Australia braces for global trade war

Good morning, it's Ben here on a warm Canberra morning, here's what's making headlines today.Today's must-reads:• Australia prepared for tra

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Good morning, it's Ben here on a warm Canberra morning, here's what's making headlines today. Today's must-reads: • Australia prepared for trade war, Treasurer says • China's DeepSeek AI banned by government • BP pauses renewable-fuel project in Australia

What's happening now

Australia's economy is well prepared to navigate a global tariff war, Treasurer Jim Chalmers told journalists yesterday, while reiterating the country is "not immune" from escalating tensions. US tariffs came into effect on Tuesday on Australia's largest trading partner China, but Chalmers pointed out that Washington and Canberra have a "very different economic relationship." China's AI DeepSeek was banned yesterday by Australia from all government systems and devices over national security concerns, becoming one of the first countries to take direct action against a Chinese artificial intelligence startup that shook Silicon Valley and global markets this year. The logo of the DeepSeek artificial intelligence app on a mobile phone. Photographer: Andrey Rudakov/Bloomberg BP is pushing back plans to make renewable fuels on the site of its former Kwinana oil refinery in Australia, amid a broader cost-cutting drive within the company. It's the second blow to Australia's green industry in just over 24 hours, with the new Queensland government announcing it would not proceed with funding for a hydrogen project. BNP Paribas hired a senior leveraged finance banker in Sydney as the French bank expands its presence in one of Asia Pacific's busiest markets for the debt class. Peter Medynski has joined BNP in a newly-created role as director, loan capital markets, according to a spokesperson for the bank. The US trade war is heating up across the globe, but Prudence Gordon of the Australian Centre for International Trade and Investment told Bloomberg Television's Australia Ahead that it isn't businesses in China, Canada and Mexico that will have to deal with the consequences of escalating trade tensions. Pimco is snapping up Australian residential mortgage-backed securities, with returns set to outperform corporate debt as the nation's central bank is likely to cut interest rates this month. Rio Tinto's iron ore shipments could take a further hit this quarter after operations at two ports in Western Australia's Pilbara region were hampered by tropical cyclones.

What happened overnight

It was a wild day in financial markets around the world, but a renewed wave of dip buying lifted stocks, with big tech leading the way ahead of results from Google's parent Alphabet. Following a slide fueled by uncertainties over a trade war, equities rebounded as investors sifted through a batch of corporate results. The S&P 500 rose 0.7% while the Nasdaq 100 climbed 1.2%. The Chinese government retaliated against US tariffs shortly after they came into effect on Tuesday, targeting a handful of American companies and slapping levies on some US goods. But the action appeared calibrated to avoid major blowback on China's economy while showing Trump an ability to inflict damage on a range of fronts.  US President Donald Trump shakes hand with China's President Xi Jinping. Photographer: FRED DUFOUR/AFP Panama is weighing whether to cancel its contract with the Hong Kong-based company that operates ports near the Panama Canal, according to people with knowledge of the situation, a potential concession to defuse Trump's threats about countering China's influence around the key waterway. Indonesia has amended a law governing the Southeast Asian nation's powerful state-owned enterprises, laying the legal foundation for a new agency to manage billions of dollars in state assets while seeking investments domestically and potentially overseas. The likely conclusion that other governments will draw from Trump's decision to delay tariffs on Canada and Mexico is that they can parry away threats by giving the US the appearance of a victory, writes Bloomberg Opinion's John Authers.

What to watch

All times Sydney • 9.00 a.m.: Australia January PMIs  • 12.30 p.m.: Independent lawmaker Zoe Daniel to address National Press Club

One more thing...

Do you want to own your own piece of Hollywood history? If you have a spare $21 million, the Swiss villa owned by screen icon Audrey Hepburn has hit the market. The 18th century farmhouse is in the scenic village of Tolochenaz, Switzerland, and it features 12 bedrooms and eight bathrooms with 10,800 square feet of space on a 40-acre lot. In the yard, there's a 50-foot-long heated pool. La Paisibile Source: Knight Frank

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