13/08/2025

BIZ & FINANCE WEDNESDAY | AUG 13, 2025

17 US, China extend tariff truce by 90 days

“If (Trump) escalates, he will struggle to gain an upper hand over China, which has many cards to play,” Xu said. China’s exports to the US fell an annual 21.7% last month, according to the country’s latest trade data, while shipments to Southeast Asia rose 16.6% over the same period as manufacturers sought to pivot to new markets and capitalise on a separate reprieve that allowed trans-shipment to the US. Separate US data released last week showed the trade deficit with China shrank to its lowest in more than 21 years in June. Still, analysts expect the world’s two largest economies to reach an agreement before long, as their deep interdependence makes pursuing alternative markets un-attractive over the long term. Ryan Majerus, a former US trade official now with the King & Spalding law firm, said the news would give both sides more time to work through long standing trade concerns. “This will undoubtedly lower anxiety on both sides as talks continue, and as the US and China work toward a framework deal in the fall,” he said. – Reuters Australia business mood brightens as activity holds up SYDNEY: A measure of Australian business confidence rose to a three-year high in July thanks to strength in services and construction, a survey showed yesterday, though rising costs also put upward pressure on retail prices. The survey from National Australia Bank (NAB) showed its index of business confidence climbed to +7 in July, from +5 in June, the highest reading since August 2022. Its measure of business conditions eased to a still solid +5 in July, after jumping to +7 the previous month. “Overall, the survey points to an improvement in activity through Q2 and suggests that the worries globally have not materially influenced local hiring and investment decisions,” said NAB’s chief economist, Sally Auld. “Generally, the services sectors, both consumer facing and for businesses, are stronger while retail and wholesale remain weaker.” Confidence could have been sup ported by expectations for lower bor rowing costs, with the Reserve Bank of Australia widely expected to cut interest rates to a two-year low of 3.60% yesterday. The survey’s measure of business sales dipped 3 points to +11 in July, after a 9 point jump in June, while profitability eased 2 points to +2. In a cautionary note for the labour market, its measure of employment fell 3 points to +1. Official data in June showed a surprise jump in unemployment to the highest since late 2021 at 4.3% and sparked worries about a weakening trend. Price indicators in the survey pointed to pockets of ongoing inflationary pres sures. Notably, quarterly growth in retail prices accelerated to 1.1% in July, from 0.5% in June, while producer prices rose at a 0.9% pace. “The survey is consistent with improving economic growth, although still highlights the challenges around cost pressures faced by many businesses,” said Auld. – Reuters

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. “What is he going to offer in exchange?” said Xu Tianchen, senior economist at the Economist Intelli gence Unit in Beijing. “China says: ‘you should allow us to buy more high-tech goods,‘ but the US is reluctant.” Xu said Trump’s refusal to ease his 20% tariff on Chinese goods over fentanyl flows suggested both sides believed they could continue to withstand the trade shock.

United States wants to see their relationship continue to deteriorate,” said Wang Mingyue, a 39-year-old professional working in robotics. “That’s why both are taking the current approach, but the game and confrontation may not be over yet - so there’s still risk.” Markets showed optimism for a breakthrough between the two superpowers, with Asian stocks rising and currencies mostly steady, after treading water for weeks. Trump told CNBC last week that the US and China were getting very close to a trade agreement and he would meet Xi before the end of the year if a deal was struck. The two sides announced a truce in their trade dispute in May 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 US nego tiators 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

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, using the acronym for the People’s Republic of China. The tariff truce between Beijing and Washington had been due to expire yesterday. 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 US tariffs on Chinese goods from shooting up to 145%, while Chinese tariffs on US 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 US imports at 10%. There was relief on the streets of China’s capital, where officials are grappling with the challenge Trump’s trade policy poses to the economy’s long-standing, export oriented growth model. “I don’t think either China or the

WASHINGTON/BEIJING: The United States and China have extended a tariff truce for another 90 days, staving off triple-digit duties on each other’s goods as US retailers get ready to ramp up inventories ahead of the critical end-of-year holiday season. US President Donald Trump announced on his Truth Social platform on Monday that he had signed an executive order suspending the imposition of higher tariffs until 12:01am EST (1.01pm Malaysian time) on Nov 10, with all other elements of the truce to remain in place. China’s Commerce Ministry issued a parallel pause on extra tariffs early yesterday, also postponing for 90 days the addition of US firms it had targeted in April to trade and investment restriction lists. “The United States continues to o Trump says Beijing has been ‘dealing quite nicely’

UK hiring falls but wage growth remains high

* LONDON: Britain’s jobs market has weakened again, official data showed, with payrolls falling for a sixth month and vacancies dropping further, but wage growth stayed strong, underscoring why the Bank of England (BoE) is so cautious about cutting interest rates. With the central bank’s policymakers split over the risks of a hiring slump and a pickup in inflation pressures, the Office for National Statistics’ (ONS) figures pointed to a continued cooling of the labour market, albeit less sharply than in recent months. The number of employees on company payrolls, as measured by tax office data, fell by a provisional 8,000 in July from June, extending a run of declines that began in February but the smallest decline in that run. The reduction in June was revised down to 26,000, fewer than the originally reported fall of 41,000. Employers have said finance minister Rachel Reeves’ decision to raise a tax on them is weighing on their staffing and pay decisions, as well as causing an increase in their prices. BEIJING: China will offer interest subsidies for businesses in eight consumer service sectors including catering and tourism, in a bid to support services consumption amid a slowing economy. Eligible businesses can receive an interest subsidy of one percentage point on loans from 21 national banks, nine government departments, including the Ministry of Finance, said in a statement yesterday. The maximum loan amount eligible for the interest subsidy for a single entity could be up to 1 million yuan (RM589,000), the statement said. The move aims to reduce financing costs “for service industry operators” and boost the consumer market, it said. The central government and provincial governments will bear 90% and 10% of the cost of the subsidy funds, respectively. The subsidy period would not exceed one year, it said. Separately yesterday, financial regulators said they would offer interest subsidies for individuals that borrow consumer loans, to reduce borrowing costs and stimulate consumer spending. Consumers can receive an interest subsidy of one percentage point on loans for single purchases no more than 50,000 yuan for items such as household vehicles and electronic products, it said. – Reuters

February 2026, according to LSEG data. Thomas Pugh, chief economist at tax and consulting firm RSM UK, saw signs that the hit to hiring caused by the tax hike on employers and a sharp increase in the minimum wage was fading. “It looks like the worst of the adjustment to the big increase in labour costs is now behind us, and that the labour market is now stabilising,” Pugh said. However, yesterday’s data showed that the number of job vacancies fell by 44,000 in the three months to July to 718,000, the lowest since the three months to April 2021. Britain’s unemployment rate in the three months to June held at 4.7%, its highest since the second quarter of 2021, although that figure was based on a survey of households that the ONS is overhauling and has said is not currently reliable.

Basic wage growth in the private sector – watched closely by the BoE – edged down to 4.8% in the three months to June. But overall average weekly earnings, excluding bonuses, grew by 5%, unchanged from the three months to May and above the 3% level seen as consistent with the BoE’s 2% inflation target. “Today’s labour market figures underline the stagflation quandary facing the Monetary Policy Committee (MPC),” Jack Kennedy, senior economist at job website Indeed, said. “While a further rate cut in November remains on the cards, it’s not a done deal with wage growth remaining elevated amid concerns over inflation persistence.” The BoE last week cut interest rates to 4% from 4.25%, but only after a tight 5-4 vote by the MPC, which expects headline inflation to hit 4% soon, double its 2% target. Sterling rose slightly after the jobs figures were published and investors trimmed their bets on the possibility of another BoE rate cut this year. They are fully pricing another cut only in

In one positive sign for the BoE and the government, the inactivity rate - which measures people out of work and not looking for a job - fell to its lowest since the start of the coronavirus pandemic at 21%. – Reuters Beijing offers interest subsidies for loans to boost consumption

Workers unloading material from a van outside a small-scale factory at Datang village in Guangzhou. China will offer interest subsidies for individuals with consumer loans, to reduce borrowing costs and stimulate consumer spending. – REUTERSPIC