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South Korea's efforts to expand the AI chip hub outside Seoul will be tested by power and water requirements
South Korea wants to build a new semiconductor hub in the southwest of its country within four years. However, local opposition due to its massive water and power needs will be one of its greatest obstacles. Honam semiconductor industrial complex, which is estimated to be worth at least 800 trillion won (540 billion dollars), is central to President Lee Jae Myung’s efforts to extend the AI chip boom outside the prosperous Seoul metropolitan region. Companies involved in the project like Samsung Electronics, however, will have to find new sources of energy to power it, with the goal of establishing it by the time Lee finishes his term in 2030. Analysts say that the power demand of the four planned chips fabrication plants could be 70% to 80% more than the current annual consumption of electricity in the southwestern regions Gwangju, North Jeolla, and South Jeolla. Local residents have said they are against plans to build new nuclear reactors or transmission lines, citing the flaws of previous energy infrastructure that they claim failed to win their approval. Residents claim they were not also consulted on plans to raise an existing dam in order to supply water to the project. Neal?Won is the principal analyst for S&P Global Energy. He said, "A large amount of power demand has been added to a region which had previously very little." Experts say that it will be difficult to operate the complex in its full capacity by 2030 without accelerated infrastructure growth. South Korea's Energy Ministry said that the southwest region has enough power to meet?local demands. If new chip fabs were located in the area, the majority of electricity would be produced locally, eliminating the need for long-distance transmission cables. It said that it would work with local governments to build the power infrastructure before fab operations, and improve public acceptability. This includes placing underground lines in densely-populated areas. Kim Sung-whan, the Energy Minister, has said that they could also consider building small modular reactors or new nuclear reactors. BOTTLENECKS FOR INFRASTRUCTURE The chip cluster project in Yongin near Seoul is a cautionary tale. Samsung Electronics, SK Hynix and other chip manufacturers have been working to expand their manufacturing capacity in the region. However, projects have faced delays due power and water problems. Mayor Lee Sang Il said SK Hynix’s first Yongin fabs were supposed to receive 265,000 metric tonnes of water a daily from a dam in another city. But opposition from the residents delayed the process for months. And supplies of power and water from other regions may face similar objections. He said that the responsibility for calming opposing voices and resolving differences rests with the central government. The government plans to assist Samsung and SK HYnix?to accelerate construction in Yongin. Roh Byeong Nam, a farmer in Yeonggwang County, southwest Korea, and co-chairman of the local anti-nuclear alliance, stated that residents would challenge any expansion or?expansion nuclear reactors if necessary through litigation. Roh stated that "to now talk about building new reactors on top of extending their lifespan is nothing less than declaring Yeonggwang as a nuclear test ground and ultimately a permanent?nuclear-waste site." Water supply is also complex. The environment ministry estimates that the cluster requires about 650,000 metric tonnes?of water per day. This is more than Gwangju’s daily residential water consumption. The developers hope to avoid building a large new dam by utilizing reclaimed water and five dam systems. They also plan to raise one of these systems - Dongbok Dam, to ensure an additional 250,000 tons per day. Kim Kwang Jin, the head of a group of dam-residents near Dongbok said that residents wanted to be consulted. Kim stated that the construction of a dam would be similar. He estimated that 1,500-1,600 households may be affected directly or indirectly. "They announced this unilaterally, without considering the resident's acceptance." The ministry of energy said that the dam-raising alternative would minimize environmental damage and relocation when compared to constructing a brand new dam. It will also continue discussions with Gwangju residents and the local government in order to avoid delays due either infrastructure or opposition.
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Oil prices drop as US-Iran strikes are offset by mediation efforts
Oil prices dipped on Tuesday as markets weighed reports of mediation attempts?between Iran and the U.S. versus an exchange of new?attacks?between both and threats of a Saudi Arabian naval blockade by Yemen's Houthis. Brent crude futures fell 35 cents or 0.4% to $88.87 a barrel at 0052 GMT. U.S. West Texas intermediate crude for September was unchanged at $82.47 a barrel. Both contracts were trading at levels below their highest in over a month, which they reached in the previous session. Houthis, who are allied with Iran in Yemen, announced?on Sunday that they would impose an naval blockade against Saudi Arabia. This could open a new front for the United States. In its war against Iran, the United States is now facing a new threat that could affect global energy supplies and international trade. Tim Waterer is the chief market analyst for KCM Trade. He said that the Houthis' threats of a blockade against Saudi Arabia are important because they raise the risk of disruption to another major oil exporter. Separately, an Iranian official said that Tehran received a mediator's proposal for a 10-day truce in order to salvage the interim agreement signed on June 17. The deal was intended to pave way for a long-term agreement to end "the war" that began February 28 when U.S. and Israeli attacks against Iran. The diplomatic move came after another night of U.S. attacks on Iranian cities, and attacks by Iran's Revolutionary Guards against U.S. military bases in the region. The U.S. Central Command announced that it would be launching another round of attacks on Iran later?on Monday. "(Oil has) come a long, way and it certainly has the potential to rise again. The overnight talk of peace and de-escalation appears to have capped the upside in the short term. Whether 'anything' comes out of those peace talks is yet to be seen, according to IG market analyst Anthony?Sycamore in a recent note. A preliminary poll on Monday showed that U.S. crude stockpiles fell last week along with gasoline while distillate inventories likely increased. (Reporting by Ishaan Arora in Bengaluru; Editing by Jacqueline Wong)
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As the AI rally cools, Indonesian stocks that have been beaten down feel the love.
Some investors are buying back the laggards as big investors start to sell and Indonesia's battered, unloved stock markets is gaining some love. Jakarta's stock market has been Asia's worst performing'major' stock market for this year. It is down by 28%. Investors have been looking at markets with less of a focus on AI. David Chao is the Asia-Pacific Global Market Strategist at Invesco, based in Singapore. He said: "We have been buying Indonesia and taking a profit in South Korea." "Indonesia remains the most overlooked macro-growth story." BARGAIN HUNTERS ARE SEEKING VALUE AS SENTIMENTS CHANGE Although still cautious, the sentiment is growing that it may not be as bad as it seems for Indonesian markets. This year there were more than $4 billion of foreign outflows due to MSCI transparency and fiscal concerns. Aninda M. Mitra, BNY Investments' head of Asia macro- and investment strategy, said: "I think a lot is already in the price on the equity side." Mitra stated that, despite the concerns about the pending MSCI decision, if the price multiples continue to fall and the rupiah stabilizes, "then there is a good case to make to begin adding selectively." Last month, Allan Gray, an asset manager, made his first investment in Indonesia, investing in Indofood Sukses Makmur - the holding company that owns the dominant instant noodle maker in the country. According to our estimates, INDF is trading at just over five times earnings. We believe this is a fair price for a consumer-facing, dominant business that generates cash. Investors also prefer banking and commodity firms, with Citi choosing Bank Central Asia, Vale Indonesia Alamtri Minerals, and Amman Mineral International. The Jakarta benchmark index has risen by more than 10% in July, while the tech-heavy indices have fallen sharply. This suggests that some investors may be starting to shift their focus into markets with lower returns. The rebound came despite the fact that there was little improvement to the concerns which sparked this year's selling, such as questions about Indonesia's fiscal policy and uncertainties surrounding MSCI's evaluation. MSCI NOVEMBER DEATHLINE THE NEXT CATALYST Indonesia retained its emerging markets status. Most analysts expect MSCI to confirm that classification in November, after it has extended its review to include a?review of the impact of reforms implemented by Jakarta regulators earlier this year. S&P helped calm investors' nerves by reaffirming Indonesia’s sovereign rating last week with a stable outlook. Citi said Indonesia was the most popular country in client meetings held by the bank earlier this month in Hong Kong and Thailand. Not everyone is convinced that an AI-driven rally cooling will provide a lasting support for Indonesian assets. Indonesia is not the only market that has recovered, as global investors have also returned to Indian and Chinese stocks. Investors have lost confidence in the welfare policies of President Prabowo Subito, as a result of fears about worsening fiscal conditions. The?rupiah has fallen nearly 8% so far this year and is at record lows. The fact that Iran is a net importer of oil has heightened concerns. Arthur Budaghyan is the chief emerging markets and China Strategist at BCA Research. The bar has been raised for these portfolios in order to allocate more capital and upgrade Indonesia. Even so, foreign investors have opted to retreat gradually rather than in a mass exodus. Copley Fund Research shows that more than half of the active fund managers they track remain overweight on Indonesia, even though the percentage of funds invested there has fallen to 80.45% - a 15 year low. The research firm stated that "the structural case for Indonesia" has not vanished. The Indonesian market is not overcrowded in either direction. It is arguably more expensive to be wrong about a recovery than it is to continue being patient. (Reporting and editing by Jacqueline Wong in Singapore, Ankur Banerjee)
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Stocks drop as oil prices rise; Iran tensions and earnings are in focus
Investors were cautious on Monday, as they awaited earnings from high-profile U.S. firms this week and developments in the U.S./Iran conflict. Oil prices ?gained. Yemen's Houthis, who are allied with Iran, said that they would impose an naval blockade against Saudi Arabia. The announcement came despite indications that Washington and Tehran want to resume diplomatic efforts to stop a spiraling attack. Brent crude futures rose by around 1.3%, settling at $89.22 per barrel. U.S. West Texas intermediate crude climbed 0.9%, settling at $83.23, after reaching its highest level in June at $85.39. Oil prices are generally a negative factor for stocks, as they raise costs for both consumers and businesses. This week, several major U.S. firms like Intel and Alphabet will report their earnings. Peter Cardillo is the chief market economist of Spartan Capital Securities, a New York-based brokerage. He said that earnings are beginning to flow and this will provide a cushion for markets. He also said that chipmaker shares had recovered some of the recent sharp losses. The semiconductor index rose 0.6% Monday, after closing Friday at a record low of?more? than 20% below its June late-closing high. This confirms that it is in a bear market. The Dow Jones Industrial Average dropped?30716 points or 0.59% to 51,839.26. The S&P 500 lost 14.41 points or 0.19% to 7,443.28. And the Nasdaq Composite was down 12.17 points or 0.05% to 25,508.07. The earnings season could reinforce or undermine this year's gains. This has been driven by an increase in AI capital expenditure, lifting semiconductor stocks and companies that have been seen as beneficiaries of the buildout. This season's show will give some insight into the AI trade, as well as chip makers, and provide more color about secondary effects of war. MSCI's global stock index fell by 3.23 points or 0.29 percent to 1,105.50. The pan-European STOXX 600 fell by 0.3%. U.S. Treasury rates rose as traders considered the impact of escalating oil prices due to the war in Iran. The U.S. economy is quiet this week, and Federal Reserve officials have a "blackout" period for public comments before the central bank meeting next Monday. The yield on the benchmark 10-year U.S. notes increased 5.68 basis points, to?4.598%. According to LSEG, the European Central Bank is holding a policy-setting meeting this week. Markets are pricing in a 13.1% probability of a rate hike. Andy Burnham, Britain's seventh prime minister since a decade, took over Keir starmer and the sterling fell 0.12% to 1.3437. He promised to reshape Britain's politics and introduce a "new economic model". The dollar index (which measures the greenback versus a basket currencies) rose 0.18%, to 100.92. Meanwhile, the euro fell 0.19%, to $1.1417. Gold spot fell by 0.24%, to $4,007.00 per ounce. (Reporting from Caroline Valetkevitch and Alun John, in New York; additional reporting from Wayne Cole, in Sydney; editing by Nick Zieminski & Stephen Coates).
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New York Army veteran taken into custody after fire outside ICE offices
Authorities say a man protesting Immigration and Customs Enforcement (ICE) was arrested on Monday, after he set off fireworks and ignited a fire on the steps leading to the ICE office in Lower Manhattan. The suspect was identified as Andrew Arrabaca a 43-year old U.S. Army Veteran living in Harlem. According to local news reports and authorities, on Monday morning a man appeared pour gasoline out of a bucket into the stairwells of 26 Federal Plaza. This office building also houses the FBI New York Field Office. He then lit it ablaze. Authorities said the suspect also ignited fireworks. He brought anti-ICE material. Department of Homeland Security announced on X, that a Federal Protective Service agent who detained the "anti-ICE rioter" was?injured. James Barnacle said that two other people had been?also lightly hurt,' at a press conference. Barnacle is the FBI assistant director for New York. Barnacle described the suspect as "an anti American, anti government extremist." James McDonald, Deputy U.S. attorney for the Southern District of New York said that an investigation is ongoing and charges have not yet been filed. Arrabaca was not available for comment and it is unclear whether he has a lawyer. Officials have confirmed that Arrabaca was in the Army between 2001 and 2005, where he worked on Patriot?missiles systems. Authorities said that investigators traced the suspect on Monday to his Harlem home. Officials say he was able to reach Midtown via subway on Sunday, and then spent the night on the streets of Lower Manhattan. What happened outside 26 Federal Plaza on this morning was disturbing. Zohran Mamdani, the mayor of New York City, told reporters that he was'relieved' no one had been seriously injured and that a suspect has been taken into custody. Reporting by Doina chiacu in Washington; David Dee Delgado in New York and Maria Tsvetkova, with editing by Michelle Nichols & Cynthia Osterman
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Trump tightens waiver rules for defense supply chains
President Donald Trump signed an executive directive on Monday that makes it more difficult for U.S. Defense contractors to get waivers to purchase critical minerals and materials from China or other banned foreign suppliers. This is the latest attempt by the Trump administration to reduce its reliance on overseas supply chain for weapons production. Defense contractors must now do more than just show that a Chinese supplier offers the cheapest or easiest option. Companies requesting a waiver must prove that they have looked for alternatives, disclosed the origins of materials and provided a plan on how to reduce their reliance on banned suppliers. Contractors who fail to comply with the new requirements may face consequences in the procurement process, such as the loss of contract opportunities. Peter Navarro told reporters at a press conference before the executive order's release that "we have tried everything and are out of options". After the news, shares of MP Materials, a company in which the Pentagon holds an estimated 15% stake, closed Monday 1% higher, at $45.70. PENTAGON PUSHES OVERHAUL OF SUPPLY CHAINS Pentagon is pushing defense contractors such as Lockheed Martin, Boeing and others to expand rapidly weapons production. They are also trying to identify and eliminate hidden vulnerabilities in the supply chain. Many minerals and processed materials that are used in advanced systems such as missiles, aircraft, and other advanced'systems' still depend on Chinese suppliers. This leaves companies trapped between the need to reduce their dependence on Beijing, and an urgent requirement to continue supplying weapons to U.S. troops and allies. China has gradually restricted access to essential minerals and leveraged supply chains. The Trump administration is "seeking" to 'pull back the curtain on the defense supply chain, which can span dozens of suppliers and reach the company that makes the final weapon. MAPPING INDUSTRIAL BASE The order directs the Pentagon's mapping of those lower levels of the industrial base. This will give officials a better view of where vital minerals, components, and other materials come from and if foreign-controlled suppliers can threaten weapons production in a conflict. This is not paperwork. "This is not paperwork," Navarro?said. He argued that the Pentagon must know if missile systems or other platforms are dependent on foreign-controlled providers before a war begins. Contractors are also required to evaluate suppliers' foreign ownership, financial vulnerabilities, and manufacturing risks. They must replace any suppliers who are deemed unreliable.
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Trump tightens waiver rules for the defense supply chain
The executive order signed by President Donald Trump Monday will make it more difficult for U.S. Defense contractors to obtain waivers that would allow them to purchase critical minerals and materials from China and other banned?foreign?suppliers. This is the latest effort of the Trump administration to reduce reliance on overseas supply chain for weapons production. Defense contractors will now have to prove much more than that Chinese suppliers are the cheapest or easiest option. Companies seeking a waiver must prove that they have searched for 'alternatives', explain the source of their materials and present a plan on how to get away from prohibited suppliers. Contractors who don't do enough to source locally will lose their contracts. "No more": "We tried nothing and are out of options", White House advisor Peter Navarro said to reporters during a press briefing held before the executive order's release. The Pentagon is pushing defense contractors such as Lockheed Martin and Boeing towards rapid expansion of weapons production, while still facing persistent vulnerabilities within the supply chains which feed the U.S. Military. Many of the critical minerals, processed materials, and advanced systems used in missiles and aircraft still depend on Chinese suppliers. This leaves companies trapped between the demands to move?away from Beijing and needing to keep weapons flowing into U.S. forces. The executive order also directs the Pentagon to develop rules requiring contractors to map critical supply chains from raw materials to finished military products. Companies will have to provide the source of components, minerals, software and other inputs that are used in certain weapons systems. This extends government visibility beyond prime contractors, to lower-tier providers. This is not paper work. "This is not paperwork," Navarro said. He argued that the Pentagon 'needs to be aware if missile systems -or other platforms- are dependent on foreign-controlled suppliers – before a war begins. Contractors are also required to evaluate suppliers' foreign ownership, financial vulnerabilities, and manufacturing risks. They must replace any suppliers who are deemed unreliable.
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Rate hike bets and US-Iran escalated oil prices have caused gold to fall.
Gold prices fell on Monday due to the escalating conflict between the U.S. and Iran. This also affected U.S. rates of interest. As of 2:50 pm EDT (1850 GMT), spot gold was down by 0.2%. U.S. Gold Futures for August Delivery settled at $4,015.90, down around 0.1%. The yields on the benchmark U.S. Treasury 10-year note increased by 0.4%. The U.S. Dollar was up by 0.2% making bullion more expensive for overseas buyers. Iran's Revolutionary Guards claimed they struck U.S. assets in the Middle East after another night of U.S. bombing of Iranian cities. Yemen's Iran aligned Houthis also declared a maritime blockade of Saudi Arabia. Brent crude oil prices are up after reaching a month-high, fueling inflation fears and stoking bets that interest rates will continue to rise. Gold is often seen as a hedge against inflation, but high interest rates tend to reduce the appeal of this non-yielding investment. David Meger is the director of metals at High Ridge Futures. He said that "higher energy prices are still in focus" as the escalation of tensions in the Middle East adds to the concern that the Fed's less than expected data on inflation last week may not be sufficient to prevent them from raising rates this year. Cleveland Fed President Beth Hammack has added her voice in a growing chorus that believes interest rates need to be raised to fight persistent inflation. This will set up a heated debate at the Fed’s next meeting, and could lead to disagreements during Kevin 'Warsh's 2nd meeting as the central bank chairman. According to CME FedWatch, traders now expect an interest rate increase in the U.S. by December. This is up from 73% last week. "We anticipate that the Fed won't raise rates until later in this year. We expect them to use balance sheet adjustments. Meger stated that we believe the realization of the situation?in the next month or two will actually add support to the gold market, and put pressure on the dollar. Other than that, silver spot gained 1.2%, to $56.55 an ounce. Platinum was up by 0.1%, at $1,592.86, while palladium rose by 0.9%, to $1,258,83. (Reporting and editing by Leroy Leo, Shailesh Kumar and Vedika Thorat in Bengaluru)
QUOTES - Trade and labor associations, analyst on Trump's reciprocal duties
Donald Trump announced on Wednesday that he will impose a baseline 10% tariff on all imports into the United States, and higher duties for some of the biggest trading partners. This could lead to a trade conflict and upset the global economy.
Countermeasures from trading partners could result in a dramatic increase in prices of everything, including bicycles and wine.
Trump has already levied 25% on automobiles and auto parts.
SCOTT WHITAKER, CEO, ADVAMED
"This type of tariff would be similar to an excise duty." R&D would be the most immediate and direct victim, as it threatens America's leadership in medtech innovation. Tariffs would cost U.S. workers, increase health care costs and hinder future medical progress."
RYAN ORABONE MANAGING CONSULTANT BEARINGPOINT
"Diversification (of the supply chain of an apparel retailer) and manufacturing is a moot issue because tariffs impact every major geographic facility where we produce clothing."
Brands need to be more strategic than ever before and plan everything with precision. "There is no room for errors anymore, including assortment, allocation and pricing."
DAVID SWARTZ ANALYST MORNINGSTAR FOLLOWING FITNESS
The huge tariffs on imports from Vietnam are clearly a negative for Nike Adidas and other sportswear companies. Due to the difficulty of manufacturing, athletic footwear can't be easily produced in other countries. Tariffs are also being levied on other Asian nations.
The industry will not react in a panic. If the tariffs remain in place, sportswear prices will rise and margins could be affected.
The chances of significant footwear and apparel manufacturing in the US being a result of any of these initiatives are virtually zero.
MARI SHOR SR., EQUITIES ANALYST AT COLUMBIA TREADNEEDLE INVESTIMENTS, WHICH HOARDS NIKE STOCKS
"The announcement of the tariffs is much worse than expected." Nike and other footwear companies will find it difficult to avoid a 46% tariff against Vietnam. The companies will try to fight back against vendors but tariffs are likely to drive up inflation in many categories and pressure consumer discretionary spending."
CHRIS VITALE, UAW VETERAN WHO RETIRED FROM STELLANTIS, ATTENDED TRUMP'S TARIFF ANNOUNCEMENT IN PERSON
"You know what's amazing is that an announcement about trade policy could become emotional."
"These are the things we've been preaching about for years. We've watched our factories and our capabilities being hollowed-out. To see a President address this and use some words and thoughts I've used, was incredible."
LIZ SHULER PRESIDENT AMERICAN FEDERATION of LABOR and CONGRESS INDUSTRIAL ORGANIZATIONS
The Trump administration's attacks against the rights of union workers at home, the gutting of government agencies that work to discourage outsourcing of American jobs, and efforts to erode crucial investments in U.S. Manufacturing take us backward.
RICHARD CAPETTO, SENIOR DIRECTOR, NORTH AMERICAN GOVT. AFFAIRS IPC
"A strong U.S. electronic industry requires a holistic approach - one that combines targeted investments and incentives, with policies that promote mutually beneficial trade partnership. Trade is crucial to innovation, cost-competitiveness, and supply chain resilience. Tariffs could increase costs for American companies and drive production overseas.
ZOLTAN VAN HEYNINGEN EXECUTIVE DIRECTOR, U.S. WOOD COALITION
We welcome President Trump's measures and the focus of his administration on Canada's unfair trading practices. We are especially pleased that the President has launched the Section 232 Investigation under the Trade Expansion Act of 1964 focusing on the imports of softwood lumber.
MARK COMPTON EXECUTIVE DIRECTOR THE AMERICAN EXPLORATION & MINING ASSOCATION
We are encouraged that the Trump administration is prioritizing the production and processing of domestic minerals so we can have the raw materials our manufacturing base, and society needs. We are looking forward to working together with the administration in order to ensure that the domestic mining industry can meet this challenge.
TONY REDONDO, FOUNDER AT COSMOS CURRENCY EXCHANGE
Intel is not immune to the cost increases caused by imported chips. Semiconductor giants such as Nvidia are also affected. China's retaliation against rare materials may worsen shortages.
PC makers (Dell and HP) may face cost increases of 10%-25%, which could add $200-$500/unit to the unit price, causing margins to be squeezed or prices to rise.
The cost of chips and steel may cause delays for AI server companies (Nvidia and Amazon).
Construction and retailers like Walmart could also be affected.
"Short-term, higher costs and chaos." "Long-term, maybe more U.S. Manufacturing but labor and infrastructure are lagging."
Consumers will face higher prices by 2025, unless companies absorb the costs. This is not common.
BERNSTEIN ANATOMY
"We are concerned that the vehicle and part tariffs will be here to stay, and they will add a significant cost burden to this sector." We see more downside risk for automotive stocks if automotive tariffs do not get reversed, but are instead extended.
TOM MADRECKI VICE-PRESIDENT OF SUPPLY CHAIN RESILIENCY CONSUMER BRANDS AFFILIATION
The majority of consumer packaged goods are already manufactured in the United States. There are some critical inputs and ingredients that must be imported because they are scarce in the United States. Tariffs alone will not bring these ingredients back to the U.S.
"Reciprocal Tariffs that don't reflect the availability of ingredients and inputs will increase costs, limit access to affordable products for consumers and unintentionally hurt iconic American manufacturers." We urge President Trump and his advisors to refine their approach to exempting key ingredients and inputs, in order to prevent inflation and protect manufacturing jobs.
LENNY LARCCA, KPMG U.S. AUTOMOTIVE LEADERS
"U.S. Automakers are looking for steps they can take to mitigate tariffs in the short term, such as working on items that can be shipped to the U.S. rapidly without major investment." Massive longer-term investments require more time and clarity."
The current playbook of the U.S. automobile industry is insufficient, and it's a momentous time for them. Automakers have an opportunity to change the way they do business. Leverage emerging technologies like AI in all areas of their business. Explore and make alliance decisions faster. "Speed up the vehicle production cycle time."
This watershed moment presents an opportunity for mergers and purchases.
DAVID McCALL, PRESIDENT UNITED STAINWORKERS INTERNATIONAL
We must make sure that our trade policy is aimed at cheaters and not trusted economic allies such as Canada. We should work to build relationships, not barriers, with partners who have shown their commitment to join us in tackling the global overcapacity.
The administration must also take measures to prevent companies using tariffs to increase prices on consumers.
MIKE HAWES is the CEO of UK's Society of Motor Manufacturers and Traders.
The tariffs cannot be absorbed, and the U.S. consumer may pay more for British products, while UK producers could have to reduce production due to a constrained market.
SETH GOLDSTEIN MORNINGSTAR ANALYST FOR U.S. SETH GOLDSTEIN, MORNINGSTAR ANALYST ON U.S.
"I expect lower volumes due to tariffs." Tariffs are likely to be passed on to the consumer in order to increase prices of products. "I expect that consumers will buy less goods."
Due to the high fixed costs of chemical production, lower volume would have a large impact on profits. We could also see another year with declining profits if tariffs are widely implemented. Many chemical producers manufacture their products in the U.S. for domestic sales, so there is less direct impact.
DAVID FRENCH EXECUTIVE V.P. OF GOVERNMENT RELATIONS AT THE NATIONAL RAILWAY FEDERATION
"More Tariffs = More Anxiety and Uncertainty for American Businesses and Consumers. Tariffs represent a tax that is paid by U.S. importers and passed on to the final consumer. No foreign country or supplier will pay tariffs. "We encourage President Trump, to hold trading partners responsible and restore fairness to American businesses without creating uncertainty or higher prices for American consumers."
ART WHEATON DIRECTOR, ILR SCHOOL CORNELL UNIVERSITY, LABOR STUDIES
It will take years and billions to bring new manufacturing jobs online. However, expansions in existing factories can happen much faster. Companies prioritize stability. Frequent policy changes can slow down investment decisions, as businesses wait to see clearer long-term signals.
MICHAEL ASHLEY SCHULMAN IS A PARTNER AT RUNNINGPOINT CAPITAL ADVISORS AND THE CIO.
"Trump may be trying not only to bring manufacturing back to the U.S. but also to increase the economic instability of China by putting tariffs on Chinese goods. Tariffs of 34% on Chinese products could force Chinese manufacturers to shut down, leading to increased unemployment and social unrest in China.
If these tariffs are imposed, they will have a significant impact on the PC, server, and semiconductor manufacturers.
Investors, analysts and politicians will all be watching with bated breathe to see what happens after this 'Liberation Day volley' from the administration. The announcement today is likely to be a worst case scenario. Hopefully, any negotiations will lead to improvements. Reporting by Juby B. Babu from Mexico City; Vallari Srivastava in San Francisco; Abhirup Roy and Caroline Humer at New York City; Nick Brown, Shounak D. Dasgupta, and Alan Barona for the editors.
(source: Reuters)