India Raises Concerns Over Proposed 500% US Tariff on Russian Oil Buyers

Japanese Prime Minister Shigeru Ishiba pushed back against the idea there has been little progress in negotiations with the US on a trade deal as a deadline looms for a 24% across-the-board tariff to take force.

“The talks are steadily but undoubtedly moving forward. There are a wide range of areas including non-tariff barriers that are being covered, but the talks on each of these points are progressing, step by step,” he said in a televised interview on Thursday evening.

He struck a different tone from US Treasury Secretary Scott Bessent, who said on Thursday that Japan’s upper house election on July 20 is putting “domestic constraints” on sealing a potential trade deal. Bessent’s comments followed a slew of critical comments about Japan in recent days from US President Donald Trump.

Ishiba was likely trying to play down concerns that Japan will not be able to win major concessions from the US and could also get blindsided by a unilateral US decision to impose tariffs as high as 35%. Still, he gave no indication that a deal was imminent ahead of the July 9 start of higher “reciprocal” tariff rates.

The July 20 upper house election cited by Bessent will see voters deliver a verdict on the performance of Ishiba’s minority government. Inflation is the top concern of the electorate, according to opinion polls, but a rushed trade deal that is seen giving Trump too many concessions would not be favourably viewed.

Japan is most concerned about a separate sectoral tariff of 25% on its auto industry, one of the economy’s key drivers of growth and a major employer. Japan’s trade negotiators have insisted that the auto tariffs must be part of any deal and have emphasised the sector’s contribution to investment and job creation in the US.

Trump has criticised Japan in recent days for not buying US cars or rice and threatened to raise the reciprocal tariff as high as 35%, raising fears that he may be targeting the country in his mission to reshape global trade arrangements.

The prime minister said some of Trump’s understanding of trade between Japan and the US was based on inaccuracies.

“President Trump has said there are no American cars in Japan, and Japan doesn’t import US rice, but these claims are based on misconceptions,” he said. “Japan is the biggest investor in the US and creates the most jobs, so I would like to see those efforts appreciated as well.”

Source: Bloomperg

China is reviewing export license applications for restricted items as part of efforts to implement its trade framework with the US, the Commerce Ministry said Friday, responding to recent US moves to ease export controls.

Both countries have been acting on the outcomes of the London framework, the ministry said in a statement.

“The London Framework was hard-won,” it said. “Dialogue and cooperation are the right path. Blackmail and coercion are not a solution.”

Both countries reached a trade framework last month following talks in London, which remains in effect through mid-August. As part of the deal, China agreed to resume shipments of rare earths — key inputs for wind turbines, electric vehicles and military hardware. In return, the US offered to ease some export restrictions on ethane, chip-design software and jet engine components.

There are signs both sides are following through. The Trump administration has lifted recent export license requirements for chip design software sales in China, and approved US ethane exports to China without additional approvals.

Meanwhile, Chinese rare earth magnets are flowing, although they haven’t yet bounced back to the levels seen before China imposed export curbs in early April, Treasury Secretary Scott Bessent said this week.

Beijing also urged the US to recognize the “mutually beneficial” nature of bilateral ties, continue to correct what it called “wrong practices,” and take concrete steps to carry out the consensus reached, according to the statement.

Source: Bloomberg Europe

Easing inflation and a slowing economy will prompt the Reserve Bank of Australia to ease policy more than predicted in May, according to a Reuters poll of economists who expect the central bank to deliver a third 25 basis point rate cut on Tuesday.

Financial markets and economists had previously forecast three RBA rate cuts this year but then in May raised their projections to four and now see five, a shift driven by inflation falling faster than expected and a weakening growth outlook.

A strong majority of economists, 31 of 37, predicted the RBA will cut its official cash rate by 25 basis points to 3.60% at the end of its two-day meeting on July 8. Six expected no change, the survey showed.

"The May meeting was notably more dovish in the outlook and that's going to manifest in cutting in July. I suspect the RBA will keep the option open for further easing and that's why there will be a follow-up cut in August," said Philip O'Donaghoe, chief economist for Australia and New Zealand at Deutsche Bank.

"The post-COVID inflation surge is pretty much entirely out of the economy. And so the RBA's task now is to make sure we can get the growth that will keep the labour market strong...(so) the risk is we see more cuts."

Over 60% of respondents in the June 30-July 3 Reuters poll, 23 of 36, forecast another quarter-point cut this quarter, taking the cash rate to 3.35%.

While the median forecast pointed to a year-end cash rate of 3.10%, there was no clear consensus among economists on where the rate would end 2025: 16 of 33 projected 3.10%, 15 expected 3.35%, one each saw 3.60% and 2.85%.

Australia's major banks - ANZ, CBA, NAB and Westpac - were similarly split, underscoring the uncertainty around the final leg of the RBA's easing cycle.

The economy is forecast to grow 1.6% this year and 2.3% in 2026, a downgrade from 2.0% and 2.4% from the April poll, the poll predicted.

Official data showed the economy expanded just 0.2% in Q1 2025, a slowdown from 0.6% in Q4 2024.

"A large part of the reason why the RBA has now found itself on a rate-cutting path that's steeper than what it would have thought at the beginning of the year is because...consumption has been softer than the RBA anticipated," said Luci Ellis, chief economist at Westpac.

Some economists flagged the lack of a trade deal ahead of the July 9 expiry of a 90-day pause on U.S. President Donald Trump's sweeping tariffs on trading partners announced in April as a downside risk to the economy and RBA rates.

Source: Yahoo Finance

US President Donald Trump’s new trade deal with Vietnam sends a clear signal about where US tariffs on Chinese goods might ultimately land, as talks between Washington and Beijing continue following their recent truce.

Chinese goods currently face tariffs of around 55%, a level expected to remain through August. But under the latest Vietnam agreement, the US will slap a 20% tariff on Vietnamese exports to the US and a steeper 40% levy on goods deemed to be transshipped — the latter targeting a well-worn backdoor used by Chinese exporters since the first China-US trade war to dodge American tariffs.

By closing the loopholes, the Trump administration is signalling what any future deal with China might look like. The 40% tariff on trans-shipped goods suggests that even if tariffs on China are eventually reduced, they are unlikely to fall significantly below that threshold.

“The 40% figure in the Vietnam deal might reflect a broader conviction in the Trump administration about the appropriate tariff level on China, which would be similarly reflected in other bilateral deals,” said Gabriel Wildau, a managing director at Teneo focused on political risk analysis in China. “However, I am sceptical that Trump has a specific red line for minimum tariffs on China.”

Beijing and Washington reached a trade framework last month following talks in London, which remains in effect through mid-August. As part of the deal, China agreed to resume shipments of rare earths — key inputs for wind turbines, electric vehicles and military hardware. In return, the US offered to ease some export restrictions on ethane, chip-design software and jet engine components.

US tariffs on Chinese goods have been cut back to around 55%, down from as high as 145% in early April. But 20% tariffs tied to fentanyl remain in place. Beijing has since tightened controls on two precursor chemicals used to make the drug — one of the few obvious avenues it has to win further tariff relief.

“The 20% is really the focal point where all the attention is centred right now,” said Christopher Beddor, the deputy China research director at Gavekal Research. “The thinking is that the Chinese government is very willing to do a deal on something related to fentanyl. They have been telegraphing that for months.”

Still, those efforts are unlikely to bring Chinese tariffs below the 40% rate now applied to Vietnam. If China’s duties were to fall to 35%, for instance, it would restore a competitive edge to China and encourage firms to shift operations back, running counter to the Trump administration’s broader objectives.

“If China ends up with a lower tariff level than Vietnam that would certainly shift the competitiveness calculations somewhat, but keep in mind that moving production facilities is not as easy as flipping a light switch on and off,” said Stephen Olson, a former US trade negotiator now with the ISEAS-Yusof Ishak Institute. “From the perspective of Chinese companies, there is zero confidence that once Trump sets a tariff level that it will remain at that level.”

For now, there are signs both sides are following through on the terms of the London agreement and displaying signs of goodwill. The Trump administration has lifted recent export license requirements for chip design software sales in China, and approved US ethane exports to China without additional approvals.

Treasury Secretary Scott Bessent said Chinese rare earth magnets are flowing, although they haven’t yet bounced back to the levels seen before China imposed export curbs in early April. The US remains hopeful that China will further ease restrictions on those exports after their London deal, he said in an interview Tuesday on Fox News.

Meanwhile, a senior Chinese official on Thursday delivered one of Beijing’s most positive messages about his nation’s ties with the US in weeks. Liu Jianchao, the head of the Communist Party’s International Department, said at the World Peace Forum that he is “optimistic” about future relations.

“China is keenly aware of what it’s gained from China-US cooperation,” Liu said “Our cooperation is mutually beneficial. The act of putting up barriers will hurt the other and ourselves as well.”

Other negotiations

Apart from Vietnam, Beijing is growing increasingly cautious about US efforts to strike trade deals that could isolate China. With a July 9 deadline approaching, when Trump’s higher “reciprocal” tariffs are set to take effect, American officials are ramping up negotiations with key partners in Asia and Europe.

Washington is pushing for new deals that would include limits on how much Chinese components in goods can be used in exports for the US, or commitments to counter what the US views as unfair Chinese trade practices. India, another nation racing to complete a deal, has been negotiating over “rules of origin”.

Beijing on Thursday said it’s taken note of the US-Vietnam trade deal and is currently assessing the situation.

“We’re happy to see all parties resolve trade conflicts with the US through equal negotiations, but firmly oppose any party striking a deal at the expense of China’s interests,” He Yongqian, a spokesperson for the Ministry of Commerce, said at a briefing.

“If such a situation arises, China will firmly strike back to protect its own legitimate rights and interests,” she added, repeating a familiar warning.

Olson cautioned against relying too much on the US-Vietnam trade agreement as a blueprint for assessing Washington’s approach to China. The stakes in US-China negotiations are significantly higher, shaped by strategic rivalry and a wider set of geopolitical considerations. There is also much less of a power discrepancy in the US-China discussions.

“One important takeaway for China from both the Vietnam deal and the previous deal with the UK is that the US intends to use these negotiations to apply pressure on China,” Olson said. “This could lead China to a much more sober assessment of what it might be possible to achieve with the US in these negotiations.”

Source: Theedgemarkets

U.S. President Donald Trump said on Thursday evening that Hamas’ acceptance of a proposed ceasefire deal with Israel will only become clear in the next 24 hours.

Speaking to reporters in Washington after returning from an event in Iowa, Trump said “we will know in the next 24 hours whether Hamas has agreed to a ceasefire.”

Trump said earlier this week that Israel had accepted the conditions needed to finalize a 60-day ceasefire with Hamas, which is expected to help broker an end to the long-running conflict in the Middle East.

Reuters reported that Hamas was seeking clear guarantees that the ceasefire will eventually lead to the war’s end. Trump’s comments come as Israel kept up its offensive against the Palestinian group in Gaza, having launched a slew of aerial and ground strikes against the region over the past week.

A separate U.S.-brokered ceasefire between Israel and Iran appeared to be holding for a second week, with reports suggesting that Washington and Tehran will also hold renewed nuclear talks soon.

Source: Investing

As the US and EU hold trade negotiations, the bloc’s businesses are working behind the scenes to prevent harsh retaliation against US President Donald Trump’s tariffs, fearing such measures could lead to escalation and harm European industry. Major European firms like Mercedes-Benz and LVMH are urging against a tough stance on US tariffs and pushing the EU for a a quick deal, we’re told. Executives are lobbying to remove iconic American products like bourbon from a list of goods to be targeted in retaliation. While the commission signals one has softened as the July 9 deadline looms. Trump said his administration will start sending out letters to trading partners today setting unilateral tariff rates, with payments due Aug. 1. Commission President Ursula von der Leyen earlier reinforced her position that the EU aims for an agreement in principle with the US by the deadline.

China Tension | The Chinese government intends to cancel part of a summit with EU leaders planned for later this month, in the latest sign of the tensions between Brussels and Beijing. The second day of the two-day summit in China is set to be canceled at Beijing’s request, we’re told.

AI Backlash | Representatives from more than 45 European organizations are calling on the EU to delay the implementation of rules on AI. Companies including ASML, Airbus and Mistral AI warned that the landmark regulation would threaten the continent’s AI ambitions and called for a more “innovation-friendly” approach.

Export Strain | ECB officials warned that the euro’s appreciation and uncertainty over trade could hurt exports and cloud the euro zone’s economic outlook, according to a summary of their meeting in June. While this year’s rally in the euro has helped curb inflation, further gains risk damaging the competitiveness of exporters.

Banking Deadlock | Chancellor Friedrich Merz reaffirmed Germany’s opposition to a joint EU deposit insurance, a scheme sought by the bloc to deepen financial ties. In comments met with applause at a banking forum in Berlin, Merz said there’s no reason to pool national liability systems across member states.

Ukraine Talks | Trump said he was “very disappointed” with a phone yesterday with Russia’s Vladimir Putin. The US leader said he’s set to speak today with Ukrainian President Volodymyr Zelenskiy, who said he plans to discuss the US decision to halt the transfer of artillery rounds and air defenses.

Sky Shield | Switzerland and Germany have agreed to jointly purchase air defense systems under the European Sky Shield Initiative. The move is in line with Switzerland’s new strategy to source more arms from Europe and counter supply-chain strains by deepening cross-border collaboration.

Greek Recovery | Once teetering on the edge of economic collapse at the peak of its debt crisis in 2015, Greece has staged a turnaround and is now outperforming many of its euro zone peers on several fronts. A decade on, the country boasts renewed investor confidence.

Scorching Europe | The worst of the heat wave that’s gripping Europe is moving toward central and southeastern parts of the continent, with Austria and Serbia facing blistering temperatures. Public services are under strain as emergency crews battle wildfires near Athens and on the island of Crete.

Investors in Romanian sovereign bonds are welcoming measures to curb the budget deficit, with the reduced risk of a credit-rating cut likely to extend a rally in the country's debt securities. The government plans to present the package including spending cuts and tax increases at next week's meeting of EU finance ministers, as it tries to rein in the EU’s widest fiscal gap.

Source: Bloomberg Europe