Wednesday, October 30, 2024

Supply Lines: Europe’s newest tariffs

After months of negotiations, threats of retaliation and auto-industry lobbying, the European Union went ahead and imposed higher tariffs to

After months of negotiations, threats of retaliation and auto-industry lobbying, the European Union went ahead and imposed higher tariffs today on electric vehicles from China.

The move, which will increase levies to as high as 45%, risks ratcheting up trade tensions between the world's biggest exporters less than a week before a US election where trade protectionism is a key consideration for voters.

Read More: EU Imposes Tariffs on China EVs, Risking Retaliation

While talks between China and the EU will continue even after the new tariffs take effect, little is expected to happen before the American ballots are tallied and a winner is declared, according to people familiar with the matter.

For now at least, some Chinese producers don't seem deterred. On Tuesday, Bloomberg News reported that  BYD, China's biggest EV maker, is hiring the former UK chief of Stellantis to help build a team of European executives to lead its expansion in the region. She's the third high-profile executive at Stellantis who has jumped to BYD in recent weeks.

China still hopes to find an acceptable resolution with the EU over the tariffs, the nation's Ministry of Commerce said after the regulation introducing the levies was published in the EU's official journal. China will take all necessary measures to defend its companies' rights, it added.

In Brussels, the expectation is that China will start retaliating on European goods next month if a deal isn't reached. That will likely further raise the pressure on officials from capitals like Berlin who are keen to see an agreement on an alternative pricing deal.

The other big question is how will China respond. So far, while it has threatened to curb investments in Europe, Beijing has mostly acted within the bounds of the rules, opening probes of its own into dairy, pork and brandy as well as warning it could return tariffs on cars with large engines to 2018 levels. The worry in Europe is that China starts taking other, more punitive actions such as restricting critical exports like rare earths needed to make EV batteries.

Read More: VW Eyes Closing Three German Factories in Cost-Cutting Push

That could see a trade tit-for-tat escalate into something far more damaging for companies on both sides.

For now, both Beijing and Brussels will be eyeing next week's US election result. If Donald Trump and his promises of tariffs on both the EU and China return to the White House, they may soon need to divert some of their attention across the Atlantic.

  • The Big Take: Despite more than six years of American tariffs, export controls and financial sanctions, Chinese President Xi Jinping is making steady progress in positioning China to dominate industries of the future. Click here to read today's Bloomberg Big Take and here to listen to the podcast.
  • US Election: Follow our coverage of the US presidential race here

Alberto Nardelli in London

Click here for more of Bloomberg.com's most-read stories about trade, supply chains and shipping.

Charted Territory

Imports up | The US merchandise trade deficit grew nearly 15% in September to the largest since March 2022 as businesses raced to beat a potential dockworkers' strike, Census Bureau data showed. The value of consumer goods imports increased to a more than two-year high, which also reflected retailers' preparations for the holiday-shopping season. Inbound shipments of capital goods, meanwhile, climbed to the highest in data back to 1992.

Today's Must Reads

  • Rachel Reeves will pledge to "rebuild Britain" with her first budget, a historic moment that will include a major package of tax hikes and extra borrowing likely to define British politics for the rest of the decade.
  • Boeing and union leaders representing 33,000 striking workers held talks with the help of the Biden administration's top labor official, as they try to end a seven-week labor dispute.
  • Caterpillar, viewed as a bellwether for the global economy, posted a third-quarter profit that missed analysts' expectations as the machinery producer grappled with weakening demand in construction around the world.
  • Germany's economy has once again avoided a technical recession but businesses and consumers keep sending warning signals that the challenges engulfing the country are becoming harder to bear. Meanwhile, Volkswagen's operating margin shrank to the lowest since the Covid-19 pandemic.
  • The Inflation Reduction Act restored American manufacturing jobs – and gave China an opportunity to extend its dominance in some clean energy technologies. 
  • The US and Taiwan will begin negotiations on addressing double taxation issues, paving the way for a deal that could reduce hurdles for businesses and boost investment in the semiconductor industry.
  • America's travel industry has gone through a sluggish recovery since the Covid-19 pandemic, reaching just 84% of its pre-pandemic international arrivals by the close of 2023. That's in stark contrast to global competitors such as France and Spain, which blew past 2019 visitation levels that same year. 

Coming Up

Bloomberg Supply Chain Intelligence Webinar Series: Artificial intelligence technology has been with us for decades, but the recent release of ChatGPT and other LLMs have transformed how we use and view AI at work and at home. Is AI ready to be deployed in supply chain management and what do I need to know about this powerful technology? Join us on Nov. 6 when host Matthew Ekroth sits down with Risto Miikkulainen, VP of AI Research at Cognizant AI Labs, for a fireside chat on this important topic. Click here to register.

On the Bloomberg Terminal

  • The strike by US dockworkers in October lasted only three days but had far-reaching effects on the paper industry, Bloomberg Intelligence's Ryan Fox writes. Certain exports of fell more than 50% in September and may remain muted, with the new Jan. 15 deadline for a contract deal a risk to volume and prices
  • A group of Senate Democrats urged Biden officials to fully eliminate the de minimis trade loophole they say allows "billions of dollars worth of imports," including illicit fentanyl, to enter the US with little oversight.
  • Run SPLC after an equity ticker on Bloomberg to show critical data about a company's suppliers, customers and peers.
  • Use the AHOY function to track global commodities trade flows.
  • See DSET CHOKE for a dataset to monitor shipping chokepoints. 
  • For freight dashboards, see {BI RAIL}, {BI TRCK} and {BI SHIP} and {BI 3PLS}
  • Click HERE for automated stories about supply chains.
  • On the Bloomberg Terminal, type NH FWV for FreightWaves content.
  • See BNEF for BloombergNEF's analysis of clean energy, advanced transport, digital industry, innovative materials, and commodities.

Like Supply Lines?

Don't keep it to yourself. Colleagues and friends can sign up here. We also publish Economics Daily, a briefing on the latest in global economics.

For even more: Follow @economics on Twitter and subscribe to Bloomberg.com for unlimited access to trusted, data-driven journalism and gain expert analysis from exclusive subscriber-only newsletters.

How are we doing? We want to hear what you think about this newsletter. Let our trade tsar know.

No comments:

Post a Comment

Alphabet Earnings: Waymo’s Growth Sets GOOGL Stock on Fire

When it comes to AI, Alphabet is crushing it     O...