US and China Extend 90-Day Trade Truce, Avoiding Immediate Tariff Escalation but Leaving Core Disputes Unresolved

The U.S. dollar held steady on Tuesday, with markets braced for a key consumer inflation report later in the day that could shape expectations for Federal Reserve interest rate cuts.The Australian dollar was steady hours before a policy decision by the Reserve Bank of Australia.The U.S. dollar index - which measures the currency against sixcounterparts, including the euro and yen - was steady at 98.497 as of 0046 GMT, after advancing 0.5% over the past two sessions.

Prior to that, the dollar had retreated as U.S. President Donald Trump's dovish-leaning pick to replace a Fed governor, and similarly inclined potential candidates for chairman, led traders to increase easing bets.In addition, Fed officials have sounded increasingly uneasy about the labour market, signalling their openness to a rate cut as soon as September.Cooling inflation could cement bets for a reduction next month, but if signs emerge that Trump's tariffs are fuelling price pressures, that might keep the central bank on hold for now.Traders currently put the odds of a quarter-point cut on September 17 at about 89%.

"Risk-reward heading into U.S. CPI this week is for a modest USD bounce as any upside surprise will challenge market pricing of almost a full cut by September," TD Securities strategists wrote in a research note."A downside surprise, on the other hand, is unlikely to move Fed pricing and the USD as much," they said."The reasoning is that for the Fed to consider an outsized cut of 50 basis points, the catalyst will be further deterioration in the labour market and not a downside CPI miss."

Economists polled by Reuters expect core CPI to have risen 0.3% in July, pushing the annual rate higher to 3%.The greenback rose 0.1% to 148.28 yen on Tuesday. The euro was flat at $1.1615.The dollar on Monday largely ignored Trump's signing an executive order extending a pause in sharply higher tariffs on Chinese imports for another 90 days, a move that some market participants said was expected.With the United States and China seeking to close a deal averting triple-digit import tariffs, a U.S. official told Reuters that chip makers Nvidia and AMD had agreed to allocate 15% of China sales revenues to the U.S. government, aiming to secure export licences for semiconductors.

The yuan was flat at 7.1935 per dollar in offshore trading.

The Aussie fetched $0.6518 , little changed from Monday with economists and investors widely expecting a quarter-point rate reduction from the RBA, after second-quarter inflation came in weaker than expected and the jobless rate hit a 3-1/2-year high.

Source: Yahoo Finance

President Donald Trump named EJ Antoni, chief economist of the conservative Heritage Foundation, to lead the Bureau of Labor Statistics after firing the former head of the agency earlier this month.

Trump appointed Antoni, who has been vocal about his concerns with BLS jobs data and revisions, in a Truth Social post. The position is subject to Senate confirmation.

“Our Economy is booming, and E.J. will ensure that the Numbers released are HONEST and ACCURATE,” Trump wrote.

Antoni would succeed Erika McEntarfer, whom Trump abruptly fired Aug. 1 after a BLS report showed weak job growth in July and substantial downward revisions to the prior two months. He accused her, without evidence, of manipulating the numbers for political purposes, while noting that she was appointed by former President Joe Biden.

Trump’s firing of McEntarfer shocked economists across the political spectrum, who immediately came to her defense and BLS as an institution. The agency’s work, in addition to that of other US statistical offices, has a “gold standard” reputation globally for being free of political influence — a status which many now fear is at risk.

BLS routinely revises its data in an effort to make it more accurate in the long run. But the latest revisions, which trimmed 258,000 jobs from May and June, were particularly eye-catching — marking the largest downward adjustment since the pandemic.

Steve Bannon, a senior adviser to Trump in his first term and an influential voice in conservative circles, had pushed Antoni for the role, calling him “the perfect guy at the perfect time to run the BLS.”

Antoni came on Bannon’s podcast shortly after the latest jobs report was released, where he was asked if there was a “MAGA Republican” in charge of BLS. Antoni responded, “No, unfortunately.”

Antoni added that the absence of a Trump pick running the agency is “part of the reason why we continue to have all of these different data problems.” He contributed to the Project 2025 policy rubric, which, in part, called for maximizing hiring of political appointees at the Labor Department, which oversees BLS.

The economist is also a senior fellow at Unleash Prosperity, a group that counts Steve Forbes, Arthur Laffer and Stephen Moore among its leaders and is one of the entities regularly bringing policy ideas to Trump. Antoni has a Ph.D. in economics.

Source: Yahoo Finance

One of China’s biggest copper fabricators is set to reap a windfall from President Donald Trump’s efforts to boost US production of the metal.Zhejiang Hailiang Co., a major manufacturer of copper tubes used in autos, airconditioning and plumbing, might seem an unlikely winner from “America First” protectionism. But its stock has jumped nearly 20% since the Trump administration imposed tariffs at the end of July on imports valued at more than $15 billion last year.

While Washington and Beijing joust over trade, investors have zeroed in on Hailiang’s footprint in the US. The company said in 2020 it’s aiming for 100,000 tons of annual capacity at its plant in Houston. The factory had 30,000 tons as of last year. In an emailed response to questions, Hailiang said last week the expansion is proceeding, without elaborating.The firm’s shares have outperformed other Chinese copper producers, as well as the broader CSI 300 Index, which has fallen slightly over the period. Hailiang’s total annual capacity is around 1.5 million tons.

The 50% duty on semi-finished copper, which will disrupt sales to the US while putting a premium on metal fashioned locally, may only be the first step in a Trump-led realignment of the global copper industry. The White House also ordered officials to come up with a plan in 90 days to slap tariffs on an array of other copper-intensive goods.The US imported at least 600,000 tons of semi-finished copper last year. That’s nearly a third of its total demand, according to Citic Securities Co. As those imports become more costly, Hailiang’s US factory is expected to deliver “exceptional profits,” the brokerage said in a note.

The plant in Houston is part of a network that also includes bases in Indonesia and Morocco. Although China is the world’s biggest market for copper, the company has expanded internationally to hedge against a slowing economy at home and the risks posed by trade hostilities with western countries.The effort may now be about to pay off after an earlier stumble. The Houston plant suffered a net loss of 35 million yuan ($4.9 million) last year due to higher labor and material costs, and expenses related to its expansion, according to Hailiang’s earnings report. That was a weight on companywide net income, which dropped 37% to 703 million yuan.

The company could also benefit from its proposed acquisition of a domestic peer. It said in December it planned to buy an undisclosed stake in Golden Dragon Precise Copper Tube Group, which also has a copper tube plant in Pine Hill, Alabama.Beijing’s campaign to end deflation helped spur positive feedback in markets from equities to commodity prices. Still, strategists at Citigroup aren’t convinced that it’s time to chase the stock rally.President Donald Trump’s direct request for China to quadruple its soybean orders is a reminder of the perilous state of 2025-2026 US exports, according to Bloomberg Intelligence.Even as the green hydrogen boom fizzles globally, a handful of projects in Asia are keeping alive hopes that the technology may someday help decarbonize polluting industries.

Source: Bloomberg Europe

New Zealand’s concrete production slipped to the lowest level in more than 10 years as cooling economic growth and global uncertainty curb home construction and investment in new commercial buildings.Output fell to 3.7 million cubic meters in the 12 months through June, Statistics New Zealand said Tuesday in Wellington. That’s down 5.9% from a year earlier and the weakest annual reading since late 2014.

A construction slowdown is contributing to a sluggish recovery from a deep recession last year, with at least two local economists forecasting the economy failed to grow in the second quarter. A steady reduction in interest rates — which the Reserve Bank is tipped to continue later this month — has so far failed to spark home-building, while businesses remain reluctant to invest in new offices and warehouses.Economists expect cheaper borrowing costs will eventually encourage building, which will see the pace of the economic expansion pick up in the second half of the year.

The number of home-building consents in the 12 months through June rose 1% from the year earlier, suggesting that demand may be finding a floor. Still, the total permitted floor area of non-residential construction fell 5.2% in the June year.The RBNZ is tipped to cut the Official Cash Rate to 3% from 3.25% on Aug. 20 but economists are split whether further cuts are likely. Investors see about a 60% likelihood the benchmark will fall to 2.75% by the end of the year, swaps data show.

Today’s report showed concrete production has slowed from an annual peak of almost 4.8 million cubic meters in late 2022. Output in the three months ended June 30 fell 10% from the year-earlier quarter to 891,909 cubic meters.

Source: Bloomberg Europe

US President Donald Trump extended a tariff truce with China by another 90 days on Monday, a White House official said, staving off triple-digit duties on Chinese goods as U.S. retailers prepared for the critical end-of-year holiday season.

Trump signed an executive order delaying the start of higher tariffs until mid-November shortly after giving reporters a noncommittal answer when asked at a news conference if he planned to keep the lower tariff rates in place. On Sunday, Trump demanded China quadruple its purchases of U.S. soybeans, but it remained unclear whether Beijing had agreed.

The tariff truce between Beijing and Washington had been due to expire on Tuesday at 00:01 ET (04:01 GMT). The timing of the extension until early November buys crucial time for the seasonal autumn surge of imports for the Christmas season, including electronics, apparel and toys at lower tariff rates.

The new order prevents U.S. tariffs on Chinese goods from shooting up to 145%, while Chinese tariffs on U.S. goods were set to hit 125% - rates that would have resulted in a virtual trade embargo between the two countries. It locks in place - at least for now - a 30% tariff on Chinese imports, with Chinese duties on U.S. imports at 10%.

"We'll see what happens," Trump told a news conference earlier on Monday, highlighting what he called his good relationship with Chinese President Xi Jinping.

"It's positive news. Combined with some of the de-escalatory steps both the United States and China have taken in recent weeks, it demonstrated that both sides are trying to see if they can reach some kind of a deal that would lay the groundwork for a Xi-Trump meeting this fall," said Wendy Cutler, a former senior U.S. trade official who is now a vice president at the Asia Society Policy Institute.

Trump told CNBC last week that the U.S. and China were getting very close to a trade agreement and he would meet with Xi before the end of the year if a deal was struck.

Trade 'detente' continued

The two sides in May announced a truce in their trade dispute after talks in Geneva, Switzerland, agreeing to a 90-day period to allow further talks. They met again in Stockholm, Sweden, in late July, and U.S. negotiators returned to Washington with a recommendation that Trump extend the deadline.

Treasury Secretary Scott Bessent has said repeatedly that the triple-digit import duties both sides slapped on each other's goods in the spring were untenable and had essentially imposed a trade embargo between the world's two largest economies.

"It wouldn’t be a Trump-style negotiation if it didn’t go right down to the wire," said Kelly Ann Shaw, a senior White House trade official during Trump's first term and now with law firm Akin Gump Strauss Hauer & Feld.

She said Trump had likely pressed China for further concessions before agreeing to the extension. Trump pushed for additional concessions on Sunday, urging China to quadruple its soybean purchases, although analysts questioned the feasibility of any such deal. Trump did not repeat the demand on Monday.

"The whole reason for the 90-day pause in the first place was to lay the groundwork for broader negotiations and there’s been a lot of noise about everything from soybeans to export controls to excess capacity over the weekend," Shaw said.

Ryan Majerus, a former U.S. trade official now with the King & Spalding law firm, said the news would give both sides more time to work through longstanding trade concerns.

“This will undoubtedly lower anxiety on both sides as talks continue, and as the U.S. and China work toward a framework deal in the fall," he said.

Imports from China early this year had surged to beat Trump's tariffs, but dropped steeply in June, Commerce Department data showed last week. The U.S. trade deficit with China tumbled by roughly a third in June to $9.5 billion, its narrowest since February 2004. Over five consecutive months of declines, the U.S. trade gap with China has narrowed by $22.2 billion - a 70% reduction from a year earlier.

No formal announcement was immediately released. The Treasury Department and U.S. Trade Representative's Office did not respond to requests for comment.

Washington has also been pressing Beijing to stop buying Russian oil, with Trump threatening to impose secondary tariffs on China.

Source: Theedgemarkets

The United States and China on Monday extended a tariff truce for another 90 days, staving off triple-digit duties on Chinese goods as U.S. retailers get ready to ramp up inventories ahead of the critical end-of-year holiday season.U.S. President Donald Trump announced on his Truth Social platform that he had signed an executive order suspending the imposition of higher tariffs until 12:01 a.m. EST on November 10, with all other elements of the truce to remain in place.China's Commerce Ministry issued parallel moves early local China time on Tuesday, saying it would adopt and maintain all necessary measures to suspend or remove non-tariff measures.

Trump on Sunday had demanded China quadruple its purchases of U.S. soybeans, but the order included no mention of any additional purchases."The United States continues to have discussions with the PRC to address the lack of trade reciprocity in our economic relationship and our resulting national and economic security concerns," Trump's executive order stated. "Through these discussions, (China) continues to take significant steps toward remedying non-reciprocal trade arrangements and addressing the concerns of the United States relating to economic and national security matters."

The tariff truce between Beijing and Washington had been due to expire on Tuesday at 12:01 a.m. EDT (0401 GMT). The extension until early November buys crucial time for the seasonal autumn surge of imports for the Christmas season, including electronics, apparel and toys at lower tariff rates.The new order prevents U.S. tariffs on Chinese goods from shooting up to 145%, while Chinese tariffs on U.S. goods were set to hit 125% - rates that would have resulted in a virtual trade embargo between the two countries. It locks in place - at least for now - a 30% tariff on Chinese imports, with Chinese duties on U.S. imports at 10%."We'll see what happens," Trump told a news conference earlier on Monday, highlighting what he called his good relationship with Chinese President Xi Jinping.

Trump told CNBC last week that the U.S. and China were getting very close to a trade agreement and he would meet with Xi before the end of the year if a deal was struck."It's positive news," said Wendy Cutler, a former senior U.S. trade official who is now a vice president at the Asia Society Policy Institute. "Combined with some of the de-escalatory steps both the United States and China have taken in recent weeks, it demonstrated that both sides are trying to see if they can reach some kind of a deal that would lay the groundwork for a Xi-Trump meeting this fall."

TRADE 'DETENTE' CONTINUED

The two sides in May announced a truce in their trade dispute after talks in Geneva, Switzerland, agreeing to a 90-day period to allow further talks. They met again in Stockholm, Sweden, in late July, and U.S. negotiators returned to Washington with a recommendation that Trump extend the deadline.Treasury Secretary Scott Bessent has said repeatedly that the triple-digit import duties both sides slapped on each other's goods in the spring were untenable and had essentially imposed a trade embargo between the world's two largest economies."It wouldn’t be a Trump-style negotiation if it didn’t go right down to the wire," said Kelly Ann Shaw, a senior White House trade official during Trump's first term and now with law firm Akin Gump Strauss Hauer & Feld.

She said Trump had likely pressed China for further concessions before agreeing to the extension. Trump pushed for additional concessions on Sunday, urging China to quadruple its soybean purchases, although analysts questioned the feasibility of any such deal. Trump did not repeat the demand on Monday.

"The whole reason for the 90-day pause in the first place was to lay the groundwork for broader negotiations and there’s been a lot of noise about everything from soybeans to export controls to excess capacity over the weekend," Shaw said.Ryan Majerus, a former U.S. trade official now with the King & Spalding law firm, said the news would give both sides more time to work through longstanding trade concerns.“This will undoubtedly lower anxiety on both sides as talks continue, and as the U.S. and China work toward a framework deal in the fall," he said.

Imports from China early this year had surged to beat Trump's tariffs, but dropped steeply in June, Commerce Department data showed last week. The U.S. trade deficit with China tumbled by roughly a third in June to $9.5 billion, its narrowest since February 2004. Over five consecutive months of declines, the U.S. trade gap with China has narrowed by $22.2 billion - a 70% reduction from a year earlier.Washington has also been pressing Beijing to stop buying Russian oil, with Trump threatening to impose secondary tariffs on China.

Source: Reuters