01/08/2025

FRIDAY | AUG 1, 2025

17

BIZ & FINANCE

Clock ticks on US tariff deadline

o Trump announces deal with South Korea,

and South Korea have reached initial deals with Washington to secure less punishing conditions. While the United States and China earlier slapped escalating tariffs on each other’s products, both sides are working to further a truce maintaining duties at lower levels. But Trump has been pushing ahead in his efforts to reshape global trade. The US leader insisted on Wednesday that the Aug 1 deadline “will not be extended” any further. In a Truth Social post, he vowed that this would be “a big day for America”. Although Trump has promised a surge in government revenues from his duties, economists warn that higher tariffs can fuel an uptick in inflation and weigh on economic growth. This could change consumption patterns. Already, consumers face an overall average effective tariff rate that is the highest since the 1930s, according to a recent analysis by The Budget Lab at Yale University. The effect on consumer prices has been limited so far but analysts cautioned this could become more pronounced as businesses run down on existing inventory and pass on more costs to buyers. Among Trump’s latest announcements were a 25% duty on Indian goods to begin today – slightly lower than previously threatened – after talks between Washington and New Delhi failed to bring about a trade pact. India would face an unspecified “penalty” over purchases of Russian weapons and energy as well, Trump said. He also unveiled a 50% tariff on

separate duties on Brazilian and Indian imports

WASHINGTON: Time is running short for governments to strike deals with Washington to avert tariff hikes that Donald Trump has vowed against dozens of economies – and the US president continues to expand his trade wars. As the clock ticked down on the Aug 1 deadline for higher levies to take effect on goods from various trading partners, Trump announced a trade deal with South Korea and separate duties on Brazilian and Indian imports. The president also signed an order on Wednesday to impose previously-threatened 50% tariffs on certain copper products and end a tariff exemption for low-value shipments from abroad. The tariff hikes due today were initially announced in April as part of a package where Trump slapped a 10% levy on goods from almost all trading partners – citing unfair trade practices. This rate was set to rise to varying levels for dozens of economies like the European Union, Japan and others, but Washington twice postponed their implementation as financial markets gyrated. So far, Britain, Vietnam, Japan, Indonesia, the Philippines, the EU

KIA Motors’ vehicles are parked, to be exported, at a port in the South Korean city of Pyeongtaek yesterday. – REUTERSPIC

Microsoft quarterly profit jumps on AI and cloud growth SAN FRANCISCO: Technology giant Microsoft on Wednesday said its profit soared above expectations in the recently ended quarter, driven by its cloud computing and artificial intelligence (AI) units. Microsoft reported profit of US$27.2 billion (RM116 billion) on revenue of US$76.4 billion, some US$29.9 billion of which was brought in by its Intelligent Cloud business. “Cloud and AI is the driving force of business transformation across every industry and sector,” Microsoft chief executive Satya Nadella said in an earnings release. “We’re innovating across the tech stack to help customers adapt and grow in this new era.” Microsoft’s Azure cloud computing offerings brought in more than US$75 billion for the company’s fiscal year, which ended on June 30, in an increase of 34% from the prior year, according to Nadella. Microsoft shares jumped about 7% in after-market trades that followed release of the earnings figures. “This was a slam-dunk quarter for Microsoft with cloud and AI driving significant business transformation across every sector and industry,” Wedbush Securities analyst Dan Ives said in a note to investors. – AFP Meanwhile, Seoul landed a deal with Trump in which South Korean products would face a 15% tariff when entering the United States – significantly below a 25% level threatened. – AFP It left out products like copper ores, concentrates and cathodes, bringing some relief to industry.

Trump inked an order too for a 50% tariff to kick today on goods like copper pipes and wiring, making good on an earlier vow to impose these duties. But the levy, which came after a Commerce Department probe on national security grounds, was less sweeping than anticipated.

Brazilian its government’s policies and actions threaten US national security. But he delayed its implementation from today to Aug 6 and crucially exempted many products from the prohibitive levy, including orange juice, civil aircraft, iron ore and some energy products. goods, saying

Fed holds firm against White House as divisions emerge WASHINGTON: The US Federal Reserve kept interest rates unchanged on Wednesday, defying strong political pressure from President Donald Trump to slash borrowing costs – although divisions emerged among policymakers. inventory in the first quarter ahead of Trump’s expected tariffs. In announcing its decision on Wednesday, the Fed cited a moderation in economic activity in the first half of the year and “solid” labour market conditions. It warned, however, that an incoming raft of new tariff rates today. Despite the dissents by Fed governors Christopher Waller and Michelle Bowman, Powell maintained that it had been a “good meeting” with thoughtful arguments around the table. “The extent of those shifts is the point of contention and subject to uncertainty. That leaves the Fed in the uncomfortable position of traversing a high wire without a safety net.” It can take anywhere from six to 18 months for the full effects of tariffs to materialise, she said.

The central bank’s call to hold interest rates at a range between 4.25% and 4.50% for a fifth consecutive meeting came with two dissents, marking the first time since 1993 that two Fed governors voted against a rate decision. It also came amid a flurry of data releases this week, including an estimate showing the world’s biggest economy returned to growth in the second quarter. But the uptick was heavily influenced by a pullback in imports after businesses rushed to stockpile

But Swonk also flagged the “hyper-politicised environment” in which divisions are happening. Trump has lashed out repeatedly at the independent Fed chair for not lowering rates sooner – calling him a “numbskull” and “moron.” The president, citing Wednesday’s GDP figures, earlier said Powell “must now lower the rate”. The repeated attacks have fuelled speculation that Trump may attempt to fire Powell or otherwise pressure him to resign early. – AFP Zuckerberg has embarked on a major AI spending spree, poaching top researchers with expensive pay packages from rivals like OpenAI and Apple as he builds a team to pursue what he calls AI superintelligence. “To win the superintelligence race requires the best of the best talent and Meta’s been on a roll when it comes to recruiting top AI talent. Money talks and Meta has plenty of it,” said Forrester research director Mike Proulx. – AFP

The dissents by Waller and Bowman, who had preferred a 25 basis points cut, were largely expected by financial markets. Both officials had earlier indicated openness to a July reduction. But KPMG chief economist Diane Swonk said: “We should expect the Fed to become less unified as we get closer to a potential cut in rates.” The hardest challenge for the central bank would be a worsening in employment alongside a pick-up in inflation, she added in a note.

“uncertainty about the economic outlook remains elevated”, while inflation too is somewhat heightened. Asked about US tariff deals and whether they brought more certainty to policymakers assessing the effects of duties, Fed chairman Jerome Powell said: “It’s been a very dynamic time for these trade negotiations.” “We’re still away from seeing where things settle down,” he told a press conference. Trump has also vowed to impose

Meta beats expectations, sending share price soaring SAN FRANCISCO: Meta Platforms reported robust second-quarter financial results on Wednesday, with revenue jumping 22% year-over-year to US$47.5 billion (RM203 billion) as the social media giant continues investing heavily in artificial intelligence. rise in users across its family of platforms. “We’ve had a strong quarter both in terms of our business and community,” said CEO Mark Zuckerberg. advertising revenue climbed a stellar 21% to US$46.6 billion. Meta’s Family of Apps segment, which includes Facebook, Instagram, WhatsApp and Messenger, saw daily active users reach 3.48 billion in June, up 6% from a year earlier.

“I’m excited to build personal superintelligence for everyone in the world.” Meta posted a net profit of US$18.3 billion (RM78 billion), compared with US$13.5 billion in the same period last year. The results exceeded Wall Street expectations as

Meta significantly increased its capital expenditures to US$17 billion in the quarter, primarily for AI infrastructure investments. It projects total 2025 capital spending between US$66 billion and US$72 billion.

The Facebook and Instagram owner’s share price soared as much as 12% in after-hours trading, with investors buoyed by the company’s growing advertising business and a