Posted originally on Jul 25, 2025 by Martin Armstrong
Keir Starmer and Narendra Modi brokered a “free trade agreement” yesterday that is expected to lift the UK economy by £4.8 billion annually, with £6 billion in investments by Indian and British corporations. The deal comes after nearly four years of negotiations and is seen as a major step forward for the two nations.
This is not a true free trade deal. Tariffs on UK goods will be reduced from 15% to 3%. Both Indian and British parliaments must approve of the measure which will take months to approve. Indian exports previously faced duties up to 20%, but the UK is now offering 99% duty-free access for Indian exports. India will go further to reduce duties on some key exports like whisky which will see an immediate deduction from 150% to 75%, followed by a reduction to 40% over the next decade. Autos exports from the UK will also see a sharp decrease from 110% to 10%.
The deal will also expand market access for high-skilled laborers seeking employment in the UK. With a few sector prohibitions, Indian professionals may now work for up to two years in the UK without the need to be based in the UK. Those workers will be eligible for a three-year exemption from social security as well. Public procurement opportunities will be widely available to UK businesses seeking to invest in India.
Some estimate that UK exports to India are expected to increase by 60% to £15.7 billion by 2040 under the new deal, with UK imports from India expected to rise by 25% or £9.8 billion by 2040. The UK government believes its GDP will increase by £4.8 billion annually if parliaments pass the measure.
The UK government also believes that the framework will create thousands of jobs. Critics believe that the deal is partial to Indian professionals who require lower wages to maintain the same lifestyle as someone living in the UK. The agreement also does not open India’s financial and legal services sectors to UK corporations. The deal does not include protections for labor rights or public health. There are other sector related issues, especially regarding coal, as many believe the safeguards for workers and the environment are not present.
India opposes the UK’s carbon border tax and adherence to the climate change net zero agenda that has been suffocating energy sectors. For 2025, the official carbon price per ton of CO2 is set at £41.84 under the UK Emissions Trading Scheme. The Carbon Price Support (CPS) is an additional tax on top of the ETS that is set at £18 per ton of CO2 for fossil fuels used to generate electricity. Beginning in 2027, the UK plans to introduce a Carbon Border Adjustment Mechanism (CBAM) tax on carbon of imported goods such as steel, iron, hydrogen, cement, fertilizers, and aluminum.
Starmer made it clear that the UK is still planning to reduce carbon emissions by 68% by 2030, with the goal of reaching net-zero by 2050. Free trade is a move in the right direction, yet, there will be noteworthy issues ahead as the two governments are not aligned on key issues. The legal and financial sector access will need to be discussed, but the climate change agenda is the stronger problem as the UK is not adhering to a plan that is unfeasible both economically and logistically.
Posted originally on CTH on July 24, 2025 | Sundance
The Federal Reserve is spending $2.5 billion to renovate existing buildings for the agency. The cost overruns so far exceed $700 million in taxpayer money. Both President Trump and OMB Director Russ Vought are furious at the costs.
The $2.5bn refurbishment of the FED headquarters is at the center of focus by the White House, looking specifically at Jay Powell the central bank’s chair. Russell Vought has compared the ridiculous renovation cost to the building of the Palace of Versailles and described cost overruns as “outrageous”.
President Trump, a builder who knows the price of all things in the construction sector, takes matters into his own hands and grabs a hard hat to tour the facility that is not expected to be finished for another two years. Here are his initial remarks (prompted):
Posted originally on CTH on July 24, 2025 | Sundance
President Trump heads to the Federal Reserve today to tour a new FED building and renovation process that is experiencing massive cost overruns. There are some impromptu remarks that were previously made moments ago that I will break out in another post; however, President Trump is expected to deliver remarks shortly.
Posted originally on Jul 24, 2025 by Martin Armstrong
China has been offloading its US Treasury holdings for years. Once the top holder of US debt, China cut its US Treasury holdings for the third consecutive month this May. Total holdings have fallen to $756.3 billion from $757.2 billion in April, according to the US Treasury, marking the lowest debt held since May 2009.
As of 2024, China has reduced its holdings by approximately 30% over a four-year period. China was able to use the exchange rate to buy yuan when the currency depreciated. China seemed to be assisting Trump years ago in lowering the dollar to ease trade frictions. That is no longer the case here as the United States began engaging in economic warfare when it pushed Russia off SWIFT, implemented sanctions, and confiscated private assets. Politicians have threatened China with economic warfare over Taiwan, and there is no incentive to hold the debt of your political enemy. It is akin to holding a gun to someone and asking them to lend you money with the promise to pay it back.
In 2013, China held $1.317 trillion in US Treasury securities at its peak holding. Geopolitical rivalry followed as China increased its military presence in the South China Sea and the US responded by forming alliances with neighboring Asian nations and conducting military operations near Taiwan. Former President Obama and Xi Jinping met in 2013 as well amid ongoing conflict regarding arms sales to Taiwan, cyber espionage accusations, and disagreements over North Korea. China offloaded $550 billion in US Treasuries by the end of 2013 and Japan became the largest holder of US debt.
Let us not forget that the Ukraine war sprang up in 2014, and the West installed its puppet government. China observed and responded accordingly. Tensions heightened in 2015 when China continued to assert its dominance in the South China Sea. The US refused to accept the One China policy, despite desperately needing China to remain an ally. Trump’s first term marked ongoing trade wars between the US and China that turned into outright hostility. The Hong Kong protests of 2019 further strengthened ties as the US aligned itself with Hong Kong and once again dismissed the One China policy.
By 2020, China was akin to Russia in terms of being the “communist” enemy of the West. Mike Pompeo delivered a speech in which he declared the end of an era of engagement with China due to intellectual property theft, territorial claims, and human rights abuses. Both Trump and Biden blacklisted Chinese companies and spoke of an ongoing need to distance the US from China rather than form a concrete alliance with its top trading partner.
By 2022, we had Nancy Pelosi and other top politicians visiting Taiwan to show their support for sovereignty. The US vowed to intervene if China attempted to reclaim its territories. Three years ago, the Chinese government warned the provinces and private companies not to borrow dollars. The people and institutions were free to do as they pleased, despite China being deemed an evil communist nation by the West.
All of this was a political farce as the West is selective about which nations it wants to be the moral police over. China will never have the incentive to take on more debt of an enemy nation. The Fed desperately needed China’s participation as its plan was to roll over its debts perpetually, but that is now out of the question. Japan is facing a massive crisis and will be the first to default. What will the US do when no one is willing to buy its debt?
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