Crypto News: Supply Lines: Europe’s waiting game

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European Union officials are rushing to strengthen their ties as concerns loom that President Donald Trump will try to divide the 27-nation bloc through tariffs.

In a private meeting last week, the European Commission urged member states to remain united, with some comparing the situation to Brexit negotiations where UK officials sought bilateral deals to undermine EU unity, according to our reporting today from European capitals.

Economically, Europe is heading into a trade confrontation with Trump in a weak position.

Data released Thursday showed GDP in both Germany and France contracted in the fourth quarte last year. Meanwhile, figures due out later in Washington may show the economy grew at a healthy 2.6% annualized pace last quarter.

A day after the US Federal Reserve opted against cutting interest rates for more of a wait-and-see approach, the European Central Bank today is expected to deliver its fifth straight reduction.

As many European countries struggle with economic angst and political paralysis, Germany's Olaf Scholz, France's Emmanuel Macron and Denmark's Mette Frederiksen have traveled around the region in recent weeks to discuss the risks that a weakened EU might face from the new US administration.

For many across Europe, the expectation is that a new volley of US tariffs is inevitable, and this time things will be worse than the trade fight Trump sparked in 2018.

That sense of worried anticipation wouldn't have eased much after Wednesday's Senate confirmation hearing for Howard Lutnick, Trump's nominee to lead the Commerce Department. "The fact that we Americans cannot sell an American car in Europe is just wrong and it needs to be fixed," Lutnick said.

And while European officials will exhaust all avenues for cooperation, they're skeptical that they can talk Trump out of a clash that could embroil everything from steel and cars to European tech regulations and tax policy.

"The EU will attempt to negotiate first, likely presenting a united front," Jamie Rush, Antonio Barroso and Eleonora Mavroeidi of Bloomberg Economics wrote in a research note. "But there is limited capacity to address those concerns."

—Brendan Murray in London

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

Charted Territory

Ready to respond | President Claudia Sheinbaum brushed off a question as to whether Mexico is expecting Trump to announce 25% tariffs on Mexican goods Feb. 1. "We don't expect it will happen," she said. "But if it does, we have our plan." Expectations are mounting ahead of Feb. 1, a date Trump has signaled as a possibility for imposing tariffs on goods from its closest allies, Mexico and Canada.

Today's Must Reads

Howard Lutnick, Trump's nominee to lead the Commerce Department, offered a detailed defense of tariffs in his confirmation hearing, the clearest signal yet from a cabinet pick that the new administration is prepared to impose the levies on allies and adversaries alike. He also declined to give unqualified support to a $52 billion chip subsidy program.
India's cabinet approved a 163 billion rupee ($1.9 billion) program to secure supplies of a range of minerals used mainly in battery, electronics, defense and agriculture sectors.
The US merchandise-trade deficit soared to a record in December, due in part to the biggest percentage increase in shipments of industrial supplies since 1993 against a decline in exports.
Bloomberg's Trade Tracker in January showed seven out of 10 key measures of international trade were in the "normal" zone, two were in "below normal" territory and one "above normal," matching the prior two months.
Bank of Canada Governor Tiff Macklem has managed to wrestle inflation back under control. But a looming US-Canada tariff war now threatens to undo his work on price stability.
Adani Group is remapping the viability of building wind power projects in Sri Lanka after the new government sought lower tariffs, marking a fresh obstacle in billionaire Gautam Adani's overseas expansion plans.

On the Bloomberg Terminal

Spot container rates could weaken further this week and next as demand for containers is likely to remain soft, given that factories and exporters in China will shut until early to mid-February for the festivities, according to Bloomberg Intelligence.
Companies are marshaling tariff experts, bolstering their political networks and seeking out countries with stable tax systems — all in a bid to inoculate themselves from the tax policy uncertainty ushered in by the new Trump administration, according to Bloomberg Law.
Canadian Pacific Kansas City says it expects shipments in North America to grow this year despite the looming threat of tariffs from the Trump administration.
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.

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