12/07/2025

BIZ & FINANCE SATURDAY | JULY 12, 2025

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Trump hits Canada with 35% tariff, eyes 15-20% on others

UK economy shrinks again in May, fuelling outlook fears Britain’s economy contracted unexpectedly for a second month running in May, adding to worries at home for finance minister Rachel Reeves in an increasingly uncertain global environment, official data showed yesterday. Gross domestic product (GDP) declined by 0.1% after a 0.3% drop in April, the Office for National Statistics said. Economists polled by Reuters had mostly forecast that GDP would rise by 0.1% from April’s level. While the services sector eked out a sliver of growth, declines in industrial output and construction dragged down overall output. The reading poses downside risks to expectations that the economy grew in the second quarter of 2025, after a surge early in the year. It boosted expectations that the Bank of England will cut interest rates next month. “The sluggish UK economy makes an August rate cut look inevitable despite the recent inflation spike, said Suren Thiru, economics director at ICAEW. Prime Minister Keir Starmer’s Labour government has struggled to meaningfully improve growth in its first year in office. Economists say it looks increasingly likely that Reeves will need to raise taxes again in her next budget – something she had hoped to avoid. “While today’s figures are disappointing, I am determined to kickstart economic growth and deliver on that promise,“ Reeves said of yesterday’s data. Britain’s economy expanded rapidly in the first quarter of 2025, outstripping growth in other countries in the Group of Seven advanced economies. In May, the Bank of England revised up its full-year growth forecast to 1%. However, much of the growth in early 2025 was likely to have been linked to the expiry of a tax break for some home purchases in April which boosted the sector before the deadline, and a rush by manufacturers to beat higher US import tariffs. The BoE has said it thinks the economy grew by about 0.25% in the second quarter of 2025. To achieve any growth for the quarter, the ONS said June’s monthly data would need to show at least a flat reading, assuming no revisions to earlier months. A month-on-month contraction of 0.4% or worse for June would herald a quarterly contraction. – Reuters LONDON:

WASHINGTON: US President Donald Trump ramped up his tariff assault on Canada on Thursday, saying the US would impose a 35% tariff on imports next month and planned to impose blanket tariffs of 15% or 20% on most other trading partners. In a letter released on his social media platform, Trump told Canadian Prime Minister Mark Carney the new rate would go into effect on Aug 1 and would go up if Canada retaliated. In a post on X late on Thursday, Carney said his government will continue to defend Canadian workers and businesses in their negotiations with the US as they work towards that deadline. The 35% tariff is an increase from the current 25% rate that Trump had assigned to Canada and is a blow to Carney, who was seeking to agree a trade pact with Washington. An exclusion for goods covered by the US Mexico-Canada Agreement (USMCA) on trade was expected to stay in place, and 10% tariffs on energy and fertilizer were also not set to change, though Trump had not made a final decision on those issues, an administration official said. Trump complained in his letter about what he referred to as the flow of fentanyl from Canada as well as the country’s tariff- and non tariff trade barriers that hurt US dairy farmers and others. He said the trade deficit was a threat to the US economy and national security. “If Canada works with me to stop the flow of fentanyl, we will, perhaps, consider an adjustment to this letter,” Trump wrote. Canadian officials say a miniscule amount of fentanyl originates from Canada but they have taken measures to strengthen the border. “Canada has made vital progress to stop the scourge of fentanyl in North America. We are committed to continuing to work with the US to save lives and protect communities in o US may rethink stance based on fentanyl flow; Carney pledges to defend Canadian workers and firms

USMCA goods likely excluded; energy and fertilizer tariffs unchanged for now. Trump blames Canada for fentanyl and unfair trade practices. – PEXELS PIX

“We’re just going to say all of the remaining countries are going to pay, whether it’s 20% or 15%. We’ll work that out now,” Trump was quoted as saying by the network. Myanmar’s ruling military general has asked Trump to reduce the 40% tariff rate on his country’s exports to the US to 10-20% and is ready to send a negotiation team to Washington if needed, state media reported yesterday. Philippines president will meet Trump in Washington this month for the first time and will discuss its 20% tariff, the country’s foreign minister said. Canada is the second-largest US trading partner after Mexico, and the largest buyer of US exports. It bought US$349.4 billion (RM1.5 trillion) of US goods last year and exported US$412.7 billion to the US, according to US Census Bureau data. Carney, who led his Liberal Party to a comeback election victory earlier this year with a pledge to tackle trade challenges with the US, had been aiming to negotiate a trade deal with its key trading partner by July 21. Last month, the Carney government dropped a planned digital tax on US tech firms after Trump ended trade talks, calling the tax a “blatant attack.” – Reuters

both our countries,” Carney added in his X post late Tuesday. The prime minister said last month that he and Trump had agreed to wrap up a new economic and security deal within 30 days. Trump has broadened his trade war in recent days, setting new tariffs on a number of countries including allies Japan and South Korea, along with a 50% tariff on copper. His latest salvo rattled investors anew, with US and European stock futures dipping in Asia yesterday as markets nervously awaited word on what tariff Trump would assign the European Union (EU) later yesterday. “The potential escalation between the EU and the US is a big deal for financial markets,” said Joseph Capurso, head of international economics at the Commonwealth Bank of Australia. “If you get something similar to (the US-China trade war in April), that’s going to be very destabilising.” In an interview with NBC News published on Thursday, Trump said other trading partners that had not yet received such letters would likely face blanket tariffs. “Not everybody has to get a letter. You know that. We’re just setting our tariffs,” Trump said in the interview.