China’s service sector hit by trade war; Ford predicts $1.5bn profit hit from Trump tariffs – business live

TruthLens AI Suggested Headline:

"China's Service Sector Growth Declines Amid US-China Trade Tensions"

China’s service sector hit by trade war; Ford predicts $1.5bn profit hit from Trump tariffs – business live analysis cover image

The Guardian 8.1

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Original Article Source: https://www.theguardian.com/business/live/2025/may/06/trade-war-china-service-sector-uk-eurozone-ford-tariffs-bp-shell-oil-business-live-news

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Raw Article Publish Date: 06 May 2025

AI Analysis Average Score: 8.1

These scores (0-10 scale) are generated by Truthlens AI's analysis, assessing the article's objectivity, accuracy, and transparency. Higher scores indicate better alignment with journalistic standards. Hover over chart points for metric details.

TruthLens AI Summary

China's service sector has shown a significant decline, with the latest purchasing manager’s survey indicating that the growth of service activity has reached its lowest point in seven months. According to the Caixin China General Services Business Activity Index, the figure dropped to 50.7 in April from 51.9 in March, reflecting a slowdown in new business and a decrease in business confidence. This drop has brought confidence levels to their lowest since the early days of the COVID-19 pandemic, as companies continue to reduce staffing levels in response to the challenging economic environment. Despite the index remaining above the 50-point threshold that indicates stagnation, the downward trend raises concerns about the potential long-term impacts of the ongoing US-China trade war on the global economy.

In the United States, the impact of tariffs imposed by the Trump administration is becoming increasingly evident. The US services sector has reported growth, but the rising costs of materials and services are contributing to inflation. Ford Motor Company has announced that it will suspend its annual financial guidance due to uncertainties stemming from the trade war, estimating a profit loss of approximately $1.5 billion for the financial year due to new tariffs on car parts. Similarly, Dutch medical-technology firm Philips has adjusted its profitability outlook, anticipating a net tariff impact of €250 million to €300 million. The trade tensions have prompted discussions about potential agreements, with Treasury Secretary Scott Bessent expressing optimism about reaching deals with China in the near future. As companies globally adapt to these economic pressures, the focus remains on the evolving nature of international trade relations and their implications for various industries.

TruthLens AI Analysis

The article presents an overview of the current state of the global economy, particularly focusing on the effects of the US-China trade war on different sectors. It highlights the struggles faced by China's service sector, as evidenced by a recent decline in business activity, and underscores the broader implications for investor sentiment and financial markets.

Analysis of China’s Service Sector

The report indicates that the Caixin China General Services Business Activity Index has dropped to its lowest point in seven months, reflecting a significant decrease in business confidence. This decline is critical as it suggests that the economic recovery from the pandemic may be stalling, raising concerns about potential long-term impacts on the economy. The drop below previous levels indicates that businesses are facing challenges, which could lead to further layoffs, signaling a troubling trend for the labor market.

US Economic Indicators and Inflation

In contrast, the article notes that the US services sector has shown growth, yet the rising costs for materials and services due to tariffs imply that inflation is becoming a concern. This juxtaposition of the two countries' economic indicators highlights the divergent paths they are on, which may have implications for future trade negotiations. Investors may interpret this information as a signal to shift their strategies, particularly in sectors that could be more sensitive to tariff impacts.

Impact on Trade Relations

The mention of potential progress in US-China trade talks introduces a glimmer of hope for investors. However, the cautious optimism is tempered by the current economic data, which could influence both countries' negotiating stances. The article indicates that any substantial progress could alleviate some economic pressures, making it a focal point for stakeholders who are closely monitoring these developments.

Public Perception and Economic Sentiment

This news piece aims to shape public perception regarding the fragility of global economic recovery amidst ongoing trade tensions. By highlighting the contrasting performances of the service sectors in the US and China, the article might be trying to foster a sense of urgency among policymakers and business leaders to address these issues promptly.

There is no overt indication that the article is attempting to hide critical information, but it does frame the narrative in a way that emphasizes the seriousness of the economic situation, which could lead to heightened anxiety among the public and investors.

Market Reactions and Stock Implications

The implications for the stock market are significant, as companies heavily reliant on trade between the US and China may face increased volatility. In particular, industries such as automotive manufacturing, represented by Ford's prediction of a profit hit from tariffs, may experience fluctuations in stock prices based on how trade negotiations progress.

Global Power Dynamics

The article touches on broader themes of global economic power dynamics, especially as the US and China navigate their complex relationship. The ongoing trade war reflects not only economic competition but also geopolitical tensions that could reshape global alliances and economic policies in the future.

The writing style of the article appears straightforward and journalistic, suggesting it is likely written by a human journalist rather than generated by AI. However, AI tools could have been used for data analysis or content optimization.

In conclusion, the article is a reliable source of current economic data and insights into the implications of the US-China trade relationship, although it may also reflect a somewhat pessimistic view of the future based on the presented economic indicators.

Unanalyzed Article Content

Source URL: https://www.theguardian.com/business/live/2025/may/06/trade-war-china-service-sector-uk-eurozone-ford-tariffs-bp-shell-oil-business-live-news

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Investors will be scrutinising the latest healthchecks on companies across the world today, for signs that the US-China trade war is hurting the global economy.

And… the latest purchasing manager’s survey data has shown that China’s service sector activity growth has hit a seven-month low, as business confidence fell to the lowest since early in the Covid-19 pandemic.

TheCaixin China General Services Business Activity Index, released this morning, fell to 50.7 in April, down from 51.9 in March. That shows the slowest rise in activity since last September – but still above the 50-point mark that signals stagnation.

China’s service sector firms reported a slowdown in new business, while business sentiment fell to the lowest level seen since February 2020, while companies continued to cut staffing levels.

The report says:

Data yesterday showed that the US services sector’s growth picked up in April, while the prices paid by American firms for materials and services jumped, indicating that the tariffs announced by the Trump administration are fuelling inflation.

The financial markets are looking for progress in trade talks between the US and its trading partners. Yesterday, treasury secretaryScottBessenttold CNBC that he believes the U.S. is “very close to some deals.”

Bessentexplained:

He added that there could be “substantial progress in the coming weeks” with China; last week, Beijing signalled it was “assessing” potential trade talks with the U.S….

9am BST: UK car sales data for April

9am BST: Eurozone services sector PMI report for April

9.30am BST: UK services sector PMI report for April

3.10pm BST: US RCM/TIPP Economic Optimism Index

The takeover of UK food-delivery platform Deliveroo by US rival DoorDash has been agreed.

The two sides have reached agreement onDoorDash’soffer of 180p in case for eachDeliverooshare, made last month.

The deal valuesDeliverooat £2.9bn, and is almost 30% higher thanDeliveroo’sshare price the day before the offer was made.

It’s less than half the value at whichDeliveroowas floated on the London stock market four years ago, though.

Tony Xu,CEO and Co-founder ofDoorDash,says he has “long admired” Deliveroo’s team, including CEO Will Shu (who willpocket around £170m from the shares he owns):

American children face paying higher prices for Barbie dolls due to the Trump tariffs on imports.

Mattel, the toy manufacturing giant, revealed last night that it plan to raise prices on American toys due to tariffs, and is also looking to move some manufacturing out of China.

In its latest earning report,Matteltold shareholders it is taking “mitigating actions” to fully offset the potential incremental cost impact of tariffs on future performance.

Those measures include:

Accelerating diversification of its supply chain and further reducing reliance on China-sourced product,

Optimizing product sourcing and product mix, and

Where necessary, taking pricing action in its U.S. business.

Chief financial officerAnthonyDiSilvestroexplained:

Paying more for a new Barbie, or Ken, might highlight the impact of tariffs for US consumers.

Donald Trump, though, argued last weekend that “a young lady” doesn’t need 37 dolls, and might be “very happy with two or three or four or five.”..

Dutch medical-technology firm Philips has lowered its outlook for profitability this financial year, blaming the US trade war.

In its latest financial results, Philips trimmed its profitability outlook for the year, as it calculated “the assumed impact of currently announced tariffs”.

Philips now expects an estimated net tariff impact of €250m to €300m “after substantial tariff mitigations”, and has lowered its forecast for its adjusted operating earnings margin by one percentage point, to 10.8% to 11.3%.

Roy Jakobs,CEO ofRoyal Philips,explains:

Philips makes medical devices such as MRI and CT scanners, and has been using artificial intelligence (AI) to speed up results:

America’s car industry is calculating the cost of the trade wars.

Overnight,FordMotorsuspended its annual guidance, due to “tariff-related uncertainty”, and estimated new tariffs would cost it about $1.5bn (£1.1bn) of profits this financial year.

Ford CEOJimFarleytold analysts:

Last week, Donald Trump’s 25% import tax on engines, transmissions and other key car parts came into force, a move that will push up costs for automakers.

Fordhad previously predicted it would post earnings before interest and taxes of between $7bn and $8.5bn this financial year.

But with uncertainty over how the trade war will play out, Ford told investors that guidance was now suspended, explaining: