2025-07-04 11:12

Pause on Trump's 'Liberation Day' tariffs expires on July 9 Stocks have flourished despite tariff volatility Dollar has taken a hit Major exporters to US still awaiting clarity Gold rises on inflation risks, global unrest, US debt worries GDANSK/LONDON, July 4 (Reuters) - The deadline U.S. President Donald Trump set for major trading partners to strike deals with Washington or face hefty tariffs expires next week, bringing to a close 90 days of volatility but leaving global investors in the dark over what will happen next. Trump's propensity to issue a threat, or impose a new tariff, only to reverse course shortly afterwards has led to turmoil over the past three months. Sign up here. Investors, however, have now become somewhat inured to this sort of policymaking on the fly. And, as a result, there is little evidence at this point that many are preparing for fireworks on July 9. Instead, most expect some kind of delay, pause or compromise. What that will look like, however, is anyone's guess. Here is a snapshot of where major markets are now, relative to where they were when Trump dropped his initial tariffs bombshell on April 2: TAKING STOCK OF STOCKS Global stock markets have staged a strong recovery following the intense volatility triggered by Trump's tariff announcement. The MSCI World index (.MIWD00000PUS) , opens new tab, which fell 10% between April 2 and April 9, the day Trump paused the tariffs, has hit successive record highs and gained over 11% since the original "Liberation Day" announcement. Global equities got another boost in May, when the U.S. and China reached a temporary truce, pausing many tariffs for another 90 days. Geopolitical tensions, including Israel's recent strikes on Iran and Washington's subsequent bombing of Iranian nuclear sites, briefly reined in sentiment but have not derailed the broader rally. The S&P 500 (.SPX) , opens new tab, which had lagged other major equity markets earlier in the year, has closed those gaps, gaining over 10% since April 2, and is neck and neck with the MSCI all-country index, which excludes the United States (.MIWU00000PUS) , opens new tab. There's an important caveat, however. The S&P has only hit record highs in dollar terms. The weakness in the U.S. currency has eroded the returns for overseas investors. In euro or Swiss franc terms, for example, the index is still about 10% below February's record high, while in pounds, it's 7% below the sterling-denominated peak. DOLLAR DECLINE The U.S. dollar, widely regarded as the world's most powerful and stable currency, has suffered a knock to its reputation from Trump's tariffs and the subsequent 90-day pause. The dollar index , which reflects the U.S. currency's performance against a basket of six others including the euro and the Japanese yen, suffered its worst first half of the year since 1973, declining by approximately 11%. It has fallen by 6.6% since April 2 alone. Against the currencies of some of the United States' biggest trading partners, the decline has been even more marked. It has lost some 8% against the euro and the Mexican peso since then and 5% against the Canadian dollar . Vincent Mortier, the CIO of Europe's largest asset manager Amundi, said the euro has plenty more room to run, especially as U.S. debt worries are also driving the dollar down. "I won't be surprised if by the end of next year we start to revisit the $1.30 level," he said, highlighting that at its 2008 peak, the euro got as high as $1.60. FOR EXPORTERS, CERTAINTY IS THE PRIZE European shares have more than recovered losses suffered since Trump's "Liberation Day". But strength in the euro and anxiety over tariffs have kept them below March's record highs. Large exporting sectors such as pharma and autos, which make up around one-third of EU exports to the United States, have rebounded too, but have been more volatile. Brussels is reportedly open to a U.S. deal that would apply a universal 10% tariff on many of its exports, something several investors would view favourably should it be confirmed. Citi said markets risk being caught offside if tariffs are reimposed at 20% or reach 50%. "Trump is truly unpredictable, but if it's really around 10%, I think the markets will react very well," said Carlo Franchini, head of institutional clients at Banca Ifigest. The impact of the trade talks extends beyond Europe, however, with automakers in Japan also being watched. Citi's base case is for a sustained 25% tariff, while a surprise cut to 10% could unlock a 50% upside for Japanese auto stocks. ALL THAT GLITTERS Gold has featured as the hedge of choice against an array of risks, from tariff-induced inflation, to geopolitical risk and a shift away from the U.S. dollar. The price has hit record after record, rising 26% so far this year to around $3,330 an ounce. Gold has eclipsed bitcoin , which has gained about 14% year to date, and even Nvidia (NVDA.O) , opens new tab, the maker of chips that power AI capabilities, whose shares went parabolic last year and have risen about 18% this year. Since April 2, gold's ascent has gathered pace, fuelled by purchases from central banks, fund managers and even individuals. A survey by UBS Asset Management this week showed 39% of respondents said they planned to increase their domestically held gold holdings, compared with 15% last year. The independence of the Federal Reserve - whose chair, Jerome Powell, Trump has berated repeatedly for not cutting interest rates fast enough - is one of the key concerns cited in the survey. (This story has been refiled to include the dropped phrase 'domestically held' in paragraph 27) https://www.reuters.com/world/china/global-markets-tariffs-deadline-graphic-pix-2025-07-04/

2025-07-04 11:04

TOKYO, July 4 (Reuters) - U.S. President Donald Trump has complained that Japan was not buying American rice, putting pressure on Tokyo as it struggles to seal a trade deal before so-called "reciprocal" tariffs are set to kick in on July 9. Tokyo has not budged on rice, a staple food and cultural heritage that it says is fundamental to its national food security. The rice market is largely protected with trade barriers, although a domestic shortage and a spike in prices have led to a surge in imports this year. Sign up here. WHAT IS JAPAN'S TRADE POLICY ON RICE? Under a World Trade Organization (WTO) "minimum access" framework introduced in 1995, Japan imports about 770,000 metric tons of rice tariff-free every year. Up to 100,000 tons of that is earmarked for staple rice, equivalent to about 1% of total domestic consumption of about 7 million tons. Of the total 767,000 tons Japan imported in the last fiscal year to March 2025, 45% came from the United States. Beyond the "minimum access" framework, Japan imposes a levy of 341 yen ($2.36) per kg, which has, for the most part, effectively priced imports out of the market. As domestic rice prices soared over the past year, a panel advising the finance ministry proposed expanding imports of staple rice - which is eaten at meals rather than used for feed or as an ingredient in other products - saying that lifting the 100,000-ton tariff-free cap could help stabilise supply. In the annual report released by the U.S. Trade Representative in March, Washington criticised Japan's rice import and distribution system as "highly regulated and nontransparent" and said that it limited U.S. exporters' ability to have "meaningful access" to Japanese consumers. IS JAPAN IMPORTING MORE RICE? A doubling in domestic rice prices from the levels of a year ago has fuelled a surge in imports, as businesses and consumers clamour for cheaper options. In the fiscal year that ended in March 2025, tariff-free imports of staple rice hit the 100,000-ton cap for the first time in seven years. About 60,000 tons came from the U.S. In an effort to provide cheaper rice to consumers more quickly, the farm ministry brought forward to June a tender usually held in September for the first 30,000 tons of tariff-free, imported staple rice for this year. Of the total tendered, 25,541 tons were from the U.S., followed by 1,500 tons from Australia and 708 tons from Thailand. For tariffed staple rice, private companies imported some 10,600 tons in May alone, of which about three-quarters came from the U.S., according to finance ministry data. That compares with total imports of 3,004 tons for all of fiscal 2024. WHAT HAPPENED IN THE LAST U.S.-JAPAN TRADE DEAL? The last bilateral trade deal was sealed in 2019 during Trump's first term, with then-Japanese Prime Minister Shinzo Abe. The U.S. aimed to restore its farmers' lost market share after Trump pulled the U.S. out of the Trans-Pacific Partnership (TPP) trade pact in 2017. Japan made concessions on U.S. beef and pork, agreeing to gradually lower or eliminate tariffs, but rice was left out. Under TPP, Japan would have accepted 70,000 tons of U.S. staple rice per year tariff-free under a U.S.-specific quota, but this was not included in the bilateral deal. ($1 = 144.3100 yen) https://www.reuters.com/markets/asia/what-is-japans-trade-policy-rice-2025-07-04/

2025-07-04 11:01

Japan to implement new agricultural policy for rice from 2027 Rice shortage leads to historic price spike and exposes limitations of old policy Trump pressures Japan on closed rice market as tariff talks stall Farmers worry about oversupply and pressure on price JOETSU, Japan, July 4 (Reuters) - For more than half a century, the Japanese government has encouraged its rice farmers to grow less of the crop so that prices of the national staple grain remained relatively high and steady. Now, under an ambitious agricultural policy announced this year, Tokyo is preparing for a reversal, envisaging a future of bountiful output that would secure the country's food security without sending prices into freefall and hurting its politically influential farmers. Sign up here. The new direction has taken on an unexpected urgency as Japanese grapple with a shortage of the all-important staple, which has prompted a historic spike in prices, a flood of imports, and interest from President Donald Trump, who has renewed pressure on Japan to buy U.S. rice as part of the allies' elusive trade deal. It is a policy that many farmers like Kazuhachi Hosaka welcome in principle, but with trepidation because questions over how it would work in practice remain unanswered. The government is aiming to complete a roadmap by the middle of next year. "We'd want the government to make sure there's some kind of a safety net for producers," Hosaka said at his farm in the northern prefecture of Niigata. "It's easy enough to switch rice for feed or processed foods to staple rice. But tilling land for new paddies or switching from wheat or soybeans would require labour, machinery and all kinds of investments." This year, Hosaka allocated all but 10 hectares (25 acres) of his 180-hectare land for staple rice, reducing feed-use rice by 20 hectares given the attractive prices. But he worries that prices could plunge if Japan's overall production goes unchecked under the new policy, set to be implemented from the 2027 crop year. "I do feel conflicted," Hosaka said about the doubling of retail rice prices to above 4,000 yen ($27.80) for a 5kg bag this year in what has turned into a national crisis. "It's important that rice prices settle at levels acceptable to both producers and consumers," he said. Hosaka hopes prices would stabilise around 3,000 to 3,500 yen - a level Prime Minister Shigeru Ishiba also hopes would be palatable for voters. Supermarket prices fell for a fifth straight week, to 3,801 yen in the seven days to June 22, but were still 70% higher than the same period last year. NATIONAL CRISIS For Japanese people, rice is more than just a staple food. Cultivated in the country for more than 2,000 years, rice is considered sacred in the indigenous Shinto religion and is deeply ingrained in local tradition and culture. The Japanese are famously proud of their short-grain Japonica variety, protecting the market with trade barriers. So when rice turned into a luxury item this year, consumers fumed and policymakers - facing imminent elections - worried. With an eye on voters ahead of an upper house election on July 20, the government has been releasing emergency rice from its stockpile to sell for about 2,000 yen ($13.83) per 5 kg (11 pounds). Farmers - also traditionally an important voting bloc for Ishiba's Liberal Democratic Party - were told it was a dire but necessary move to protect Japan's food security and prevent consumers from switching permanently away from homegrown rice. But for most of the past 50 years, Japan has poured its energy into doing the opposite: providing subsidies to farmers to grow crops other than staple rice so as to prevent oversupply and a fall in prices. That system backfired last year when the farm ministry misread supply from the heat-damaged 2023 harvest, resulting in a severe shortage in August. The ensuing surge in prices made Japan an anomaly against a fall in global prices, and exposed the risks of its approach. The new policy, if successful, would prevent a recurrence by allocating 350,000 tons of rice for export in 2030 - an eight-fold jump from 45,000 tons last year - that could be redirected to the domestic market in the event of a shortage, the government says. Some agricultural experts say the policy is unrealistic. The idea of selling expensive Japanese rice abroad is counterintuitive, especially when even Japan is importing record amounts of the grain despite the 341 yen per kg levy that had previously priced foreign products out of the market. Japanese have also acquired a taste for U.S. Calrose rice, while imports from Taiwan, Thailand and Vietnam have also been popular with businesses and cost-conscious consumers. "Expensive rice might sell to niche markets, but getting that up to 350,000 tons would require price competitiveness, and there's a long way for that," said Kazunuki Ohizumi, professor emeritus at Miyagi University and an expert on agricultural management. The government aims to provide some form of support but also expects farmers to make their own efforts to consolidate, and make use of artificial intelligence and other technologies to lower production costs. Meanwhile, Hosaka said, prices of fertilisers, pesticides and fuel have shot up, sending production costs through the roof. "It's tough," he said. "The government has released quite a bit of stockpiled rice, so I'm very worried about prices falling even further." ($1 = 144.6100 yen) https://www.reuters.com/markets/commodities/reversal-japan-now-wants-rice-farmers-produce-more-will-it-work-2025-07-04/

2025-07-04 10:10

MUMBAI, July 04 (Reuters) - The Indian rupee witnessed muted price action on Friday to end the week little changed as traders awaited developments in U.S.-India trade talks, with a positive outcome potentially helping the local currency break past a sticky resistance level. The rupee closed at 85.3925, down about 0.1% each on the week and day. Sign up here. The currency had risen to a one-month peak of 85.25 in the previous session but pared gains on Friday after traders scaled back wagers on rate cuts by the Federal Reserve following a stronger-than-expected U.S. labour market report. On the day, routine dollar demand from importers weighed on the rupee with market participants also avoiding aggressive bullish wagers on the local currency to limit carrying risk over the weekend, a trader at a foreign bank said. While the rupee has persistently failed to rise and hold above a technical resistance level around 85.35-85.40 over recent sessions, a favourable trade deal with the U.S. may help the currency clear the hurdle, the trader added. U.S. President Donald Trump has said that Washington will start sending letters to countries on Friday specifying what tariff rates they will face on imports to the United States. "If Trump's comments prove accurate, then investors will again begin to downgrade growth expectations and upgrade inflation expectations, which will only encourage further dollar selling," MUFG said in a note, referring to the letters. Earlier in the week, Trump announced a deal with Vietnam, and the White House teased a forthcoming agreement with India. Meanwhile, talks with Japan - the U.S.' closest ally in Asia - have appeared to hit road blocks. Amid the ongoing uncertainty, analysts have pointed out that India's climbing foreign exchange reserves and the central bank's shrinking forward book are cementing the rupee's defences. https://www.reuters.com/world/india/rupee-ends-week-little-changed-looming-tariff-deadline-focus-2025-07-04/

2025-07-04 08:28

July 4 (Reuters) - Investors await U.S. President Donald Trump's July 9 deadline for trade partners to strike deals on tariffs with a degree of equanimity, but what happens beyond that has the power to stir up more volatility and uncertainty. The data docket for the coming week is light, leaving the focus squarely on tariffs - so far, the U.S. administration has a limited deal with Britain and in-principle agreement with Vietnam. Two down, just roughly 180 to go, including the penguin-populated Heard Island. Sign up here. Trump said on Sunday his administration was close to finalising deals with several trade partners and will send letters notifying others by July 9 of higher rates that will kick in from August 1. Here's a look at the week ahead from Rocky Swift in Tokyo, Lewis Krauskopf in New York and Alun John, Marc Jones and Amanda Cooper in London. 1/ DEALS, OR NO DEALS? With just days to go until the deadline, investors are on edge to see if the United States forges any agreements with trading partners as they seek to avoid higher levies. Investors have circled this date for months. Trump paused many of the harshest U.S. tariffs for 90 days after his April 2 "Liberation Day" announcement roiled global markets. The coming days could bring a number of scenarios. Some investors have speculated about more delays to allow for talks to continue, but Trump has said he is not thinking of extending the deadline. He even suggested he could impose a tariff of 30% or 35% on imports from Japan - well above the 24% rate he announced in April. 2/ SO MUCH WINNING It may be a sign you're not "winning" in trade talks with the Trump administration when you start attracting verbal broadsides like "spoiled" and "recalcitrant". That's the position of Japan, facing the July 9 deadline before hefty tariffs take effect on its export-dependent economy. Trump hinted at a "potential" deal in late April, but after multiple rounds of talks, none has emerged. He said last week he could set a tariff of "30% or 35% or whatever" on Japanese imports, far higher than the rate he announced on April 2. Cars and rice are sticking points. Japan has vowed not to "sacrifice" its critical agriculture sector. And with autos being Japan's biggest employer and export to the U.S., at nearly 30% of the total, Tokyo may feel it has no choice but to fight for a better deal. 3/ GILT TRIP British bondholders are no strangers to crisis. The British government's decision to scale back an unpopular reform of the welfare system, thereby blowing a 5-billion-pound hole in its budget plans and the visible upset of finance minister Rachel Reeves in parliament was all traders needed to unleash a blast of selling that revived memories of 2022. Benchmark 10-year gilt yields shot up 21 basis points at one point and sterling fell as investors fretted Reeves' job might be on the line, but reversed course after Prime Minister Keir Starmer publicly backed her. Reeves is running out of wiggle-room and may be forced into tax hikes later this year. British consumers are already under pressure. The coming week's data on house prices, car sales and economic growth may show more of those cracks. 4/ THE COMEBACK KID 2025 was meant to be European markets' year, as erratic U.S. policymaking and a once-in-a-generation fiscal shift in Germany prompted investors to shift their money into Europe. That's still the case for the euro , but in equities-land, Wall Street is catching up fast. The STOXX 600 benchmark is up 6.9% in 2025, just one percentage point above the S&P 500, a narrowing from around a 10-percentage point gap in March. (.STOXX) , opens new tab, (.SPX) , opens new tab A storming few months for big tech - where Europe cannot compete - is driving much of U.S. performance. Poster child Nvidia (NVDA.O) , opens new tab hit a market value of $3.92 trillion on Thursday. U.S.-friendly, or Europe-unfriendly, tariff developments in the coming days could see Wall Street overtake Europe on a year-to-date basis. Barring one day in April's tariff sell-off, that's not happened since early January. 5/ STABLE GENIUS With the "One Big Beautiful Bill" done, House Republicans will start working on getting the Senate's landmark stablecoin legislation — known as the GENIUS Act — passed and on to Trump's desk. Stablecoins are a type of cryptocurrency designed to maintain a constant value. The act could see stablecoins explode from being worth around $250 billion now, to anywhere between $500 billion and $2 trillion in the next few years, depending on who you ask, but it is getting plenty of central bankers - and China - hot under the collar. One fear, especially in emerging markets, is it will trigger the "dollarisation" of their economies, whereas many in the industrialised world warn stablecoins give too much control over money to private firms that experience shows can become very unstable very quickly. https://www.reuters.com/business/take-five/global-markets-themes-graphic-2025-07-04/

2025-07-04 08:03

China announces duties up to 34.9% on EU brandy producers Duties come into effect on Saturday for five years Major cognac producers spared if they sell at minimum price Cognac makers say caught in wider dispute over China-made EVs EU says tariffs are unfair, unjustified SHANGHAI/PARIS, July 4 (Reuters) - China spared major cognac producers Pernod Ricard, LVMH and Remy Cointreau from hefty duties on EU brandy on Friday, a rare bright spot at a time of trade tensions between Brussels and Beijing as the two sides row over tariffs on Chinese-made EVs. China will from Saturday levy duties of up to 34.9% for five years on brandy originating in the European Union, most of it cognac from France, the Chinese Commerce Ministry said in a final ruling of an investigation lasting more than a year. Sign up here. But most of France's cognac industry, including big brands LVMH-owned Hennessy and Remy Martin, will be exempt from the duties provided they sell at a minimum price, the ministry said in a statement. It did not disclose the minimum prices. Beijing launched its anti-dumping probe on EU brandy in January last year, in what was widely viewed as retaliation for the EU's decision to impose big import tariffs on China-made electric vehicles. French cognac makers generate global exports of $3 billion a year combined. With premium aged bottles of the liquor selling for hundreds of dollars, they have complained they are collateral damage in the broader trade row between Brussels and Beijing. In addition to the reprieve, China's commerce ministry will give back deposits made by brandy makers since October, when provisional duties were imposed. The refund issue, which weighed particularly heavily on smaller producers, was one of the sticking points in months-long negotiations, two industry sources said. China is the world's biggest market for cognac in value terms. China's commerce ministry said in a statement on Saturday that 34 firms secured agreements for minimum price commitments instead of tariffs. Remy Martin owner Remy Cointreau (RCOP.PA) , opens new tab said in a statement that the deal on minimum price commitments constituted "a substantially less punitive alternative", enabling "the strengthening of some investments in China". Pernod Ricard (PERP.PA) , opens new tab said it regrets the increase in the cost of operating in China, but additional costs are significantly less than would be the case if tariffs had been made permanent. LVMH (LVMH.PA) , opens new tab and Campari (CPRI.MI) , opens new tab did not immediately respond to requests for comment. There was little sign that the rift between China and the EU was easing. Olof Gill, the European Commission's spokesperson for trade, said the tariffs were unfair and unjustified. WANG AND MACRON China's Foreign Minister Wang Yi is visiting Europe this week, seeking to lay the groundwork for a summit between EU and Chinese leaders later this month, with the EV dispute and China's curbs on the export of rare earths high on the agenda. At a meeting with French President Emmanuel Macron on Friday, Wang said China and Europe have resolved the brandy issue via friendly consultations, state news agency Xinhua reported. Wang said he hoped France, as a core power in the European Union, will urge the EU to properly address China-EU trade and economic disputes and actively respond to China's concerns, the report said. Asked about media reports that China was poised to shorten the summit to a single day instead of two, a European Commission spokesperson said the programme was still being finalised. "Nothing has been cancelled because nothing has been announced and no final programme has been agreed yet," the spokesperson added. Last week, Reuters reported that French cognac makers had reached a tentative deal on minimum import prices for the Chinese market but that China would only finalise the deal if progress was made regarding EU tariffs on Chinese-made EVs. INVESTOR RELIEF Shares of French spirits makers were mixed as investors digested the ruling, with many relieved Beijing had agreed to drop tariffs in return for price commitments, likely reviving sales that have suffered due to the tariffs. Remy Cointreau shares were up 0.54% and Pernod was down 0.3%, having regained some ground lost earlier in the day. LVMH was down 1.5%. Monthly cognac exports to China have fallen by as much as 70% due to the trade dispute, according to data from the Bureau National Interprofessionnel du Cognac, a French industry group. Citi analysts said they expected upgrades to earnings forecasts for Pernod and Remy. Remy, which makes 70% of its sales from cognac, mostly in the U.S. and China, said it would update its annual guidance when it releases quarterly numbers on July 25. European spirits makers have also been grappling with a downturn in sales in the United States where inflation has deterred drinkers from pricier spirits. President Donald Trump has also threatened tariffs on imports from the EU. The minimum price pledges could translate into some price increases, but they will likely be small and it is too early to tell whether there could be an impact on shelf prices, a senior industry source with knowledge of the China negotiations said. "The French government has been raising this repeatedly with the Chinese government and saying this is a major bone of contention," said a senior French industry source with knowledge of the China negotiations, who declined to be named because of the sensitivity of the matter. "I think both sides, France and China, did not want this to get out of hand. They wanted to find a resolution." The cognac industry association said the deal for minimum price commitments will be "less unfavourable" than anti-dumping duties but still worse for its members than the historical pre-investigation norm. "This is why we renew our call to the French government and the European Commission to reach a political agreement with the Chinese authorities as soon as possible to return to a situation without anti-dumping duties," it said in a statement. https://www.reuters.com/world/china/china-impose-duties-up-349-eu-brandy-starting-july-5-2025-07-04/