President Donald Trump says he’s increasing tariffs on South Korean imports into the US related to autos, ​lumber and pharmaceuticals to 25 per cent, while accusing the ally’s legislature of “not living up” to its trade deal with Washington.

“South Korea’s Legislature is ⁠not living up to its Deal with the United States,” Trump wrote on social media.

“Because the Korean Legislature hasn’t enacted our Historic Trade Agreement, which is their prerogative, I am hereby increasing South Korean TARIFFS on Autos, Lumber, Pharma, and all other Reciprocal TARIFFS, from 15% to 25%.”

It was not clear when the tariff hike would take effect.

South Korea’s presidential office and the US Trade Representative’s office did ‌not respond immediately ​to requests for comment. Trump has previously threatened other tariff hikes and in some cases delayed them or not ‍followed through.

South Korea had been working to implement a deal announced with Washington last year that lowered US tariffs against many of its exports to 15 per cent.

But earlier this month, South Korea’s finance minister said the country’s planned investment of $US350 billion ($A506 billion) in strategic US sectors under the trade deal was unlikely to kick off in the first half of 2026, citing the weak won currency.

The prospect of large currency ​outflows has caused headaches for authorities in Seoul at a time when ‌the won has slumped to trade at levels unseen since the global financial crisis from 2007 to 2009.

Trump has used the leverage of tariffs throughout his second term in ​office in his foreign policy. Economists have raised concerns about the approach and the policy also faces a test in an ‍ongoing case at the US Supreme Court.

In the deal reached between the allies last year, Washington and Seoul agreed to set tariffs on US imports of Korean autos and auto parts at 15 per cent, down from 25 per cent, putting them on par ​with ​their Japanese competitors.

The two countries said last year ​that as part of the $US350 billion ($A506 billion) South Korean investment into US ​strategic sectors, Seoul would pay $US200 billion ($A289 billion) in cash in phased installments that would be capped at $US20 billion ($A29 billion) a year in an effort to maintain won stability.

Australian firms are noticing an easing in a key business pressure, taking some steam out of calls for the Reserve Bank to hike interest rates.

But while capacity utilisation cooled slightly in December, it remains above the long-run average and won’t stop the central bank from lifting borrowing costs if it feels inflation data, set to be released on Wednesday, is still running too hot.

Capacity utilisation, which measures how close a business is running to its maximum productive potential, fell 0.3 percentage points to 83.2 per cent in December, according to NAB’s monthly business survey.

NAB chief economist Sally Auld said capacity utilisation remained elevated and broad-based, with five of eight industries still trending above their long-run averages.

“While the small decline in capacity utilisation in the month will be welcome, it is unlikely to ameliorate the RBA’s concern that the economy is pushing up against capacity constraints,” she said.

“This is especially the case given mounting evidence that domestic demand was stronger than expected in the fourth quarter of 2025.”

The importance of capacity utilisation to the RBA’s thinking was highlighted in a speech given by the bank’s deputy governor Andrew Hauser in November.

Speaking shortly after the Melbourne Cup, Mr Hauser said Australia’s economy risked being “boxed in” by its own capacity constraints. 

Without a rebound in productivity, Australia’s economy could not grow much faster without pushing up inflation, he said.

That raises the implication that the RBA’s hand would be forced to tighten monetary policy to get price growth under control.

Since then, consumer demand has proven stronger than the RBA expected and inflation has continued to run above its 2-3 per cent target band.

Minutes from the RBA’s December rates meeting revealed board members were keeping a close eye on NAB’s survey, noting “capacity constraints had increased further above historical averages”.

Despite rising fears that the RBA will be forced to lift interest rates to cool the economy, business confidence improved slightly to three points in December, NAB revealed.

Business conditions also firmed, with both measures running above their long-run average.

Cyclically sensitive industries, such as retail and manufacturing, were the most improved.

“The survey is consistent with the view that momentum improved in the Australian economy in the fourth quarter of the year,” Dr Auld said

Poverty in Britain has deepened, with approximately 6.8 million people now living ‍in “very deep poverty”, the highest level in three decades.

“Very deep poverty” refers to households with ​an after-housing-costs income below 40 per cent of the UK median, amounting to around stg16,400 ($A32,440) a year ⁠for a couple with two young children.

The report by Joseph Rowntree Foundation (JRF), which conducts research aimed at solving poverty in Britain, said the overall poverty rate in the UK fell slightly from 24 per cent in 1994/95 to 21 per cent in 2023/24, but “very deep poverty” edged up from ‌eight per cent to 10 per cent, ​now accounting for almost half of everyone in poverty.

The report said child ‍poverty has also climbed, with 4.5 million children in poverty, rising for the third year in a row.

It follows Finance Minister Rachel Reeves’ November decision to scrap a two-child limit on welfare payments in April, a move that officials estimate will cost stg3.1 billion ($A6.1 billion) aimed ​at reducing child poverty rates by increasing benefits ‌for families.

The cap, introduced by the Conservative government in 2017, has meant many low-income families do not receive ​further benefits when they have a third child or subsequent children.

The JRF welcomed ‍the removal of the two-child limit but cautioned that it “cannot be the only step”, warning that without further action in the government’s strategy to end child poverty, ​progress ​is likely to stall.

According to ​the report, children remain disproportionately affected by poverty, along ​with people with disabilities, while certain minority groups, such as Bangladeshi and Pakistani communities in Britain, experience particularly high poverty rates.

Britain’s economy grew by a stronger-than-expected 0.3 per cent in November, its strongest monthly rise since June. Inflation, however, rose more than forecast to 3.4 per cent in ‍December but is expected to slow sharply soon.

Poverty in Britain has deepened, with approximately 6.8 million people now living ‍in “very deep poverty”, the highest level in three decades.

“Very deep poverty” refers to households with ​an after-housing-costs income below 40 per cent of the UK median, amounting to around stg16,400 ($A32,440) a year ⁠for a couple with two young children.

The report by Joseph Rowntree Foundation (JRF), which conducts research aimed at solving poverty in Britain, said the overall poverty rate in the UK fell slightly from 24 per cent in 1994/95 to 21 per cent in 2023/24, but “very deep poverty” edged up from ‌eight per cent to 10 per cent, ​now accounting for almost half of everyone in poverty.

The report said child ‍poverty has also climbed, with 4.5 million children in poverty, rising for the third year in a row.

It follows Finance Minister Rachel Reeves’ November decision to scrap a two-child limit on welfare payments in April, a move that officials estimate will cost stg3.1 billion ($A6.1 billion) aimed ​at reducing child poverty rates by increasing benefits ‌for families.

The cap, introduced by the Conservative government in 2017, has meant many low-income families do not receive ​further benefits when they have a third child or subsequent children.

The JRF welcomed ‍the removal of the two-child limit but cautioned that it “cannot be the only step”, warning that without further action in the government’s strategy to end child poverty, ​progress ​is likely to stall.

According to ​the report, children remain disproportionately affected by poverty, along ​with people with disabilities, while certain minority groups, such as Bangladeshi and Pakistani communities in Britain, experience particularly high poverty rates.

Britain’s economy grew by a stronger-than-expected 0.3 per cent in November, its strongest monthly rise since June. Inflation, however, rose more than forecast to 3.4 per cent in ‍December but is expected to slow sharply soon.

Allies of embattled Opposition Leader Sussan Ley have declared their unwavering support for her remaining in the top job as speculation about her future ramps up. 

Opposition immigration spokesman and moderate Paul Scarr said he has thrown his “100 per cent support” behind Ms Ley and backed her handling of the vote on contentious hate crime legislation, which passed with Liberal support.

“Sussan has demonstrated, since becoming leader, how she’s been able to navigate some very, very difficult issues,” Senator Scarr told ABC Radio on Tuesday.

“People tend to be referring to the risks arising from the legislation, but there was risk in not passing that legislation, so I think Sussan behaved very responsibly.”

Parliament passed laws allowing for the outlawing of hate groups and increasing penalties for hate speech in response to the December 14 Bondi terror attack.

The legislation ultimately triggered the coalition’s break-up after MPs from the Nationals broke with the Liberals in voting against the laws.

Liberal frontbencher Angus Taylor and now-backbencher Andrew Hastie are angling to replace Ms Ley.

While sources have told AAP a spill is likely to be called when parliament returns in the first week of February, the opposition leader has refused to bow to the pressure.

Senator Scarr said he had not been contacted by Mr Taylor or Mr Hastie to run the numbers for a potential leadership tilt.

He repeated a line from Ms Ley, stating that rumours about her leadership were just part of a “frenzy of speculation in the media”.

“At the moment there is no announced challenge. There is no announced intention to seek a spill,” Senator Scarr said.

Addressing reporters on Australia Day in Corowa, Ms Ley said she was “absolutely not” of the belief that her leadership was over.

But Mr Taylor wouldn’t rule out taking a tilt at the leadership when politicians returned to Canberra.

“The Liberal Party has got a lot of work to do,” he said.

Liberal MP Tim Wilson also threw his support behind Ms Ley, saying the party did not “want tantrums like we’ve seen from the National Party”.

“What people want to see is leadership,” he told Sky News.

“I always support the leader, we’ve got to make sure that whatever it is, we’re united behind the team.”

Canadian Prime Minister Mark Carney says some of US President Donald Trump’s threats should be viewed as prepositioning ahead of negotiations to renew the free trade pact between the two large trading partners. 

Carney noted they are entering a review of the United States–Mexico–Canada Agreement this year and said he expects a “robust review”.

“The president is a strong negotiator, and some of these comments and positioning should be viewed in the broader context of that,” Carney said on Monday. 

Trump threatened on the weekend to impose a 100 per cent tariff on goods imported from Canada if America’s northern neighbour went ahead with a trade deal with Beijing, though Carney has said Canada has no interest in negotiating a comprehensive trade deal with Beijing.

Dominic LeBlanc, Canada’s minister responsible for Canada-US Trade, said he spoke with US Trade Representative Jamieson Greer on Sunday and made it clear that the Canadians are negotiating a “narrow trade arrangement” with China that mostly deals with just “a few sectors of our economy”.

He compared that to an agreement Trump made with Chinese leader Xi Jinping in South Korea last northern summer in which the US cut some tariffs on China while Beijing moved to allow rare earth exports and lift a pause on purchasing US soy. 

LeBlanc also said upcoming talks were a review of the United States-Mexico-Canada Agreement and not a full-scale renegotiation of trade as happened during Trump’s first term.

Breaking with the US this month during a visit to Beijing, Carney cut its 100 per cent tariff on Chinese electric cars in return for lower tariffs on those Canadian products.

Trump’s tariff threat came amid an escalating war of words with Carney as the president’s push to acquire Greenland strained the NATO alliance.

Carney has emerged as a spokesman for a movement for countries to find ways to link up and counter the US under Trump. 

“Middle powers must act together because if you are not at the table, you are on the menu,” Carney said in Davos.

Shares in Danone have slumped as French company Vitagermine widened a recall of baby ​formula on concerns over contamination, affecting four manufacturers so far and threatening large losses for the firms.

Companies affected by the ⁠precautionary recalls of infant milk powder on worries it could be contaminated with the toxin cereulide include three of the world’s largest dairy groups: Nestle, Danone and privately-owned Lactalis.

Danone shares closed 2.3 per cent lower after falling as much as 6 per cent in early trade, their lowest since January 2025.

Swiss group Nestle’s shares had pared most of their losses, closing down 0.9 per cent ‌after falling as ​much as 3 per cent in morning trade to a five-month low. 

The shares’ fall this month was ‍still at nearly 9 per cent after batches were recalled in dozens of countries earlier this month.

The recalls highlight how a single compromised ingredient can spread through the tightly regulated infant nutrition sector, triggering swift action from regulators and causing rapid market jitters.

Cereulide, a toxin produced by the Bacillus cereus bacteria which can cause nausea and vomiting, was ​detected in an ingredient sourced from a supplier.

French investigators are examining ‌whether there is a link between the death of two infants and recalled formula products.

The French agriculture ministry has said the product originated in ​China and was sold by a Dutch company, without specifying any names.

Ireland’s Food Safety Authority on Friday ‍said cereulide had been detected in arachidonic acid oil manufactured in China.

The possible financial effects of the recalls could be about 10 times more for Nestle than Danone, according ​to ​Barclays estimates.

In a worst-case scenario, Danone could lose ​100 million euros ($A171 million), Barclays said, while Nestle’s losses could be closer ​to 1 billion Swiss francs ($A1.86 billion).

Infant formula accounts for about 21 per cent of Danone’s group revenue, according to Bernstein analysts. 

For Nestle, the category likely represents about 5 per cent.

Danone, already co-operating with Singaporean regulators who blocked batches of infant formula over contamination concerns, on Friday said it was recalling some batches after Irish regulators said products manufactured there had been exported to other European countries.

On Monday, privately held Vitagermine said it had recalled three specific batches of its Babybio infant formula.

If cooked food cools slowly or is kept warm for hours, Bacillus cereus can grow and produce cereulide. 

Big pots of rice or pasta, or dishes kept on a ‍warm stove or buffet, are common risk points.

Infant formula often includes oils containing arachidonic acid to make it resemble breast ​milk.

Bacillus cereus spores can survive in ​dry ingredients used for infant formula and, under certain ​conditions during ingredient handling or processing, may grow and produce cereulide.

Because the toxin is heat-stable, heat treatment will not destroy it, allowing it to remain in the finished formula.

Australians need to get more financially literate or risk being exploited by an explosion of artificial intelligence scams and financial product advertisements, the regulator warns.

Amid the breathtaking pace of technological change, Australia is unprepared for the disruption that AI will bring, says outgoing Australian Securities and Investments Commission chair Joe Longo.

The financial watchdog is keeping a close eye on the increasingly ubiquitous use of AI agents, which are capable of independently performing tasks with minimal human input.

While a potential productivity boon for businesses, the rapid uptake of agentic AI could amplify harm for consumers, by exploiting things like behavioural biases and amplifying the threat of scams, ASIC warned in its issues outlook for 2026.

Mr Longo said keeping pace with technological change was not only a significant problem for consumers and investors, but posed an “existential risk” for the regulator as well.

“ASIC has invested in AI capability and data literacy and data-enabled decision making … but I think we need to be investing a lot more,” he told AAP.

Rather than taking a whack-a-mole approach by simply focusing on more regulation to address technologically-driven threats as they arise, Australia needed to have a national conversation around strengthening financial literacy.

ASIC planned to continue investing in consumer education programs, such as Moneysmart.

“Prevention is always better than the cure,” said Mr Longo, whose term at the head of ASIC finishes on May 31. 

“The whole question of literacy around technology is related to financial literacy, because we’re seeing a convergence.

“So many financial products are promoted through a range of these technologies or platforms. So I do worry that, as a community, we’re not investing enough in our level of understanding around these issues.”

The Australian Competition and Consumer Commission recently warned AI agents posed new questions, new risks and regulatory challenges for authorities.

They include determining who is liable for misleading advertising if AI systems are increasingly making decisions and representations on behalf of a business.

The government in 2024 tipped in an extra $120 million in funding for ASIC over four years to improve its data capability and cyber security and modernise its business registry, but Mr Longo said more funding was still needed. 

“I think we ought to be resourced more generously, frankly, in this area,” Mr Longo said.

“I’ve been calling for more funding for our digital transformation for some time now.”

AI has helped fuel an explosion in advertisements spruiking questionable investments in financial products. 

ASIC is already discussing law reform around limiting cold calling and lead generation, which drove customers to invest in the collapsed Shield and First Guardian master funds.

“But generally, we’re talking about advertising that isn’t regulated,” Mr Longo said

“So what we’re calling for is greater consideration of whether that kind of advertising should be restricted in some way, or carrying with it warnings that before you go ahead, you should get proper financial advice from a licensed financial advisor.

“We’ve just seen too many examples at the moment of people losing their money in circumstances where they’re investing their life savings, for example, chasing a higher return.”

Other key issues ASIC is keeping an eye on in 2026 include some familiar concerns, like cyber attacks, the rising exposure of mum and dad investors to private credit markets, and super funds’ operational failures, such as delays in processing death benefit claims.

But some emergent issues are also keeping the regulator up at night.

ASIC flagged it would be monitoring the banking sector to ensure lenders, who are feeling their margins squeezed by heightened competition, did not resort to tactics that harmed consumers.

“The competitive dynamics at play in Australia could incentivise relaxed credit assessments, larger or unsuitable loans, product changes for lower-margin customers, and aggressive marketing that steers consumers towards higher-risk products,” ASIC said.

Scorching heatwave conditions continue to grip much of Australia’s southeast, keeping authorities on high alert as fire conditions grow increasingly unpredictable.

Temperatures are expected to soar across parts of Victoria and South Australia on Tuesday, with the Bureau of Meteorology warning the extreme heat could break records.

Melbourne is set to swelter through its hottest day since the devastating Black Saturday bushfires in 2009, with a maximum temperature of 44C expected.

Mildura, in the state’s far north, is forecast to reach 49C, while Broken Hill in NSW is expected to hit 47C, with both locations set to break temperature records.

“If Mildura does reach (that high), it will be the hottest temperature recorded in Victoria,” senior meteorologist Dean Narramore told AAP.

“Pretty much all observation points near the SA and Victorian border are either approaching or likely to exceed January records and a few locations could also break their all-time records.”

It comes as a total fire ban remain in place for both Victoria and SA as several fires burn out of control under dynamic conditions.

Records were broken on Monday in Adelaide where the temperature reached 44.7C, exceeding the city’s previous Australia Day heat record set in 2006.

Ceduna, northwest of the capital, climbed to 49C, surpassing its previous record temperature, while NSW town Dubbo reached 46.1C to record its hottest January day.

The weather conditions are worrying authorities in Victoria as multiple fires continue to burn out of control, including in the Otways where a blaze jumped containment lines at Carlisle River on Saturday, threatening the small community of Gellibrand.

Authorities say there has been unconfirmed property loss within the fire grounds.

The bureau warns gusty southwesterly winds will hit Melbourne on Tuesday afternoon, with a risk of thunderstorms producing dry lightning.

A cooler change will begin to move through Victoria on Wednesday, although inland parts of the southeast won’t see much of a reprieve. 

Deputy incident controller Alistair Drayton says the gusty change is worrying, with authorities urging residents living in Gellibrand, Kawarren, Beech Forest, Forrest and Barongarook to evacuate. 

“The conditions tomorrow mean the fire could spread quickly and unpredictably. We strongly recommend people in affected areas to enact their bushfire plan, and leave early to protect themselves and their families,” he said.

The heatwave conditions have also sparked a warning from paramedics, who responded to 11 cases of children locked in cars over the weekend as temperatures soared into the 40s in Victoria.

Ambulance Victoria urged the community never to leave children, pets, or older people unattended in vehicles.

“The temperature inside a vehicle can double and become deadly within minutes,” director of emergency management Dale Armstrong said.

“It is particularly dangerous for children to be left inside vehicles, as a child’s body temperature rises three to five times faster than an adult.”

Residents in both states are urged to drink plenty of water, check on family, friends, and neighbours to see if they need help and stay indoors. 

The European Commission has opened a probe into the US tech company X over its artificial intelligence chatbot Grok after it created sexualised images of women and children. 

“Non-consensual sexual deepfakes of women and children are a violent, unacceptable form of degradation,” EU Commission Vice President Henna Virkkunen said on Monday. 

The investigation will probe whether X has complied with its obligations under European Union law, including the duty to “diligently assess and mitigate systemic risks,” the commission, which acts as the EU’s digital watchdog, wrote in a statement. 

“This includes risks related to the dissemination of illegal content in the EU, such as manipulated sexually explicit images, including content that may amount to child sexual abuse material,” it said. 

“These risks seem to have materialised, exposing citizens in the EU to serious harm.” 

Elon Musk’s social media platform has come under heavy criticism in recent weeks after Grok allowed users to digitally replace women’s clothing with bikinis and, in some cases, create sexualised depictions of minors. 

After prolonged international outrage, X introduced some restrictions in mid-January. 

These include preventing Grok “from allowing the editing of images of real people in revealing clothing such as bikinis” and restricting the image creation feature of the AI chatbot to paid subscribers, X said in a statement. 

The commission stressed that the opening of a probe does not prejudge its outcome. 

British media regulator Ofcom also launched an official investigation into Musk’s online platform earlier in January over the sexualised images created by Grok. 

British Prime Minister Keir Starmer called the AI-created images “absolutely disgusting”. 

Authorities in France have also been investigating Grok since last year. 

The original investigation there revolves around allegations that algorithms on the social network were altered to give more attention to far-right content. New allegations of Holocaust denial and sexual imagery have since been added. 

Grok has already been banned in Indonesia and Malaysia. 

On Monday, Brussels also announced an extension to a separate investigation into X which was opened in December 2023. 

The commission has been working to assess whether the platform’s recommender system, the algorithm which suggests content to users, “has properly assessed and mitigated all systemic risks” under the bloc’s Digital Services Act (DSA). 

The probe now also covered “the impact of its recently announced switch to a Grok-based recommender system”, the commission said.