Introduction: US ‘close to 10 trade deals’ after China agreement ‘signed’
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Hopes are building that the US may be close to announcing more trade deals, and avoid imposing punishing new tariffs that would disrupt the global economy.
Overnight, Donald Trump announced that China and the US had signed a deal, without providing details, declaring:
“We just signed with China yesterday.”
It later emerged that the agreement will expedite rare earth shipments to the US, building on the progress negotiators made in Switzerland last month.
A White House official explained:
“The administration and China agreed to an additional understanding for a framework to implement the Geneva agreement……how we can implement expediting rare earths shipments to the US again.”
The US, and its trading partners, have less than two weeks until Trump’s 90-day trade war pause expires.
US Commerce Secretary Howard Lutnick has claimed that progress is being made, and hinted that the White House has imminent plans to reach agreements with 10 major trading partners.
Lutnick told Bloomberg Television:
“We’re going to do top 10 deals, put them in the right category, and then these other countries will fit behind.”
Trump has previously indicated he could send letters to countries announcing their new tariff rates, if deals aren’t agreed in time.
Lutnick has indicated that countries will be sorted into “proper buckets” on 9 July, although there might be flexibility for further negotiations….
He says:
“Those who have deals will have deals, and everybody else that is negotiating with us, they’ll get a response from us and then they’ll go into that package. If people want to come back and negotiate further, they’re entitled to, but that tariff rate will be set and off we’ll go.”
The agenda
-
10am BST: EU consumer and business confidence stats
-
1.30pm BST: US PCE inflation report for May
-
3pm BST: University of Michigan’s US consumer confidence index
Key events
UK car exports to the US halved in May
UK car production has slumped to a 76-year low, as Donald Trump’s trade war hurt the British auto industry.
Shipments to the US fell by 55.4% last month, according to new data from the Society of Motor Manufacturers and Traders.
The SMMT says:
This was primarily due to the imposition by the US administration of a supplementary 25% Section 232 tariffs on cars from March which depressed demand instantly forcing many manufacturers to stop shipments. However, with the trade agreement negotiated by government due to come into effect before the end of June, this should hopefully be a short-lived constraint.
There was weakness elsewhere too, though. Shipments to the EU fell by 22.5%, while output for the UK domestic market tumbled by 42%.
Overall, UK car and commercial vehicle production fell by 32.8% in May. That’s the lowest performance for the month since 1949, if you exclude 2020, when Covid lockdowns forced factories to shut or cut capacity.
Data overnight has indicated the US trade war hurt earnings at China’s factories this year.
China’s industrial profits plunged 9.1% in May, compared with a year earlier, and have fallen by 1.1% in the first five months of the year, according to the National Bureau of Statistics (NBS).
NBS statistician Yu Weining attributed the fall to:
“insufficient effective demand, declining prices of industrial products and fluctuations in short-term factors.”
BBG: China confirms trade framework details With US
China has said it has further confirmed details of a trade framework with the US in recent days, Bloomberg reports.
A spokesperson for the Chinese Commerce Ministry made the announcement in a statement today, while reiterating that it will continue to approve export permits of controlled items.
In the statement, the Chinese Commerce Ministry said Beijing will “review and approve eligible applications for export of controlled items in accordance with the law,” and the US side will cancel restrictive measures, which it didn’t specify.
Asia-Pacific shares hit over three year high
Shares across Asia-Pacific markets have hit their highest level in more than three years today, as optimism builds in the markets.
MSCI’s broadest index of Asia-Pacific shares outside Japan has climbed to its highest level since November 2021.
The rally was driven by strong gains in Japan, where the Nikkei 225 index jumped by 1.4%. The yen, typically a safe-haven, weakened amid hopes for progress in tariff negotiations between the US and other countries.
China’s markets were mixed, though, with the CSI300 index dipping by 0.5%.
Jim Reid, market strategist at Deutsche Bank, suggests markets are in a ‘sweet spot’:
The continued positive momentum in equities was impressive. We seem to be in a sweet spot post Middle Eastern calm and pre the July 9th reciprocal tariff extension deadline. This will start to come into view soon, and headlines are starting to bubble up.
Introduction: US ‘close to 10 trade deals’ after China agreement ‘signed’
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Hopes are building that the US may be close to announcing more trade deals, and avoid imposing punishing new tariffs that would disrupt the global economy.
Overnight, Donald Trump announced that China and the US had signed a deal, without providing details, declaring:
“We just signed with China yesterday.”
It later emerged that the agreement will expedite rare earth shipments to the US, building on the progress negotiators made in Switzerland last month.
A White House official explained:
“The administration and China agreed to an additional understanding for a framework to implement the Geneva agreement……how we can implement expediting rare earths shipments to the US again.”
The US, and its trading partners, have less than two weeks until Trump’s 90-day trade war pause expires.
US Commerce Secretary Howard Lutnick has claimed that progress is being made, and hinted that the White House has imminent plans to reach agreements with 10 major trading partners.
Lutnick told Bloomberg Television:
“We’re going to do top 10 deals, put them in the right category, and then these other countries will fit behind.”
Trump has previously indicated he could send letters to countries announcing their new tariff rates, if deals aren’t agreed in time.
Lutnick has indicated that countries will be sorted into “proper buckets” on 9 July, although there might be flexibility for further negotiations….
He says:
“Those who have deals will have deals, and everybody else that is negotiating with us, they’ll get a response from us and then they’ll go into that package. If people want to come back and negotiate further, they’re entitled to, but that tariff rate will be set and off we’ll go.”
The agenda
-
10am BST: EU consumer and business confidence stats
-
1.30pm BST: US PCE inflation report for May
-
3pm BST: University of Michigan’s US consumer confidence index
