Note: Global Morning Briefing summarizes global news reported by Seoul Economic Daily.
U.S., China Each Cut Tariffs on $30 Billion in Goods; 1,696 Items Disclosed
The United States and China each agreed to lower tariffs on $30 billion worth of goods as a follow-up to their summit, and the White House disclosed the 1,696 items covered by the reductions. Combined with the May agreement, the total reaches $60 billion, or about 14.5% of the $415 billion in two-way trade last year.
The U.S. will cut tariffs on 77 Chinese consumer goods, including small appliances such as microwave ovens, electric shavers and coffee makers, as well as toys, thermos flasks and infant car seats. China will lower tariffs on 1,619 items, including medical devices such as MRI machines and surgical robots, and U.S. agricultural, livestock and fishery products such as wheat, beef, salmon, whiskey and cheese.
Political calculations underpin both sides. With midterm elections set for Nov. 3, President Donald Trump is seeking to reassure farming and fishing constituencies shaken by a surge in diesel prices, while easing discontent among consumers weary of price pressures. China, struggling with weak domestic demand and rising unemployment, has regained U.S. market access for the light industrial goods that anchor its exports. Bloomberg noted that the move could help China meet its target of buying more than $17 billion of U.S. farm products annually through 2028. Still, China's imports of U.S. agricultural products excluding soybeans totaled just $3.9 billion from January through July this year.
The White House said 90% of all items will fall to most-favored-nation tariff levels. Treasury Secretary Scott Bessent, U.S. Trade Representative Jamieson Greer and Chinese Vice Premier He Lifeng will serve as chief representatives on a U.S.-China trade committee that will meet at least once per quarter. Meanwhile, China's Commerce Ministry said it had agreed to include U.S. coal in the tariff reductions but did not mention the commitment to import more than 10 million tons of coal that the White House cited.
Yen at 157 Range: Will Trump's Remarks Speed Up the BOJ Clock?
The Bank of Japan may raise its benchmark rate for a second consecutive meeting in October, according to growing speculation. The prospect is being read as the result of a faster pace of U.S. tightening combined with American pressure over the weak yen.
Kazuo Momma, a former BOJ executive director, put the odds of a consecutive October hike at 20% to 30% in an interview with Bloomberg on the 25th of this month. Momma projected three more increases of 0.25 percentage point each, reaching a terminal rate of about 2% in June or July next year.
The BOJ raised its benchmark rate to 1.25% on the 18th, the highest level in 31 years. Governor Kazuo Ueda stressed that abrupt increases should be avoided, but released minutes included remarks from board members that the pace of hikes could quicken beyond the six-month intervals the market expects.
The U.S. Federal Reserve raised its benchmark rate by 0.25 percentage point to 4.00% this month. After Chair Kevin Warsh signaled further tightening, hawkish comments from Fed officials have followed, fueling talk of an October increase.
The yen slid to the 158 range per dollar immediately after the BOJ hike, approaching 160, before trading at 157.43 on the 28th. Prime Minister Sanae Takaichi said President Donald Trump had indicated at the U.S.-Japan summit that the weak yen was making trade difficult for the United States, and Treasury Secretary Scott Bessent also said a stronger yen would be desirable.
From 95% Share to Zero: Is China's Market Reopening for Nvidia?
The Chinese government is considering allowing domestic companies to buy Nvidia's new RTX Pro 5500 chip, according to reports. Analysts say China, which has suppressed imports of U.S. semiconductors, has shifted to a pragmatic course in order to tap the performance of advanced chips.
The Information reported on the 27th, citing sources, that the Ministry of Industry and Information Technology had informed companies including ByteDance and Alibaba of the approval policy. The government asked companies to report desired volumes and intended uses. The chip is designed for workstations and, unlike server-grade AI accelerators, uses GDDR7 memory instead of HBM. Still, bundling eight of them in a single server can run large AI models, making them usable for chatbots, AI agents and video editing and generation. ByteDance is reviewing an order of about 1 million units, and Nvidia plans to supply about 500,000 units per quarter to China starting at the end of December. The order deadline for securing volume is Sept. 30, and the China selling price is 85,000 to 90,000 yuan.
Nvidia ceded its lead in China's high-performance AI chip market to local players such as Huawei after U.S. export controls took effect. Chief Executive Jensen Huang has lamented that Nvidia's share of the Chinese market fell from 95% at one point to virtually zero. Charu Chanana, chief investment strategist at Saxo, said that because Chinese chips still trail Nvidia in performance, supply capacity and ecosystem, Nvidia has room to close the gap again if export restrictions are eased.
Whether the U.S. will approve the sales remains unclear. Trump has recently moved openly to check China, and U.S. Trade Representative Jamieson Greer said semiconductor export controls were not discussed in the U.S.-China negotiations. Even if approved, the step would be hard to read as an easing of the U.S. blockade on AI chips, observers said.
Starbucks Weighs Selling Majority Stake in Japan Unit; 250 North American Stores to Close
Starbucks, the world's largest coffee brand, is moving to sell overseas units and shut underperforming stores to cut costs. The company is weighing the sale of a majority stake in its Japan unit, one of its largest markets, while closing 250 underperforming stores in North America.
According to Reuters, Starbucks filed documents with regulators to close 250 of its roughly 18,000 stores in North America, or 1% of the total. The Japan stake sale is valued at about $3 billion (4 trillion won), following the full sale of its Korean unit in 2021 and the transfer of a 60% stake in its China unit to Hong Kong-based private equity firm Boyu Capital in April this year.
Behind the moves is weakness in North America. Starbucks focused on efficiency after the pandemic, but its identity as a "third place" wavered and it posted six straight quarters of declining sales in North America. Under former Chief Executive Laxman Narasimhan, previously of PepsiCo, labor disputes and rising costs deepened the crisis.
Chief Executive Brian Niccol, who took office in 2024, led four consecutive quarters of sales growth with his "Back to Starbucks" strategy, but cost burdens remain heavy. According to the Financial Times, about $1 billion has gone into remodeling up to 9,000 company-operated stores in North America, and at least $500 million into restructuring. As a result, the operating margin fell from 15.8% to 12.9% in two years, and the North American margin dropped from 21% to 13.6%. Niccol has set a goal of cutting annual costs by $2 billion by 2028.
Japan carries symbolic weight because it was the first market Starbucks entered outside North America, in 1996, and has long been considered a core region. International store sales rose 5.7% from a year earlier in the third quarter this year, helped by growth in Japan and Britain. Chinese outlet Touzhong Wang said Starbucks appears willing to let go of anything outside North America, seeking to reshape its overseas business around royalties that guarantee reliable profit.
