2025-08-06 23:16

56% of Canadian exports by value avoided tariffs in June due to trade deal compliance Oil exports to the U.S. earned exemptions, not facing tariffs Smaller firms face tariffs, uncertainty, without USMCA compliance OTTAWA, Aug 6 (Reuters) - Steve Mallia's Toronto-based telescope accessory business was thriving until March when the Trump administration imposed a 25% tariff on U.S.-bound orders that do not comply with local content rules under the U.S.-Mexico-Canada Agreement. The tariff, imposed soon after U.S. President Donald Trump took office in January, effectively stopped Mallia's StarField Optics from competing in its main market, as many of the components used in its products came from China. Sign up here. "When we started to sell into the U.S., business was very strong. We were making money," Mallia said. "As soon as the tariff started to really take place, that disappeared." Mallia, who founded his company in 2018, quickly decided his company's best hope of surviving was to make his products compliant with USMCA, the 2018 trade deal that replaced the North American Free Trade Agreement. Tough decisions small businesses like Mallia must now make highlight the uneven consequences of Trump's efforts to upend the global trading order. While the existing trade deal means Canada and Mexico have so far been less impacted by Trump's tariffs than many other economies, there are hundreds of small and medium companies in Canada that face a direct hit for not being USMCA compliant. Small and medium businesses represent almost 98% of all firms in Canada and account for over 50% of the economy, according to government data. Mallia said production changes to accomplish compliance came at a heavy cost: six months of lost sales, along with additional expenses to set up the factory, alter his supply chain and ramp up production. Even so, a cost-benefit analysis convinced Mallia that it was money well spent. The changes will allow him to regain access from October to a market that has accounted for about 60% of StarField's sales, he estimates. Mallia started the transition well before Thursday, when Trump hiked tariffs to 35% from 25% on goods imported from Canada that do not comply with the free trade deal. Canada's steel, aluminum and auto sectors are particularly hard hit as they face separate tariffs between 25% and 50%. Adding to the uncertainty, USMCA is up for renegotiation next year. To be compliant, companies such as StarField must prove that they generate a bulk of their products within the U.S., Mexico or Canada, or they have substantially altered an imported product in one of the three countries. In Canada, a failure to comply with the trade deal means no or costly access to the world's biggest economy. "Some companies are just not able to do that (comply), and some companies will not be able to do that in the short term," said Clifford Sosnow, partner and chair of the international trade and investment group at Fasken, a Canadian law firm. OIL EXPORTS DUTY FREE About 92% of Canadian exports by value entered the U.S. tariff-free in June because they were exempt, data from the U.S. Census Bureau showed. However, that figure is skewed by oil and gas shipments, Canada's top export by far, since almost 99% of oil shipments entered the U.S. duty free in June. Without oil and gas, total tariff-free imports into the U.S. from Canada fell by six percentage points in June on a yearly basis - to 89% from 95%. Oil producers and other larger exporters have the resources to ensure USMCA compliance, unlike smaller firms such as Mallia's. The amount of Canadian exports that are officially USMCA compliant jumped by 20 percentage points in April to 56%, but has remained nearly unchanged since then, an analysis of U.S. Census Bureau data released on Tuesday showed. The oil sector, which accounts for close to a third of Canada's exports to the United States, quickly adapted, with USMCA compliance rising to 84% in June from 25% in the same period a year ago. Adding all other free trade provisions such as goods shipped directly to free trade zones or free trade bilateral agreements, more than 99% of Canadian oil exports enter the U.S. duty-free, U.S. Census Bureau data showed. But outside of the oil and gas sector, compliance has only moved three percentage points to 45% in June from 42% the same month last year, suggesting that companies are struggling to meet USMCA rules to evade tariffs. The Bank of Canada assumes that over the next two years 95% of Canadian goods exports are likely to be USMCA compliant, though lawyers and export consultants say the increase in compliance from the current level will not be quick. Sectors struggling to comply with the trade deal and earn exemptions include exporters of live animals, meat, vegetables, cereals, chemicals and furniture, U.S. census data shows. For many smaller companies, achieving compliance requires changing supply chains established decades ago, hiring legal counsel and documenting their production cycle for months or even years, said Sosnow from Fasken. Barry Appleton, a professor at New York Law School and an international trade expert, said he expects more Canadian companies will become compliant, but very slowly and at a heavy cost that they will eventually pass on to customers. "The low-hanging fruit has been picked," he said. Mallia is looking to ramp up sales to Europe and Australia, but knows he cannot ignore the U.S. market. He is resigned to paying the high cost to resume shipping duty-free. "At the end of the day, they're the biggest economy in the world, and they're right there," he said. "You are foolish not to look at that." https://www.reuters.com/world/americas/trump-tariffs-cost-small-canadian-firms-big-business-oil-enjoy-exemptions-2025-08-06/

2025-08-06 23:13

FEMA staff diverted to ICE amid hurricane season DHS warns FEMA staff of potential termination if transfer declined Concerns over FEMA understaffing during hurricane season WASHINGTON, Aug 6 (Reuters) - The Trump administration is transferring Federal Emergency Management Agency staffers to help speed the hiring of thousands of immigration enforcement agents, according to staff notices seen by Reuters and a government spokesperson, diverting resources away from the agency during the U.S. hurricane season. The Department of Homeland Security, the parent of both FEMA and the Immigration and Customs Enforcement (ICE) agency, sent notices to affected employees directing them to accept the transfer to ICE or potentially face termination. Sign up here. The Washington Post reported , opens new tab that DHS transferred more than 100 people to ICE from its human resources department and security team, citing current and former officials familiar with the reassignments. Reuters was not able to determine the number of affected staff. The timing of the transfers could leave FEMA understaffed at a critical moment, former FEMA officials warned, potentially hampering disaster response during the height of hurricane season. "DHS is adopting an all-hands-on-deck strategy to recruit 10,000 new ICE agents," department spokesperson Tricia McLaughlin said in a statement. "To support this effort, select FEMA employees will temporarily be detailed to ICE for 90 days to assist with hiring and vetting. Their deployment will NOT disrupt FEMA’s critical operations." The transfers come as President Donald Trump seeks to expand immigration enforcement, a cornerstone of his administration’s agenda, while FEMA is facing staffing shortages after thousands of staffers, including a raft of senior officials, resigned, accepted incentives to leave or were fired. MASS HIRING Trump aims to deport record numbers of immigrants in the U.S. illegally. A spending package passed by the Republican-led Congress in July provides a massive funding increase for ICE, including money to hire 10,000 new ICE officers over five years. ICE has been trying to bring back retired personnel and lure officers from other law enforcement agencies. At the same time, the Trump administration has floated the idea of shrinking or shutting down FEMA entirely. FEMA employees who received transfer orders were told they needed to accept or decline the reassignment within seven days, according to notices seen by Reuters. If they declined or failed to report for duty they could be fired, the notices said. FEMA employees have been deployed to other parts of DHS before, including to help with immigration efforts, but it has been on a voluntary basis, according to Deanne Criswell, who headed FEMA during President Joe Biden's administration. Citing the wording of the notices, Criswell said she was worried the reassignments were not voluntary and that many affected staff would decline, exacerbating staffing shortage ahead of the Atlantic hurricane season's peak next month. FEMA's human resources and security staff are critical to contracting with and vetting local companies and people to respond to a disaster. "They're already short staffed because they've lost so many. Are they going to be able to get them back? That would be my concern," Criswell said. https://www.reuters.com/world/us/trump-administration-shifts-fema-staff-ice-during-hurricane-season-2025-08-06/

2025-08-06 23:13

BoE expected to cut Bank Rate to 4.0% from 4.25% Reduction would be fifth since August last year Some policymakers are worried about jobs slowdown Others are more concerned about inflation pressure BoE decision due at 1100 GMT, press conference 1130 GMT LONDON, Aug 7 (Reuters) - The Bank of England looks poised to cut interest rates for the fifth time in 12 months on Thursday but nagging worries about inflation are likely to split its policymakers and cloud the outlook for its next moves. Governor Andrew Bailey and most of the Monetary Policy Committee are expected to favour taking Bank Rate to 4% from 4.25% as they react to a jobs slowdown made worse by a tax hike on employers and U.S. President Donald Trump's trade war. Sign up here. But two MPC members might push for a bigger cut to prop up the economy while another two might prefer no cut at all due to their inflation concerns, a voting pattern last seen in May and reflecting the conflicting pressures on Britain's central bank. Investors will be watching to see if the BoE sticks to its "gradual and careful" language about the pace of lowering borrowing costs, a message that economists have taken to mean one rate cut every three months. That slow and steady path no longer looks so clear, with inflation running above the BoE's projections and forecast by some economists to reach 4% in coming months, double the central bank's target. Economists at Pantheon Macroeconomics have predicted Thursday's rate cut will be the BoE's last for a while due to the persistence of inflation. That would be a blow for finance minister Rachel Reeves and Prime Minister Keir Starmer, who have promised to speed up Britain's slow economic growth. By contrast, analysts at investment bank Evercore think the BoE might accelerate the pace of cuts later this year as hiring weakens further. Investors are mostly pricing in another cut in November after Thursday's expected move but only one or two more reductions in 2026, which would leave Bank Rate at 3.5% or 3.25%, higher than the euro zone's benchmark rate of 2%. HIGH INFLATION EXPECTATIONS High inflation expectations in surveys of the British public mean Bailey and the rest of the MPC cannot focus squarely on giving the economy a boost by cutting borrowing costs. Inflation has been above the Bank of England's 2% target almost constantly since May 2021. "If I'm a worker and I'm bargaining for a wage, am I really going to believe that inflation is going to come back to 2%?" Stephen Millard, deputy director at the National Institute of Economic and Social Research think tank, said. "I would, personally. But I could imagine there's still quite a bit of wage pressure just coming from that." In contrast to the BoE, which has forecast that inflation will only return to 2% in early 2027, the European Central Bank expects inflation in the euro zone to hold below 2%. It has cut borrowing costs eight times since June of last year. Growth in wages in Britain has proven slower to ease after surging during the COVID-19 pandemic. At about 5% in the most recent data it remains above the 3% level that the BoE thinks is roughly consistent with its inflation target. The BoE will announce the MPC's latest decision and forecasts for the economy at 1100 GMT, half an hour before Bailey and other top officials hold a press conference. The central bank is also expected to assess the impact of its programme of running down its stockpile of government debt ahead of a decision in September on the pace of sales over the following 12 months, a key decision for bond investors. https://www.reuters.com/world/uk/bank-england-facing-jobs-inflation-dilemma-poised-cut-rates-2025-08-06/

2025-08-06 22:40

WASHINGTON, Aug 6 (Reuters) - U.S. President Donald Trump on Wednesday said he could announce further tariffs on China similar to the 25% duties announced earlier on India over its purchases of Russian oil, depending on what happens. "Could happen," Trump told reporters, after saying he expected to announce more secondary sanctions aimed at pressuring Russia to end its war in Ukraine. Sign up here. He gave no further details. "It may happen ... I can't tell you yet," Trump said. "We did it with India. We're doing it probably with a couple of others. One of them could be China." Trump on Wednesday imposed an additional 25% tariff on Indian goods, on top of a 25% tariff announced previously, citing its continued purchases of Russian oil. The White House order did not mention China, which is another big purchaser of Russian oil. Last week, U.S. Treasury Secretary Scott Bessent warned China that it could also face new tariffs if it continued buying Russian oil. https://www.reuters.com/business/energy/trump-says-he-could-impose-more-tariffs-china-similar-india-duties-over-russian-2025-08-06/

2025-08-06 22:33

HOUSTON, Aug 6 (Reuters) - Recent U.S. restrictions on ethane exports to China will likely make it more difficult to contract with Chinese companies, even though they have already been lifted, U.S. exporter Energy Transfer (ET.N) , opens new tab said on Wednesday. The U.S. placed restrictions on shipping ethane - and a wide swathe of other exports - to China in late May and early June after accusing Beijing of slowing shipments of rare earths vital to automakers and other industries. Sign up here. The restrictions were rescinded last month, but they disrupted flows of ethane and caused significant delays to shipments. "That, you know, put a little bit of a black eye on us, on our industry, on our country...," Marshall McCrea, co-CEO of Energy Transfer, said in a post-earnings conference call. The company is one of the top U.S. exporters of ethane, a natural gas liquid. "We think it's going to be probably a little bit more difficult to contract with Chinese crackers, good or bad, we think that they're probably going to be a little bit more hesitant," McCrea added. About half of U.S. ethane, which is extracted from shale gas, heads to China where it is run through crackers to produce ethylene, a building block for plastics. Chinese petrochemical firms use ethane as a feedstock because it is cheaper than naphtha, while U.S. oil and gas producers need China to buy their natural gas liquids as domestic supply exceeds demand. Rival Enterprise Products Partners (EPD.N) , opens new tab also warned last week that the export curbs compromised the U.S. brand for reliable supply and energy security. "These kind of actions rarely hurt the intended target and often backfire hurting our own industry more," said Jim Teague, CEO of Enterprise Products. Enterprise said at least one non-Chinese company that it was in discussions with about contracting ethane decided to contract naphtha instead. Energy Transfer reported a 11.5% decline in net income to $1.16 billion, or 32 cents per unit, in the three months ended June 30. Revenue of $19.24 billion came in well below estimates of about $22 billion, according to LSEG data. https://www.reuters.com/business/energy/us-ethane-curbs-will-make-contracting-china-harder-energy-transfer-says-2025-08-06/

2025-08-06 21:54

Aug 6 (Reuters) - Nutrien (NTR.TO) , opens new tab topped Wall Street estimates for second-quarter profit on Wednesday, as the world's top potash producer benefited from improved demand in North America amid a robust corn planting season. U.S. farmers expanded corn plantings by 5% this year to the highest since 2013 while cutting soybean acres by 4% to a five-year low, the U.S. Department of Agriculture said in June. Sign up here. The agency expects U.S. farmers will seed 95.203 million acres (38.527 million hectares) of corn this year, up from 90.594 million last year. "Fertilizer market fundamentals are supported by strong global demand, persistent supply disruptions and project delays. We have seen healthy fertilizer customer engagement and field activity in North America," CEO Ken Seitz said in a statement. Saskatoon, Canada-based Nutrien said it expects current-year potash sales volumes to be in the range of 13.9 million tonnes to 14.5 million tonnes. It previously projected potash sales volumes of 13.6 million tonnes to 14.4 million tonnes. U.S.-listed shares of the company were up more than 2% in trading after the bell. Nutrien's second-quarter potash sales jumped 31% to $991 million in the three months ended June 30. Total sales rose to $10.44 billion, from $10.16 billion a year earlier, with the retail segment, the company's largest by revenue, reporting sales of $7.96 billion during the quarter. The company posted an adjusted profit of $2.65 per share, compared with analysts' average estimate of $2.40, according to data compiled by LSEG. https://www.reuters.com/markets/commodities/nutrien-beats-quarterly-profit-estimates-strong-potash-demand-2025-08-06/