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Tesla warns of retaliatory duties
Tesla, a major American automaker, has warned it and other exporters that they are vulnerable to retaliatory duties that could be imposed in response to President Donald Trump’s aggressive tariffs. Elon Musk, the CEO of Tesla and a close Trump ally, is leading White House efforts to shrink the federal government. The billionaire is in charge of the Department of Government Efficiency. Tesla's letter is noteworthy because it reflects the concerns of many U.S. companies about Trump's tariffs. The letter is unsigned, but on letterhead of the company. It's not known who wrote it. Tesla stated that it was important to make sure the Trump administration’s efforts to resolve trade issues “do not unintentionally harm U.S. companies." It stated that it wanted to avoid the retaliation it experienced in previous trade disputes which led to increased tariffs on imported electric vehicles into countries subjected to U.S. duties. Tesla wrote in a letter sent to the U.S. Trade Representative Office that "U.S. Exporters are exposed to disproportionate effects when other countries react to U.S. Trade Actions." "For instance, previous trade actions by the United States resulted in immediate responses by the targeted countries including increased tariffs for EVs imported to those countries." Trump may impose significant tariffs in April on parts and vehicles made all over the world. Tesla has warned that despite aggressive localization, it is difficult to find certain parts or components in the United States. The automaker said that businesses will "benefit" from a phased-in approach, which allows them to be prepared and take the appropriate compliance and supply chain measures. Tesla didn't immediately respond to an inquiry for comment. In a letter dated on Tuesday, Tesla said that as a U.S. exporter and manufacturer it encourages USTR "to consider the downstream effects of certain proposed measures taken to address unfair trading practices". Autos Drive America is a trade association that represents major foreign automakers such as Toyota, Volkswagen, BMW, Honda, and Hyundai. They warned USTR separately in separate comments about the impact of imposing "wide-based tariffs" on U.S. assembly plant production. The group said, "automakers can't shift their supply chains over night, and cost increases are bound to lead to a combination of higher prices for consumers, fewer models available to them, and the shutdown of U.S. manufacturing lines, which could result in job losses throughout the supply chain."
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Trump escalates trade war by threatening to impose tariffs on European wines and spirits
Donald Trump, the U.S. president, threatened on Thursday to impose a tariff of 200% on wine, cognac, and other alcohol imported from Europe. This opened a new front in an ongoing global trade war which has caused financial markets to be roiled and sparked recession fears. Investors were worried about Trump's threat to impose more trade barriers in the world's biggest consumer market. Trump's threats came in response to an EU plan to impose tariffs next month on American whiskey and products -- which is itself a response by Trump to his 25% tariffs for steel and aluminum imports, which went into effect on Wednesday. The European Commission did not immediately comment on Trump's tweet. Canada, an ally and neighbor of the United States and the largest aluminum supplier, announced its own countermeasures to Trump's metals duties and took the dispute to World Trade Organization. Trump has repeatedly threatened to impose a variety of trade sanctions since returning to the White House last January, but he has delayed action on most of them. In an Oval Office discussion with NATO Secretary General Mark Rutte, Trump said that he will not back down from the reciprocal tariffs which he had promised to impose against all trading partners by April 2. He said, "We have been ripped of for years and we will not be ripped-off again." Alcohol is proving to be one of the key friction points in the trade war that's brewing. As relations between the United States and Canada have deteriorated, some Canadian retailers have removed American Bourbon from their shelves. Trump has also threatened to annex this country. U.S. Commerce secretary Howard Lutnick said Fox News that he will meet with Canadian Finance minister Dominic LeBlanc on Thursday and Ontario Premier Doug Ford to discuss tariffs. However, he added that the U.S. would be seeking concessions from Canada. He said, "You must remember that Canada is here, relying on our economic strength." "Why do we do all of this business with Canada if the people are not grateful, respectful and don't want it?" The EU has proposed many countermeasures worth 28.31 billion euros (26 billion euro) that would be applied to products with little more than a symbolic value such as bathrobes and dental floss. The proposed duty of 50% on U.S. Bourbon would be a major blow to the industry. Exports have been steadily growing since the United States lifted the tariffs Trump imposed in his first term from 2017 to 2021. According to the Distilled Spirits Council of the United States (a trade group), the EU exported roughly 40% of spirits in 2023. Eurostat reports that the United States is responsible for 31% (or more) of EU wine and spirit exports. Trump's proposed tax of 200% on European alcohol will create additional headwinds for producers such as Pernod Ricard. The company has already reduced its sales forecast due to Chinese duties that were imposed in 2013. The industry calls for more toasts and fewer tariffs Both sides of the Atlantic have urged their leaders on de-escalation. This cycle of retaliation based on tit-for - tat must stop now! SpiritsEurope, a trade association for the industry, said: Trump has filled his administration with people who share these views. Treasury Secretary Scott Bessent stated that he is not concerned about recent Wall Street volatility, as the Trump administration has its sights set on a long-term transformation of U.S. economics. He said that the EU would be more affected by a trade conflict, since it is more dependent on exports to America. He said, "I would advise these government leaders to realize that they are losing this argument from an economic standpoint," on CNBC. Investors, businesses, and consumers have been frightened by Trump's threats. Jets, coffees, clothing, automobiles, and packaged food producers are among many businesses that have scrambled to evaluate their operations in light of Trump's actions. Tesla, the company owned by Trump advisor Elon Musk argued to U.S. Trade officials in a letter that the trade conflict could make the U.S. a target of retaliatory duties. Tesla, a U.S. exporter and manufacturer, encouraged USTR to take into account the downstream effects of certain proposed measures taken to address unfair trading practices in a March 11 letter. Some economists claim that the uncertainty is a threat to the U.S. economic health and increases the risk of a recession. A poll conducted by /Ipsos on Wednesday revealed that 70% of Americans believe Trump's tariffs will make purchases more costly. Trump claimed that his tariffs on alcohol would benefit domestic producers. Importers and distributors in the United States said that it would result in lost sales, job losses and closed businesses. Eric Faber is the president of Cutting Edge Selections in Cincinnati. He said that U.S. Wineries wouldn't be able fill the gap, if Trumps tariffs make European wines unaffordable. He said that the higher prices would hurt distributors and restaurants who help U.S. wines reach their customers. He said that it would be "absolutely catastrophic". Reporting by Doina Schiacu, Andy Sullivan, Andrea Shalal and Philip Blenkinsop, in Washington, and by Susan Heavey in Brussels. Additional reporting by David Lawder and Steve Holland; Madeline Chambers; Dominique Patton; Emma Rumney; Tasiilo Humel; Andy Sullivan's writing; Editing and proofreading by Louise Heavens; Bernadette Baum; Mark Porter; Deepa Babington.
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US Treasury confirms that the Russian Energy Financing License has expired
The U.S. Treasury confirmed on Thursday that the license for a winding down of energy transactions between Russian financial institutions and American companies expired this week as planned under strict sanctions imposed during Joe Biden's final days in office. A Treasury spokesperson confirmed that General License 8L expires at 12:01 am EDT on the morning of Wednesday. The Biden administration issued the license on 10 January to clear any remaining transactions, as it had banned energy financing deals between Russian banks including Sberbank and VTB, along with the Central Bank of the Russian Federation. The Biden administration imposed the most severe sanctions on Russia for its oil and gas revenues in response to its invasion of Ukraine. This was done in an attempt to strengthen Ukraine's position during any future peace talks. The sanctions also prohibited dollar transactions with Russian energy companies Gazprom Neft, Surneftegas and 183 vessels which have shipped Russian crude oil. Many of these vessels are part of the shadow fleet - a grouping that includes aging tankers owned by non-Western firms. Scott Bessent, U.S. Treasury secretary, has criticised Biden's sanctions against Russia for being ineffective as they were preoccupied with maintaining low oil prices. In an email, the Treasury spokesperson stated that the Trump administration is "focused on ending the fight and encouraging negotiations to end war." "We will continue to implement sanctions which are one of the levers that facilitate these goals." (Reporting and editing by Leslie Adler, Diane Craft and David Lawder)
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Fuel shortage threatens Bolivia's soy harvest, causing farmers to panic
In Bolivia's Santa Cruz farm region, an increasing fuel shortage has begun to affect farmers' abilities to harvest their crops. This is a cause for concern in the country, which is struggling economically and where agriculture plays a major role. Fuel shortages, which have led to long queues at the pumps, are the result of a decline in foreign currency reserves during the past decade, and a local gas production that has reached crisis levels. The government of President Luis Arce is concerned about the situation, and has tried to limit prices by using subsidies. Joel Eizaguirre is a soybean farmer in Santa Cruz, the main farming belt of the nation. We'll be left with producers that will make different choices. It's going affect everyone. Jaime Fernando Hernandez of the oilseed and grain group ANAPO said that if diesel was not available for farm machinery and tractors then a lot of food – including corn, soy and sorghum – could be lost. This would have a ripple effect on the entire food chain, affecting production of chicken, eggs, milk, and livestock. He said that the impact on productivity and food production would be "truly catastrophic". Bolivian government is under increasing pressure because of the fuel and dollar crisis. They have decided to use cryptocurrency for payment and fuel cargoes. The farmer Eizaguirre stated that he would rather pay more to have fuel than not enough. He was referring to a parallel exchange rate of more than 11 bolivianos to the dollar, as opposed to 6.86 at an official controlled rate due to the shortage of hard currency. He said: "I personally would rather pay 11 bolivianos for fuel than not have enough to harvest our grains or be able plant during the approaching winter." Reporting by Santiago Limachi in Santa Cruz de la Sierra and Monica Machicao Editing by Adam Jourdan & Matthew Lewis
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Tariff angst is overshadowing soft inflation as stocks fall sharply and bond prices rise
On Thursday, global equities fell and U.S. Treasury yields also did. This was due to concerns about global trade tensions as well as the impact of inflation and economic growth. Trump warned that the EU would not be able to remove the whiskey surcharges imposed by the United States if it did not do so. The increased tariffs were imposed on Wednesday after Trump's new tariffs on steel and aluminum imports from the United States. The Bureau of Labor Statistics, the Labor Department's Bureau of Labor Statistics, released data on Thursday that showed U.S. Producer prices (PPI), which were expected to rise faster than consumer prices (CPI), actually remained unchanged in February. Tim Ghriskey is a senior portfolio strategist with Ingalls & Snyder, New York. He said that if it weren't for the ongoing trade war, the market would have been up strongly on the inflation data. "Traders have their attention on the trade conflict." Ghriskey said, "It appears that the administration (in the U.S.) is very aggressive. They seem to be committed to the long-term and personalities are unlikely to change their minds in the near future." Bill Adams, Chief economist at Comerica Bank, wrote in a note of research that the outlook for inflation depends more on government policy such as tariffs and deportations, or Department of Government Efficiency (DOGE), than "the data released right now which is looking backwards." At 02:47 pm on Wall Street, the Dow Jones Industrial Average dropped 399.18 or 0.97% to 40,951.75. S&P 500 dropped 51.21 points or 0.91% to 5,548.09, while Nasdaq Composite declined 231.66 points or 1.31% to 17,416.75. The MSCI index of global stocks fell by 6.69 points or 0.81% to 824.16. The pan-European STOXX 600 Index closed earlier down 0.15%, after rising by 0.81% the previous session. The U.S. S&P 500 is down nearly 6% this year. However, European stocks have done better thanks to government plans for defense spending and a possible peace agreement with Ukraine. The STOXX Index is up 6.5% for the year, despite recent drops. U.S. Treasury Yields fell on Friday as falling stocks boosted demand to buy safe haven U.S. Government debt. Trade wars between the United States, and its trading partners are escalating and threatening growth and inflation. The yield on the benchmark U.S. 10 year notes dropped 3.6 basis points from 4,316% at late Wednesday to 4.28%. The 30-year bond rate fell by 2.9 basis points, from 4.631% to 4.6016% late on Wednesday. The yield on the 2-year bond, which is usually in line with expectations of interest rates for the Federal Reserve (Federal Reserve), fell by 4.2 basis points, to 3.953% from 3.995% at late Wednesday. The U.S. Dollar was mixed in terms of currencies. It weakened against the safe-haven Japanese yen, but gained on the Euro and Canadian dollar. The euro fell 0.28% against the dollar to $1.0855, but the dollar dropped 0.34% against the Japanese yen to 147.74. The Canadian dollar fell 0.39% against the dollar to C$1.44 each. The pound fell 0.06% to 1.2952. Oil prices fell on Thursday after rallying on Wednesday due to a bigger-than-expected withdrawal of gasoline from U.S. stocks. Traders weighed macroeconomic worries and demand versus expectation. U.S. crude oil settled at $66.55 per barrel down $1.13 or 1.67% and Brent settled at $69,88 per barrel down 1.51% or $0.07 for the day. Gold prices soared to record levels on Thursday and were just a few cents away from the $3,000 mark per ounce. The momentum was driven by increased tariff uncertainty as well as bets placed on the Federal Reserve's easing of monetary policy. Spot gold increased 1.71% to 2,981.92 dollars an ounce. U.S. Gold Futures increased by 1.51% to $2.983.50 per ounce.
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The GM CEO and Trump met on Wednesday amid the tariff war -- White House
A White House official said that President Donald Trump and General Motors CEO Mary Barra met on Wednesday to discuss the automaker’s investment plans in light of an ongoing tariff battle. After a phone call with Barra and Ford CEO Jim Farley, as well as Stellantis Chair John Elkann, Trump agreed last week to exempt automakers for a month from his 25% tariffs against Canada and Mexico, as long as the comply with free trade rules. Trump said to reporters that GM visited him on Wednesday and "want to invest $60 billion". GM has not yet commented on the meeting. It is unclear when any new expenditures will occur. The White House has been told by automakers that they need to be certain about the tariffs and vehicle emission policies before they make any significant changes in their North American investment plans. Trump imposed hefty tariffs this week on steel and aluminium, impacting products ranging from bulldozers to cars. As exemptions, exclusions, and quotas expired, the metals tariffs increased to an effective 25% increase. The American Automotive Policy Council (AAPC), a group that represents the Detroit Three automakers noted that domestic automakers purchased the majority of their aluminum and steel in North America or the United States, but expressed concern about "specifically revoking the exemptions for Canada" and "Mexico". Stellantis said to its dealers that it was willing to work with Trump to "support further investment in our U.S. Manufacturing footprint, but we need to give ourselves time to make the changes without negatively affecting our business or our customers." Trump also threatens new reciprocal tariffs for April 2, which could dramatically increase the cost of imported vehicles from Japan, South Korea and Europe. In meetings, Trump and Commerce Secretary Howard Lutnick told automakers that they wanted the industry to shift more assembly and part production to the United States.
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Shares jump as Panama reviews First Quantum mine closure
He told reporters that next week, Panama's president Jose Raul Mulino would begin an investigation into a closed copper mine owned by Canada's First Quantum Minerals. Mulino also ordered the restarting of a power station needed to run a port nearby. The port was used to export mine production. First Quantum was ordered by the predecessor of Mulino to close the open-pit copper mine in 2023 after protests. This led to concerns about the maintenance of Cobre Panama and the 120,000 metric tones of copper concentrate that were stockpiled. First Quantum's shares rose by more than 8% after Mulino made his comments. The mine, which accounted for 1% global copper production, was among the top in the world before it was closed. Mulino said that he has authorized the removal of stranded products of copper from the mine. He argues that it is "wasted", and that Panama will need to be reimbursed after it is processed out-of-country. He said that the power plant will be activated to facilitate exports out of the port at a press conference held every week. Mulino was talking about the Punta Rincon Port, which is located approximately 17 miles (27km) north of mine. The president said that he will review the future of mine in greater detail as early as next week. Mulino stated, "The mine issue will be handled with great care and always keeping in mind the national interest." "We will start next week." First Quantum issued a statement after Mulino's speech expressing satisfaction at the president’s decision to restart power plant, as well as with his comments regarding exports. The statement said, "We welcome President Obama's statements... about the export authorizations for copper concentrate." Reporting by Elida Mehro and Divyarajagopal, Additional reporting by Aida Pelaez-Fernandez, Writing by Daina Elizabeth Solomon; Editing David Alire Garcia
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US Farmers Sue Trump Administration for Withheld IRA Funds
On Thursday, several U.S. nonprofits and farmers filed a suit against the Trump Administration, alleging that it illegally holds back Department of Agriculture grants financed by the Inflation Reduction Act. The USDA has frozen a wide range of grants while it conducts a review of agency spending, including money for farm programs and conservation funded by IRA. Five farmers who were involved in this lawsuit received grants for solar panel installation from the USDA Rural Energy for America Program. Grants were given to the three non-profits involved by the Forest Service. According to the complaint, farmers have contracted with solar installers for which they have incurred costs that may not be recoverable in the event the grants remain frozen. It says that the freeze has forced nonprofits to lay off or furlough staff, or reduce programs. This is not efficiency in government. This is a wasteful expenditure that causes unwarranted financial hardship to small farmers and groups trying to improve the communities in which they live. The USDA didn't immediately respond to our request for a comment. Agriculture Secretary Brooke Rollins said that the agency was beginning to release IRA grants to the farmers. However, the agency did not provide details on how much money had been released or the timetable.
Oil slips amid macroeconomic concerns despite firm demand expectations
The oil prices fell on Thursday, after an earlier surge on the back of a bigger-than-expected drop in gasoline stocks in the United States. Markets weighed macroeconomic worries against a firm demand in near-term.
Brent futures dropped 5 cents, to $70.9 a bar by 0426 GMT. U.S. West Texas Intermediate crude oil futures lost 10 cents, to $67.58 a bar.
Both benchmarks rallied about 2% on Wednesday as U.S. government data showed tighter-than-expected oil and fuel inventories.
Analysts had predicted a 1.9 million barrel drop in gasoline stocks, but the actual decline was 5.7 million. Distillate stocks were also lower than expected - despite gains for crude oil stocks.
Hiroyuki Kikakawa, Nissan Securities Investment's chief strategist, said that declining U.S. gas inventories increased expectations of a seasonal increase in demand for spring. However, concerns over the global impact of tariff wars on the economy weighed heavily on the market.
He added that "with strong and weak factors moving simultaneously, it is difficult for the markets to lean in one direction."
Donald Trump warned on Wednesday that he would escalate a global war of trade by imposing further tariffs on European Union products, while major U.S. trade partners announced they would retaliate against trade barriers already put in place by the U.S. President.
Trump's focus on tariffs has shaken investors, consumers, and business confidence in the U.S. and raised recession fears.
The Organization of the Petroleum Exporting Countries (OPEC) said that Kazakhstan was the leader in the OPEC+ group for a significant increase in crude production in February. This highlights the difficulty the producer group faces in enforcing adherence of agreed output targets.
JP Morgan analysts noted that concerns about the sluggish demand for jet fuel weighed on markets. They also pointed out that U.S. Transportation Security Administration (TSA) data revealed passenger numbers in March had decreased by 5% compared to last year, after a stagnant February.
The overall market was not as weak as expected due to the strong demand outlook.
Analysts at JP Morgan said that the strong demand from the U.S. and Ukraine's 377 drones that targeted Russian energy infrastructures and military installations helped to support prices.
They added that "as of March 11th, global oil demand averaged 102 million barrels a day. This is an increase of 1.7 million barrels compared to last year and exceeds our projection for the month."
(source: Reuters)