TLDR
- US eases export restrictions on China for chip design software and ethane, signaling reduced trade tensions
- Trump announces Vietnam trade deal with 20% tariff on Vietnamese goods, lower than originally planned 46%
- June jobs report expected to show hiring slowed to 110,000 new jobs with unemployment rising to 4.3%
- ADP data shows private employers cut 33,000 jobs in June, first monthly decline since March 2023
- Markets price in two Fed rate cuts as economic data shows cooling labor market conditions
The United States has taken steps to reduce trade tensions with China by easing export restrictions on chip design software and ethane. This move marks a shift from the heightened trade restrictions that characterized recent US-China relations.
JUST IN: 🇺🇸🇨🇳 United States rescinds export restrictions on chip software to China, CNBC reports. pic.twitter.com/ktHKO8LVDD
— Watcher.Guru (@WatcherGuru) July 3, 2025
Software companies including Synopsys, Cadence, and Siemans announced they will resume selling chip design tools to Chinese customers. The US also removed limits on ethane exports to China that were imposed just weeks earlier.
President Trump announced a trade agreement with Vietnam on Wednesday, one week before the July 9 deadline for higher tariffs. Under the deal, Vietnamese goods imported to the US will face a 20% tariff, which is lower than the previously planned 46% tariff but higher than the current 10% universal rate.
🚨 JUST IN: President Trump negotiated a FANTASTIC trade deal with Vietnam
Vietnam’s market is now FULLY open to the United States
MANY more of these coming soon! 🔥 pic.twitter.com/zHDkttlS80
— Nick Sortor (@nicksortor) July 2, 2025
The Vietnam agreement includes a 40% tariff on transshipped goods that originate from other countries like China. US goods exported to Vietnam will not face tariffs under this arrangement.
Trade Negotiations Continue with Mixed Results
This marks the second trade deal the US has reached since Trump paused his “Liberation Day” duties. The US previously struck an agreement with the United Kingdom and established a framework with China for future trade discussions.
Negotiations with Japan have faced challenges, with Trump suggesting tariffs of 30-35% for Japanese goods. He expressed doubt about reaching an agreement with Japan, calling the country “very tough” and “very spoiled.”
The European Union has indicated willingness to accept a 10% universal tariff on many exports. However, the EU seeks exemptions for pharmaceuticals, alcohol, semiconductors, and commercial aircraft.
Canada has eliminated its digital services tax that would have affected large US technology companies. The White House confirmed that trade talks between the two countries have resumed.
Labor Market Data Points to Economic Cooling
The June jobs report is expected to show continued cooling in the US labor market. Economists predict nonfarm payrolls rose by 110,000 jobs in June, down from 139,000 in May.
The unemployment rate is forecast to increase to 4.3% from 4.2% in the previous month. Average hourly earnings are expected to grow 0.3% month-over-month and 3.8% year-over-year.
ADP data revealed that private employers cut 33,000 jobs in June. This represents the first monthly decline in private sector employment since March 2023.
Continuing unemployment benefit filings recently reached their highest level in nearly four years. However, the May Job Openings and Labor Turnover Survey showed job openings at their highest level since November 2024.
Market Response to Economic Data
The S&P 500 has reached several new record highs recently due to investor optimism about Federal Reserve rate cuts and trade deals. Markets now price in two interest rate cuts from the Fed, up from one reduction priced in a month ago.
Weaker economic data in recent weeks has influenced market expectations for Fed policy. However, analysts warn that further signs of economic slowing could negatively impact stock prices.
The jobs report comes as investors closely monitor labor market conditions for signals about future Fed action. The data will provide insight into whether the economic slowdown is broadening or remains contained to specific sectors.
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