Yazılar

Ontario Pauses Retaliatory Measures, Including Starlink Contract, After U.S. Tariffs Delay

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Ontario has temporarily halted several planned retaliatory actions against the United States, including the cancellation of a C$100 million ($68.12 million) contract with Elon Musk’s Starlink. Premier Doug Ford announced the decision following U.S. President Donald Trump’s move to delay the imposition of tariffs on Canadian imports by 30 days.

Ford had previously threatened to sever the Starlink deal, which would have seen Starlink provide high-speed internet to 15,000 remote homes and businesses in Ontario. The Premier also planned to bar U.S. companies from provincial contracts and remove American products from the shelves of Ontario’s liquor board.

“We have some good news today. We have temporarily averted tariffs that would have severely damaged our economy, giving time for more negotiation and time for cooler heads to prevail,” Ford posted on X, referring to the tariff reprieve.

Ontario, the most populous and industrially significant province in Canada, had prepared the retaliatory measures after Trump proposed a 25% tariff on most Canadian imports, excluding oil. The proposed tariffs sparked concerns about a potential recession if the measures remained in place for long.

Prime Minister Justin Trudeau announced Canada’s response on Saturday, which included imposing 25% tariffs on C$155 billion worth of U.S. goods. While Ford acknowledged that the ongoing trade tensions could delay or freeze various projects, he emphasized the temporary nature of the reprieve.

 

Panasonic Energy Aims to Cut China Supply for U.S. EV Battery Business Amid Tariff Concerns

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Panasonic Energy, a key supplier of electric vehicle (EV) batteries to Tesla and other automakers, has set its top priority to eliminate its reliance on China for U.S.-made batteries, according to a senior executive. Allan Swan, President of Panasonic Energy of North America, told Reuters that adjusting the company’s supply chain is its “No.1 objective” in response to the incoming policies of U.S. President-elect Donald Trump, who has pledged to impose significant tariffs on imported goods, including a 60% tariff on Chinese products.

Panasonic Energy, a subsidiary of Japanese electronics giant Panasonic, currently relies on some Chinese suppliers, though Swan emphasized that the company is working towards reducing this dependence. “We do have some Chinese supply, but we don’t have a lot, and we plan to have even less going forward,” Swan stated. The shift is being accelerated by the potential tariffs and is part of Panasonic’s broader strategy to strengthen its American supply chain.

The raw materials used in Panasonic Energy’s U.S.-manufactured batteries primarily come from international suppliers, including those based in Canada. In response to President Trump’s transition team’s recommendation to impose tariffs on battery materials, Panasonic is taking a “three-pronged approach” to modify its supply chain. This includes securing more U.S. suppliers, supporting Japanese and Korean suppliers to set up operations in the U.S., and collaborating with existing suppliers already planning U.S.-based operations.

Swan emphasized that Panasonic Energy’s focus is on building a robust domestic supply chain to meet U.S. production targets. The company operates a factory in Nevada and plans to open another in Kansas later this year. These efforts are part of Panasonic’s broader goal of aligning with U.S. trade policies and increasing local production as the U.S. shifts toward greater protectionism.

Japanese firms, including major automakers like Nissan and Honda, are bracing for the potential impacts of U.S. tariffs, particularly those targeting Mexico, a key low-cost production hub for the American market. Heavy machinery company Komatsu has also voiced concerns about the potential trade disruptions between the U.S. and Canada.

 

China Plans Record Budget Deficit of 4% of GDP in 2025 to Counter Economic Headwinds

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China’s leaders have agreed to raise the budget deficit to 4% of GDP in 2025, the highest on record, while maintaining an economic growth target of around 5%, according to two sources familiar with the matter. This decision, aligned with a “more proactive” fiscal policy, emerged from last week’s Central Economic Work Conference (CEWC) and December’s Politburo meeting, although the targets remain unofficial.

The proposed increase in deficit, up from the 2024 target of 3%, translates to an additional 1.3 trillion yuan ($179.4 billion) in spending. A significant portion of this fiscal stimulus will be funded by issuing off-budget special bonds, the sources noted. These plans, which could still change, are typically announced officially during the annual parliament meeting in March.

The ramped-up fiscal measures aim to cushion China’s economy from challenges, including a severe property crisis, mounting local government debt, and weak consumer demand. Analysts also point to the anticipated U.S. tariff hikes under a Trump administration as a key risk, with levies expected to exceed 60% on Chinese imports.

China’s exporters, who ship over $400 billion worth of goods annually to the U.S., fear the tariffs could shrink profits, hurt job creation, and amplify economic woes. Analysts warn this could exacerbate industrial overcapacity and intensify deflationary pressures. Some manufacturers have already started relocating production abroad to sidestep trade penalties.

Fiscal Stimulus and Monetary Policy
The CEWC emphasized “steady economic growth” through increased fiscal spending and further issuance of government debt. China’s central bank is expected to adopt an “appropriately loose” monetary policy stance, replacing its 14-year-long “prudent” approach. This shift raises expectations for interest rate cuts and liquidity injections, signaling a dual focus on fiscal and monetary easing.

Morgan Stanley predicts a 2-trillion-yuan fiscal expansion, combining a modest increase in off-budget bonds and a wider deficit. Analysts suggest the 5% GDP target is more about guiding economic expectations and restoring business confidence than imposing a hard constraint.

Yuan Strategy
To mitigate the impact of U.S. tariffs, China may consider allowing the yuan to weaken in 2025, as reported last week. While this move could support exporters, China has reiterated its pledge to maintain the currency’s “basic stability at a reasonable and balanced level,” consistent with CEWC statements from previous years.

Facing external and domestic headwinds, China’s record fiscal expansion highlights its commitment to propping up growth and stabilizing the economy amid rising geopolitical uncertainties and structural challenges.