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ROI-Global trade in rude health? McGeever: Yes, with a catch
Global trade doesn't cool in the shadow of tariffs, wars on trade, real wars, and energy shocks. It's heating. How durable is it when the price, and not volume, is what's stoking up the flames? Recent trade data, from the U.S., China and other major economies, shows that cross-border commerce has grown at a faster rate than economists expected. In many cases the price increases were the primary cause of increased activity and surprising export figures. This reflects the spike in inflation caused by the Iran War, particularly on the oil and energy markets. This was especially true in the U.S. where exports reached a record of $327 billion last month, driven by shipments from a wide range of products. In fact, the goods surplus shrank to its lowest level since 2020. This is good news for the U.S. economic system, since the declining deficit could contribute to the growth of the economy in the second quarter. This could have been primarily due to the high prices of oil, fuel, and other energy products. This raises the issue of how durable this improvement is. It's clear that it isn't just the price that does all the work. The physical export volumes of Canada have returned to their previous levels before Donald Trump was elected to the White House by the U.S. in November 2024. This has sparked trade tensions with the neighboring countries. According to CIBC, the exports of April were only second to those in February last year when companies were preparing for Trump's looming duties. Base effects are another factor that may be affecting headline trade figures. The slowdown in trade during the first half of the year as Trump's tariff wars began is now used to compare year-over-year figures. This suggests that it's too early to predict a?trade revival. HAPPY CHIPS DAY! The price is also an important factor in Asia's trade boom. However, the soaring demand for AI is also fueling the sizzling numbers. China, the largest exporter in the world, saw its total exports rise 19.4% in May. Pantheon Macroeconomics says that sales of high-tech goods accounted for 12 percent of this. While the value of integrated-circuit exports has more than doubled in the last year, export volumes have only increased by 2%. This suggests that the headline figure is inflated because the price was high. The same thing is happening in other sectors. However, Beijing policymakers and critics will continue to focus on headline dollar figures, particularly the large one, China's total 12-month rolling trade surplus of more than $1 trillion. Taiwan's AI export surge was even more impressive. Exports rose in May more than expected to the second highest level by value ever, up almost 52% compared to a year ago. Price was again a major factor. TSMC, the world's largest manufacturer of advanced chips that power AI applications and a major global supplier to Nvidia and Apple, is located in Taiwan. Chips, computer equipment and software, as well as other high-tech products, have seen a surge in price over the last year, largely due to an explosion in demand. Goldman Sachs Global Institute estimates that AI-related investments will reach $7,6 trillion by 2031. SURPRISING RESILIENCE Global trade has shown a remarkable resilience, which few observers could have imagined possible in the face of volatile market conditions. Trump's "Liberation Day tariffs" triggered a global trade war, which may have ended decades of internationalization. Geopolitical rifts also threaten trade flows, notably in Middle East. The 'AI frenzy' is largely responsible for the booming global trade. The demand for these applications has been increasing, a large part of trade in AI products is cross-border and many have been exempted from tariffs. The question is, can this continue? Could the rise in AI compute costs curb demand eventually? Could major powers seek to reduce AI supply chains in order to minimize national security risks? The AI boom is unlikely to fade away, which suggests that trade activity may remain resilient, despite tariffs, protectionism and deglobalization. Everything seems to be dependent on the outcome of this tech story, just as it is with other parts of the global economic system. You like this column? Check out Open Interest, your new essential source for global financial commentary. Follow ROI on LinkedIn and X. Listen to the Morning Bid podcast daily on Apple, Spotify or the app. Subscribe to the Morning Bid podcast and hear journalists discussing the latest news in finance and markets seven days a weeks.
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South Korea demands fair treatment from EU on new steel import tariffs
His office reported that South Korean President Lee Jae Myung had asked the European Union to "consider" the Korean steel producers as the bloc prepares to raise import tariffs starting July 1. The president's office released a statement saying that Lee made this request at a meeting with European Council President Antonio Costa and European Commission Presiden Ursula von der Leyen in Belgium on Wednesday. The office reported that Lee requested the EU ensure that 'South Korean steelmakers' can access the'market of the bloc' on terms as favorable as those offered to their competitors. He cited South Korea's position as a strategic free trade partner to the EU. The European Parliament voted in 'May to reduce tariff-free imports of steel?by almost half, from levels in 2024?to 18,3 million metric tons per year. Tariffs of 50% will be applied to volumes above this level. This is an increase from the current 25%. Eurofer data shows that in 2024, South Korea will be the second-largest steel exporter into the EU, with 3.3 million tons of finished steel products.
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French utility EDF and Centrica eye UK Government deal on Sizewell B Nuclear Plant Extension
A spokesperson for EDF said on Wednesday that the French company and UK-based Centrica were prepared to invest?about PS800 million ($1.07 billion) in order to extend the life of Britain's Sizewell B Nuclear Power Station to 2055, from 2035. Sizewell B, located on the North Sea Coast in Suffolk, supplies almost 1.2 gigawatts to the grid and is the only pressure-water reactor in Britain. A spokesperson for the French utility said that it was looking to?agree on a framework' with the UK Government. EDF said that the volatility in the energy markets has increased the need to secure a model suitable for reducing commercial risks, and enabling investment decisions. Centrica holds a 20% stake in the UK's nuclear generation business of EDF Energy, which includes Sizewell B. EDF's British branch had stated in January that a life extension of the plant was technically possible and that negotiations were underway with the UK for the necessary investment. Bloomberg News reported, citing a source, that EDF, Centrica and the government were close to negotiating a draft agreement to extend life of the plant. According to the report, companies are close to a heads-of-terms agreement with Department for Energy Security and Net Zero. An announcement is expected in the next few weeks. Bloomberg reported that under the terms discussed, Sizewell B would receive approximately PS70 per megawatt hour of electricity generated. The UK Department for Energy Security and Net Zero, as well as Centrica did not immediately respond to requests for comments on the report.
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Hawaii looks at suspending gasoline tax as prices rise
Hawaii Governor Josh Green said he was considering a pause in the state's gasoline tax due to the surge of prices at the pump three months into the Iran War. Gasoline prices on the island are among the highest in the United States. They average $5.58 a gallon - up $1 over last year's price of $4.48. Gas prices are soaring. Green stated in a press release that he was considering a temporary halt on the state and local taxes on gasoline for a part of summer to provide some relief to consumers. His office stated that the governor is evaluating?various options including executive actions. The state uses the revenue from taxes to maintain its infrastructure, such as roads and bridges. The American Automobile Association estimates that the average national gasoline price per gallon is $4.15. This is up over $1 from one year ago. The national average is still higher than 2025 but has dropped from $4.52 last month. California, Washington and Hawaii are the states that have been hardest hit, with an average price per gallon ranging from $5.07 to $5.83, according to AAA. In these states, the averages ranged from $3.64 to $4.68 per month a year earlier. Only a few states, including Indiana and Georgia, have taken concrete measures to provide relief. Utah passed a bill that reduced the state tax by 15% between July and December. The conflict is preventing oil from flowing through the Strait of Hormuz. Before the conflict, about one-fifth of the daily supply of oil in the world passed through this strait. Carl Davis, Research Director at the Institute for Taxation and Economic Policy said that "high energy prices are a worldwide problem and there is no way to fix it." Even if they suspend the gas tax, we will still pay a lot more than before the war began. Gas prices are too high to fix with a holiday. According to an Ipsos/May poll, more than 6/10 Americans believe that their household finances have been affected by higher gas prices. CNBC shared data from 'Moody's Analytics' that showed the average U.S. family has spent an extra $450 on fuel since the Iran War began on February 28. According to Moody's, this figure could rise to nearly $2,000 after a year if the conflict continues. Donald Trump, the U.S. President, has said that he expects gas prices will drop once the conflict ends. Even if U.S.-Iran agree on a peace agreement, oil industry experts believe that fuel prices will continue to be under pressure, even after the conflict ends. It will take many months for Middle East production to return to prewar levels. (Reporting and editing by Donna Bryson in Washington, Sanjeev MIglani, and Jasper Ward)
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Albania protests continue to grow as opposition to Kushner Resort persists
On Wednesday, thousands of Albanians took to the streets in Tirana's capital city for the largest protest yet against the construction of a resort planned by Donald Trump's son-in law Jared Kushner. The project is 'expected to cost about 5 billion euros.' It has sparked outrage among Balkan citizens because it is located near a wetland that protects flamingos, seals, and sea turtles. But also, there was a perception of a lack of transparency in the plans designed by the foreign investors. The crowd stretched for half a mile down one of the main boulevards in the city. Protesters chanted, "New Albania", and held signs saying "Albania isn't for sale". "The Zvernec project is a project... without transparency. This is the culmination of the events that have taken place in Albania over the past 35 years. "Enough is enough",?said Leand Lakrori, a protester. The protests represent the latest test of Rama's leadership. He has been in office since 2013, and many blame him for not doing enough to eradicate widespread corruption and improve basic services such as healthcare. Rama said in an interview with this week's newspaper that the project will go forward and be completed properly. He says that he has also made significant progress in reducing corruption, including the creation of an?special prosecutor's office (SPAK), which has launched a number of high-profile cases over the past few years. As well, violence broke out earlier this year when protesters called for the resignation of Rama’s deputy Belinda Balluku over allegations of?corruption. Rama dismissed?Balluku but mistrust still remains. "I'm here protesting, to end this saga of Albanian government. Fabio Bracaj said that the two parties are always the same. "We want to see a new era... a better country." Kushner's and Ivanka Trump's idea for the resort was born when they fell in love with Albania on a yacht a few years ago. Last month, protests broke out at a development site near Zvernec after developers built a fence to surround some land. Since then, the fence has been removed.
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The FOREX Dollar falls as US inflation data holds off rate hike
Dollar fell on Wednesday, after data revealed that U.S. consumer prices rose to their highest level in 3 years in May. The reading, however, was in line economists' predictions, and did little to increase?the odds of a Federal Reserve interest rate hike this year. U.S. consumer prices rose at their fastest rate in three years, as the Iran War increased the cost of gasoline and energy products. Bureau of Labor Statistics of the Labor Department announced on Wednesday that the Consumer Price Index had increased by 4.2% over the 12-month period ending in May. This is the biggest gain since April 20,23. The economists polled had predicted the CPI to increase 4.2% on an annual basis. Karl Schamotta is the chief market strategist for Corpay, a Toronto-based company. He said that the Federal Reserve has not yet been able to use the soaring prices of energy in its core measures. The dollar index (which measures the U.S. dollar against six other currencies) was down 0.1% at 99.875, but still not far off the two-month-high of 100.214 that was reached on Monday. Schamotta stated that traders are preparing for a neutral statement from officials at the Federal Open Market Committee meeting next week, and have modestly reduced expectations of a rate increase by year's end. The traders of short-term U.S. rates have backed away from betting that the Federal Reserve will raise interest rates as early as September. However, they remain confident that an increase in rate is coming by October. According to a large majority of economists polled, the Fed will keep its key rate unchanged for the remainder of 2026. Jason Pride, the chief of investment strategy and research for wealth management firm Glenmede, stated in a report that "after three months of high energy costs, there has been no meaningful pass-through" to core goods. This is the most important data in the report today that shows the Iran shock has not spread to a generalized episode of inflation. Even so, traders were on edge. U.S. president Donald Trump announced on Wednesday the United States would attack Iran "very strongly" if a peace deal was not reached. He also revealed that the U.S. Military secretly escorted vessels carrying more than 100,000,000 barrels of crude oil out of Strait of Hormuz to moderate global oil prices. The Yen remains in focus A Bank of Japan rate increase at its policy meeting on June 16 is almost completely?priced-in, which means that it will not trigger a significant turnaround in the yen's weakness even if it occurs. Tony Sycamore said that a hawkish comment from Governor (Kazuo Ueda) would be needed to signal the BOJ's next hike could move from December to September – with the?possibility a third increase before the end of the year," Tony Sycamore wrote in a note. Without that, or something similar the Ministry of Finance will likely have to use its chequebook again to defend the currency. The Japanese yen remained steady at 160.475 against the dollar. It continues to hover near the 160 level, which is widely considered a "line in the sand" for official intervention. According to a poll of economists, the BOJ is likely to raise its key rate in this month's quarter and again next year. This will bring borrowing costs up to 1.25% at the end of the calendar year. DOLLAR SOFTNESS On Wednesday, the Bank of Canada kept its benchmark rate at the same level. Governor Tiff MacKlem said that the central banks would not hesitate to increase rates to control inflation. The pound was 0.1% stronger against the dollar Wednesday as investors closely watched the latest escalation of tensions between Iran and the U.S. ahead of the UK GDP data on Friday. The leading cryptocurrency, bitcoin, was almost flat on the day. It now stands at $61,949. (Reporting and editing by Kevin Buckland; Will Dunham, Jan Harvey and Kevin Buckland; Additional reporting and editing by Sophie Kiderlin and Satoshi Sugyama in London; Reporting by Saqib Ahmed Iqbal; Additional reporting and editing by Sophie Kiderlin and Satoshi Sugyama in Tokyo)
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Trump: 'I love inflation' as prices increase amid Iran war
Donald Trump on a Wednesday appeared to be embracing data that showed a rise in inflation of more than 4%. He told reporters that he "loved the inflation" and reiterated his belief prices would fall once the Iran War ended. When asked about U.S. data that showed consumer inflation increased in May at the fastest rate in three years, and if it could hurt his fellow Republicans months before November's midterm elections, Trump replied: "I love inflation." Trump then explained that he approved a plan to secretly move oil tanks through the Strait of Hormuz due to concerns about higher costs and inflation. Trump stated that his calculation was successful and that the operation was a success. Trump stated that the oil will drop back to its previous level when the war is over. It's going down. It will fall like a stone. Trump called the war against Iran a diversion and described it as a "national security issue" because the closing of a key shipping route by Tehran has increased the price of gasoline, fertilizer, and other goods. The Federal Reserve could be prevented from lowering interest rates by higher prices, something Trump has been calling for since he returned to power in the United States last year. Republicans want to keep control of the U.S. House of Representatives, but they are worried that a consumer backlash will hand the reins over to Democrats. The cost of living is a major issue for Americans. Trump won the 2024 presidential elections in part due to his promise to reduce inflation. However, his approval rating has fallen to its lowest point of his career, and this includes his handling of cost of living. The efforts to reopen Strait of Hormuz for tanker traffic to move goods has?so-far stalled. Industry executives and analysts have warned that the coming weeks could bring another oil price shock, severe enough to shake broader financial markets. Even if Trump and Tehran strike a deal soon it will take months for supplies to move, with disruptions predicted through 2026. While Americans are more protected from fuel price shocks than many other countries, higher energy prices could affect consumer spending in the long run. Trump said last month that Americans' financial problems were not a consideration as he pushed for a deal while threatening to attack Iran again: "I do not think about Americans financial situation." I don't care about anyone. "I only think of one thing: we cannot allow Iran to have a nuclear bomb." (Reporting and editing by Scott Malone, Chizu Nomiyama and Bo Erickson)
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Gold falls 3% amid inflation and rate hike concerns as the Middle East escalates
Gold prices dropped?more?than 3% on Tuesday as investors focused on U.S. key data to get clues about the direction of monetary policy. By 2:26 pm EDT (1826 GMT), spot gold had fallen 3.5% to $4,111.95 an ounce. This was its lowest price since March 23. U.S. gold futures for August delivered settled 3.6% lower, at $4133.3. Tai Wong, a metals trader independent, said that the markets are desperate for some good news after Friday's strong payrolls and Trump's earlier threat this morning to 'pay the price'? for not negotiating with Iran. Trump said that Iran took too long to reach a?deal and now would "pay the price." Trump said that the U.S. will attack Iran "very hard" if a peace deal cannot be reached. Iran launched drone and missile attacks against U.S. bases located in Jordan, Kuwait, and Bahrain as a retaliation to American strikes around the Strait of Hormuz on Iranian targets. Since the beginning of the war, in late February 2008, the price of gold has been under pressure due to the rising oil prices and fears about inflation. Gold is often seen as an inflation hedge, but higher interest rates can be detrimental to the metal. According to CME Group’s FedWatch tool, traders are pricing in about a 67% probability of an interest rate increase in the U.S. in December. The U.S. Labor Department reported on Wednesday that the Consumer Price Index, excluding energy and food items, gained 0.2% monthly after increasing 0.4% in April. Investors will have more information to assess the Federal Reserve's policy on monetary policies after the release of the U.S. Producer Price Index, which is scheduled for Thursday. Inflation, central bank purchases, and currency debasement are still concerns that continue to drive gold prices, according to Paul?Wong. He is a market analyst at Sprott Asset Management. Silver spot fell by 0.8%, to $64.83, platinum dropped by 2.6%, to $1681.88, while palladium increased 0.7%, to $1230.41. (Reporting and editing by Paul Simao, Leroy Leo, and Anushree mukherjee from Bengaluru)
EU nations divided over nature law in newest blow to green program
The European Union's. flagship policy to restore broken nature is awaiting the. balance, with a vote to pass the law on Monday cancelled after. Hungary withdrew its assistance for the costs.
A vote on the law among EU countries' environment ministers. on Monday was aborted after Hungary stated last week it would. no longer back the policy - erasing the already-slim. reinforced majority of countries in favour.
The nature law is the latest EU ecological policy to come. under fire as policymakers try to react to months of mad. farmers' demonstrations over complaints consisting of strict green EU. regulations. The EU has already compromised various green guidelines to. attempt to quell the protests.
The agricultural sector is a very important sector, not. just in Hungary, but everywhere in Europe, Hungary's state. secretary for environment Aniko Raisz informed press reporters on Monday.
Raisz said Hungary was not opposed to protecting nature, however. that ecological objectives required to be sensible and take into. account the sectors impacted.
Some EU diplomats stated Hungary's already-large safeguarded. natural areas suggested the country might comply with the content of. the EU nature law, and suggested Budapest's relocation was a purely. political one.
Dutch climate minister Rob Jetten on Monday acknowledged the. increased political examination of green measures ahead of the EU. Parliament elections in June.
With the approaching European elections, it will not be simple to. leave this position, Jetten stated of the EU nature law.
Some EU countries warned versus cancelling the policy. Environment ministers was because of discuss their next steps on. the law on Monday afternoon.
We can't quit. I prompt member states to reach a. breakthrough on this law, German Environment Minister Steffi. Lemke stated.
Spanish climate minister Teresa Ribera stated it would be a. big irresponsibility to decrease efforts to tackle worsening. nature loss and environment modification.
The law would be among the EU's greatest ecological. policies, requiring countries to present steps bring back. nature on a fifth of their land and sea by 2030.
Its objective is to turn around the 81% of Europe's natural. habitats that are classed as in bad condition. However the policy. has dealt with a backlash from some federal governments and legislators. concerned it would impose burdensome guidelines on farmers, or clash. with other industries.
Other countries including Italy, Poland and Sweden have. opposed the law, while Belgium and Austria are set to stay away,. EU officials stated.
(source: Reuters)