World
New Zealand plans major defence spending hike. US and Iran to hold talks. North Korea’s crypto heists. By Jonathan Pearlman.
Sharemarkets ricochet amid Trump tariff turmoil
Great power rivalry
United States: Donald Trump paused most of his tariffs this week but stepped up his escalating trade war with China as he sought to end sharemarket turmoil and address fears of a looming economic collapse.
Hours after his tariffs took effect on Wednesday, Trump announced a 90-day pause on the reciprocal tariffs he imposed on almost 60 countries. A blanket 10 per cent tariff will still apply to all countries, including Australia. However, Trump upped tariffs on China to 125 per cent from 104 per cent – a rate he imposed in response to retaliatory tariffs announced by Beijing.
The move has left the world’s two largest economies locked in an escalating trade war that will – even with the pause on other tariffs – reshape the global economy.
Trump’s sudden pause on Wednesday ended a plunge in sharemarkets. Wall Street’s S&P 500, which had experienced its worst falls since the depth of the Covid-19 pandemic, increased 9.5 per cent, marking its best day since 2008.
Trump said he paused the tariffs because countries had been open to making a deal and had not imposed reciprocal tariffs, unlike China, which had shown a “lack of respect”. He said he noticed that investors were becoming “queasy”.
“Over the last few days it looked pretty glum,” he told reporters. “I thought that people were jumping a little bit out of line … They were getting a little bit afraid.”
The tariffs had sparked wild fluctuations in sharemarkets, including losses of US stock values of more than US$6 trillion in the four days to Tuesday. The price of crude oil – a marker of growth expectations – dropped to its lowest levels since 2021.
Andy Brenner, a finance expert from NatAlliance Securities, told the Financial Times on Thursday that the tariff pause was “Trump’s capitulation to markets”.
“He has saved face by keeping tariffs on China,” he said.
The tariffs also sparked open dissent from Elon Musk and other loyalists.
Musk, a critic of the tariffs, attacked Trump’s trade adviser, Peter Navarro, calling him a “moron” and “dumber than a sack of bricks”. The tirade came after Navarro – a tariff devotee – suggested Musk, who heads Tesla and SpaceX, opposed the tariffs because of his business interests. The share price of Tesla, whose second-biggest market is China, dropped 22 per cent in the four days to Tuesday but jumped 23 per cent on Wednesday after the tariff pause was announced.
The neighbourhood
New Zealand: Christopher Luxon, New Zealand’s prime minister, this week announced plans to almost double defence spending amid concerns about the rise of China and growing regional instability.
The country’s defence budget will be lifted to 2 per cent of gross domestic product within the next eight years, up from current yearly spending of almost NZ$5 billion, which is a little more than 1 per cent of GDP. An additional $9 billion will be spent over the next four years, above planned increases.
“New Zealand and our allies and partners across the world are no longer in a benign environment,” Luxon, who leads the centre-right National party, told reporters on Monday.
An RNZ-Reid Research poll earlier this month found 50 per cent of New Zealanders support increasing defence spending, 32 per cent are opposed, and 18 per cent are uncommitted.
Defence Minister Judith Collins said New Zealand faced an increasingly dangerous world, citing a Chinese missile launch in the Pacific last year and a recent Chinese naval deployment to the Tasman Sea. “Distance, certainly, is no longer any protection for New Zealand,” she told reporters.
The government plans to use the funds to upgrade two frigates, replace two transport planes, buy a fleet of naval helicopters and upgrade its missiles capability.
Luxon said the additional spending – which follows a cut in the defence budget last year of more than 6 per cent – was “the floor, not the ceiling”.
War zone
Iran: The US and Iran will hold talks on Saturday to discuss Iran’s nuclear program, marking the first official negotiations between the two countries since Donald Trump withdrew from a nuclear deal in 2018.
Trump said on Monday that Iran will be “in great danger” if it fails to agree to a deal, though Tehran is unlikely to accept his initial demands that it destroy its nuclear facilities and hand over its enriched uranium.
“I think everybody agrees that doing a deal would be preferable to doing the obvious,” Trump told reporters.
Abbas Araghchi, Iran’s foreign affairs minister, wrote in The Washington Post on Tuesday that Tehran was open to reaching a deal but the US must first end its military threats.
“Mark my words: Iran prefers diplomacy, but it knows how to defend itself,” he wrote.
Iran, which insists its nuclear program is for civilian purposes, has signalled it wants sanctions removed in return for any concessions. But an Iranian official told Reuters: “Our nuclear program cannot be dismantled.”
Trump reached out to Iran recently via the United Arab Emirates, saying he wanted a deal to end Iran’s nuclear program and avoid military strikes by the US and Israel.
The talks are due to be held in Oman, the site of initial secret talks in 2013 that led to the nuclear deal overseen by former US president Barack Obama. Delegations on Saturday are due to include Araghchi and Steve Witkoff, Trump’s envoy for the Middle East.
Trump met this week at the White House with Israel’s Prime Minister Benjamin Netanyahu, who said the “military option” would remain if the talks failed.
Meanwhile, Israel conducted a series of heavy air strikes in Gaza this week following Hamas rocket attacks last Sunday. Officials in Gaza said Israel’s strikes on Monday and early Tuesday killed 58 people.
Israel resumed attacks against Hamas in early March and cut off aid to Gaza after an initial phase of a ceasefire deal ended without an agreement on a second phase.
António Guterres, the United Nations secretary-general, called on Israel on Tuesday to end its blockade. “As aid has dried up, the floodgates of horror have reopened,” he told reporters.
Spotlight: North Korea’s crypto heists
North Korea has discovered a new source of revenue to help it weather international sanctions and pay for its nuclear weapons program: stealing crypto.
Hackers from North Korea have conducted a series of crypto heists, including stealing US$200 million from Indian crypto exchange WazirX last July and $1.5 billion worth of Ethereum coins last February from the exchange Bybit.
North Korea is now the third-largest confirmed government holder of Bitcoin – behind the US and the United Kingdom – and accounts for 60 per cent of stolen crypto. According to the Binance exchange, North Korea’s hackers converted Ethereum coins they stole last February to Bitcoin, leaving them with 13,562 coins worth about $1.1 billion. Analysts say North Korean state-backed hacking groups have stolen more than $6 billion worth of crypto in the past decade.
Park Jung-won, of Dankook University in South Korea, told Deutsche Welle that North Korean leader Kim Jong-Un was shifting from smuggling drugs and exporting counterfeit goods to stealing crypto.
“It is probably fair to say that given the way the world was cracking down on Pyongyang’s smuggling efforts, crypto has saved the regime,” he said. “The assumption is that it is being spent on weapons and greater military technology as well as the Kim family.”
North Korea’s hackers reportedly use elaborate strategies to infiltrate networks, such as using false foreign identities to gain employment as remote IT workers or targeting staff at crypto firms with customised job offers or investment opportunities that contain malware. Analysts told The Wall Street Journal that North Korea recruits young students who are good at maths and sciences and now commands about 8000 hackers.
This article was first published in the print edition of The Saturday Paper on April 12, 2025 as "Sharemarkets bounce back on Trump tariff turnaround".
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