressure has not gone unnoticed. In a clear move to placate Washington, Malaysia has committed to acquiring a fleet of thirty Boeing aircraft — an unmistakable gesture of goodwill designed to signal alignment and buy strategic space. Punishment without collapse Trump's tariffs are not aimed at fully collapsing economies or dismantling vital production lines. They are surgical strikes intended to sow uncertainty, prompt capital outflows, and provoke policy concessions. The strategy lies in creating just enough discomfort to trigger domestic recalibration — without harming US supply chains. For politically fragile or externally dependent economies, this can be destabilising. Governments facing economic slowdowns may be forced to reduce subsidies, cut development budgets, or raise taxes — all of which can incite public anger or expose rifts among political elites. While the tariffs stop short of sanctions, they function similarly in effect: they extract behavioural shifts without requiring boots on the ground. Malaysia's delicate balancing act Malaysia is no stranger to external pressure. As a trade-dependent nation with global linkages, especially in electronics, it finds itself in the crosshairs of Trump's selective tariff regime. Though spared in the semiconductor and integrated circuit categories, Malaysia remains vulnerable to broader policy risks. The recent decision to purchase Boeing aircraft, widely interpreted as a gesture of mollification, illustrates the kind of transactional diplomacy Trump has championed. In this view, economic relief is not merit-based but conditional — contingent on visible political gestures, economic alignment, or foreign policy moderation. When viewed in their broader context, these tariffs, despite exempting key sectors such as semiconductors and integrated circuits, are capable of precipitating political instability, policy reversals, and potentially even regime change in targeted states. — Reuters pic Yet such concessions come at a cost. Prioritising foreign appeasement over domestic priorities can invite criticism at home, undermine industrial policies, or trigger a sense of lost sovereignty. In more extreme scenarios, public perception of economic capitulation may erode a government's legitimacy, feeding into opposition narratives and electoral volatility. Regime change by other means To be clear, Trump is not openly calling for regime change. But his policy toolkit enables outcomes that mirror it. When tariffs weaken a government's economic foundation, erode investor confidence, or amplify societal frustrations, they set the stage for political transitions. In democratic systems, this might mean a loss of parliamentary control or a change in administration. In authoritarian or hybrid regimes, it may lead to intensified repression, elite defections, or shifts in geopolitical alignment. The outcomes vary — but the pressure originates from the same source. The flawed genius — and danger — of Trump's tariff strategy lies in its deniability. Unlike overt sanctions or military actions, tariffs wear a mask of legitimacy. They can be explained away as economic tools while quietly forcing nations to rethink their entire policy compass. Strategic autonomy or strategic submission? The challenge for countries like Malaysia is to navigate between appeasement and autonomy. Excessive alignment with the US may yield short-term relief but weaken long-term resilience. Conversely, hedging toward alternative blocs such as BRICS or deepening ties with China risks further economic retaliation. This is the exact trap Trump's tariffs are designed to create. They force nations into binary choices where neutrality becomes untenable. By weaponising trade, Trump reduces diplomacy to a transaction and multilateralism to an afterthought. Conclusion: The political cost of economic coercion Trump's tariffs, though selectively applied and politically packaged, are far from benign. They are instruments of economic coercion with deeply political consequences. Whether or not intended, they are capable of reshaping national strategies, unsettling governments, and accelerating regime change without firing a single shot. Malaysia and its neighbours in Southeast Asia would do well to read the subtext. The exemptions granted today may be revoked tomorrow. The deals made now may come with deeper expectations later. And the space for independent decision-making may shrink under the growing weight of transactional power politics. In this era of manufactured economic pain, survival depends not just on trade diversification — but on strategic clarity, regional unity, and the courage to say no when pressure comes dressed as partnership. * Phar Kim Beng is the Director of the Institute of Internationalization and Asean Studies (IINTAS) and Professor of Asean Studies in International Islamic University of Malaysia. He writes frequently on regional trade, diplomacy, and international strategy. ** This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.
Bloomberg
24-06-2025
- Business
- Bloomberg
Australia Must Choose Defense or Social Spending, Rabobank Says
Australia confronts a 'guns or butter' choice between a bigger defense budget and expanding national disability insurance and other social programs, according to Rabobank, which calls for economic statecraft to navigate a risky regional security environment. For now, the government is opting for 'butter,' but it retains substantial fiscal headroom to bolster military spending when compared to peer economies, Rabobank economist Benjamin Picton said in a research note on Tuesday. The nation's debt is lower than that of counterparts as a share of its gross domestic product.
