12/05/2025

BIZ & FINANCE MONDAY | MAY 12, 2025

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Japan PM reiterates call to eliminate all tariffs

TOKYO: Japanese Prime Minister Shigeru Ishiba reiterated yesterday that he will aim for the elimination of all tariffs in trade negotiations with the United States. Speaking on a Fuji Television morning programme, Ishiba said that “discussions have gradually come together”, and that Tokyo’s relationship with US President Donald Trump is “surprisingly good”. However, Ishiba said that Washington’s agreement with London, announced on Thursday, which lowers prohibitive duties on British car exports while keeping a baseline 10% tariff in place, was “one model” for trade deals, “but we should aim for 0% tariffs”. Saying that high auto import levies would make cars more expensive for US consumers, Ishiba added, “for the sake of the American economy as well, shouldn’t those tariffs be lowered?” Trump said on Friday that the US will maintain a baseline 10% tariff on imports even after trade deals are struck, adding there could be exemptions when countries offer significant trade terms. Currently, Japan faces a 25% levy on economically crucial auto exports to the United States, and a reciprocal 24% tariff on other Japanese goods. In terms of supporting the domestic economy, Ishiba said that the government needs to think carefully about a mooted reduction in consumption tax. “If we suddenly lower the consumption tax, what happens to the country’s finances?” he said. “We have to think if there aren’t other ways that we can help those who are truly in need.” – Reuters US projected to hit debt limit in August WASHINGTON: There is a “reasonable probability” the United States will hit its borrowing limit in August when Congress is in recess, Treasury Secretary Scott Bessent said last week, calling on lawmakers to act. “I respectfully urge Congress to increase or suspend the debt limit by mid-July, before its scheduled break, to protect the full faith and credit of the United States,” he wrote in a letter to the speaker of the House of Representatives Mike Johnson. The United States exceeded a roughly US$36 trillion (RM155 trillion) congressionally approved borrowing cap in January this year, forcing the Treasury Department to take “extraordinary measures” to avert the risk of a government default. The Republican-controlled Congress has been in talks to increase the threshold as part of a broader suite of tax-and-spend measures based on President Donald Trump’s policy priorities. But the talks have so far failed to translate into legislation that can pass both the House and the Senate, spurring Bessent’s letter. “Prior episodes have shown that waiting until the last minute ... can have serious adverse consequences for financial markets, businesses and the federal government,” he said. “A failure to suspend or increase the debt limit would wreak havoc on our financial system and diminish America’s security and global leadership position,” Bessent added. – AFP

Trump hails ‘total reset’ in US-China relations Members of the Chinese delegation leaving the residence where trade talks take place in Geneva. – REUTERSPIC

markets”, said Gary Hufbauer, a senior non-resident fellow at the Peterson Institute for International Economics (PIIE). But Hufbauer cautioned he was “very sceptical that there will be any return to something like normal US-China trade relations,“ with even a tariff rate of 70% to 80% still potentially halving bilateral trade. China’s vice-premier went into the discussions buoyed by Friday’s news that China’s exports rose last month despite the trade war. The unexpected development was attributed by experts to a re-routing of trade to Southeast Asia to mitigate US tariffs. Among some of the more moderate Trump officials like Bessent and Commerce Secretary Howard Lutnick, “there’s a realisation that China is better equipped to deal with this trade war than the US”, said Hufbauer. “It’s nice that they’re talking. But my expectations for the actual outcomes of this first round of talks is pretty limited,” Sheets from Citigroup said. “I think it’s quite possible they’ll walk away from Geneva saying how constructive and productive the talks were, but not actually reducing tariffs at all,” Hufbauer said. In his Truth Social post, Trump said the talks had made “GREAT PROGRESS!!” “We want to see, for the good of both China and the US, an opening up of China to American business.” – AFP

the trade relations with these extremely high tariffs is ultimately in the interests of neither the United States nor China,” Citigroup global chief economist Nathan Sheets told AFP, calling the tariffs a “lose-lose proposition”. The discussions are the first time senior officials from the world’s two largest economies have met face-to-face to tackle the thorny topic of trade since Trump slapped steep new levies on China last month, sparking a robust retaliation from Beijing. The tariffs imposed by Trump on the Asian manufacturing giant since the start of the year currently total 145%, with cumulative US duties on some Chinese goods reaching a staggering 245%. In retaliation, China put 125% tariffs on US goods. Ahead of the meeting, Trump signalled he might lower the tariffs, suggesting on social media that an “80% Tariff on China seems right!” However, his press secretary Karoline Leavitt later clarified that the United States would not lower tariffs unilaterally, and that China would also need to make concessions. Going into the meeting, both sides played down expectations of a major change in trade relations, with Bessent underlining a focus on “de-escalation” and not a “big trade deal”, and Beijing insisting the United States must ease tariffs first. The fact the talks are even happening “is good news for business, and for the financial

GENEVA: Talks between top US and Chinese officials resumed for a second day yesterday, after US President Donald Trump voiced optimism over the negotiations aimed at de-escalating trade tensions sparked by his aggressive tariff rollout. In a Truth Social post following a first day of talks in Geneva on Saturday, Trump praised the “very good” discussions and deemed them “a total reset negotiated in a friendly, but constructive, manner”. Earlier, Chinese state news agency Xinhua also described the talks in Switzerland as “an important step in promoting the resolution of the issue”. The second day of closed-door meetings between US Treasury Secretary Scott Bessent, Trade Representative Jamieson Greer and Chinese Vice-Premier He Lifeng resumed shortly after 10am (4pm in Malaysia) yesterday. As of Saturday, the talks were taking place at the residence of the Swiss ambassador to the United Nations in Geneva, a discrete villa with sky-blue shutters near a large park on the left bank of Lake Geneva. “These talks reflect that the current state of o Trade talks resume in Geneva, expectations low for major breakthrough

House committee unveils partial tax plan to achieve Trump agenda WASHINGTON: The US House committee in charge of taxes released last week a partial text of its part of President Donald Trump’s proposed tax agenda that would make his 2017 tax cuts permanent, leaving out contentious issues before a planned vote tomorrow. issues like what to do with the current US$10,000 deduction limit for state and local taxes, which is important to states with high taxes like New York, California and New Jersey. over how to pay for what Trump has called his “big, beautiful bill” – a multitrillion-dollar tax-cut and immigration reform agenda, with the fate of the Medicaid healthcare programme and the nation’s debt ceiling hanging in the balance.

It also does not address the fate of Medicaid, which covered about 35 million people in states Trump won in last year’s presidential election and clean energy tax credits that benefit some Republican states. “Ways and Means Republicans have spent two years preparing for this moment, and we will deliver for the American people,” said ways and means committee chair Jason Smith of Missouri. US congressional Republicans are struggling

The party is torn between hardliners who want tax cuts to be scaled back to achieve a goal of US$2 trillion in spending reductions over the next decade and moderates pushing back against large-scale slashing of the Medicaid healthcare programme. Ways and Means is scheduled to hold a meeting to debate and advance the legislation tomorrow afternoon. – Reuters

The 28-page proposal by the House Ways and Means Committee would increase the child tax credit from US$1,000 to US$2,500 through 2028 and to US$2,000 after, and adds a requirement for recipients to have a Social Security number and reduces some taxes for multinational companies and unincorporated businesses. But it does not address more hotly contested