EU to Protect Airbus in US Trade Deal as Ferrari Set to Lose Out
The European Commission, which handles trade matters for the EU, is closing in on a preliminary agreement that would exempt commercial aircraft from some tariffs in a potential boost to Airbus SE, according to people familiar with the matter. It would also create carve outs for some — mostly German — carmakers, giving relief to companies such as BMW AG and Mercedes-Benz Group AG.
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Oil prices ease from two-week highs as investors await tariff clarity
By Arathy Somasekhar (Reuters) -Oil prices edged slightly lower on Wednesday after rising to two-week highs in the previous session, as investors were watching new developments on U.S. tariffs and trying to gauge their impact. Brent crude futures were down 20 cents, or 0.3%, at $69.95 a barrel by 0121 GMT. U.S. West Texas Intermediate crude fell 21 cents, or 0.4%, to $68.12 a barrel. U.S. President Donald Trump's latest tariff delay provided some hope to major trade partners Japan, South Korea and the European Union that deals to ease duties could still be reached, while bewildering some smaller exporters such as South Africa and leaving companies with no clarity on the path forward. Trump pushed back Wednesday's previous deadline to August 1, a date he said on Tuesday was final, declaring: "No extensions will be granted." He also said he would impose a 50% tariff on imported copper and soon introduce long-threatened levies on semiconductors and pharmaceuticals, broadening his trade war that has rattled markets worldwide. While the tariffs have prompted worries of oil demand destruction, strong travel demand for the July 4th weekend buoyed hopes. A record 72.2 million Americans were projected to travel more than 50 miles (80 km) for Fourth of July vacations, data from travel group AAA showed last week. On the supply side, the U.S. will produce less oil in 2025 than previously expected as declining oil prices have prompted U.S. producers to slow activity this year, the Energy Information Administration forecast on Tuesday in a monthly report. The world's largest oil producer is projected to produce 13.37 million barrels per day of oil in 2025, versus last month's forecast of 13.42 million bpd, the EIA said in its short-term energy outlook report. In 2026, the U.S. will produce 13.37 million bpd, in line with the previous forecast. OPEC+ oil producers are, on the other hand, set to approve another big output boost for September as they complete both the unwinding of voluntary production cuts by eight members and the United Arab Emirates' move to a larger quota, five sources said. On Saturday, the group approved a 548,000 bpd jump for August. However, the actual output increase has been smaller than the announced levels so far and most of the supply has been from Saudi Arabia, analysts said. Meanwhile, geopolitical tensions remained, providing a floor for prices. Four seafarers on the Liberian-flagged, Greek-operated bulk carrier Eternity C were killed in a drone and speedboat attack off Yemen, an official with knowledge of the issue said on Tuesday, the second incident in a day after months of calm.
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German business sentiment rises: Ifo sees sixth consecutive lift
Germany's closely-watched IFO index, which measures business optimism in the country, rose in June despite wider geopolitical uncertainty. Firms rated the business climate at 88.4, the sixth consecutive monthly rise, and a notch up from the 87.5 reading seen in May. Business expectations came in at 90.7, up from 89.0 recorded in the previous month, and also marking the highest level seen since early 2023. The optimism comes despite geopolitical risks that threaten the German economy. A 90-day pause to so-called 'reciprocal' tariffs imposed by the US will come to an end on 9 July, creating significant uncertainty for Europe. The EU could see a baseline tariff of 10% jump to 50% if a deal is not reached before then. Related Highest-paying jobs in Germany: Official data and job postings reveal top salaries German economic morale soars in June: 'Confidence is picking up' Added to this, President Donald Trump has already reintroduced a 50% duty on EU steel and aluminium entering the US, as well as placing a 25% tariff on imported cars and car parts. In 2024, Germany posted a record trade surplus with the US of €69.95 billion. This year, the rising value of the euro may slightly hamper exports as it behaves like an extra tariff, making German goods more expensive for some overseas consumers. Despite these headwinds, there are factors contributing to the positive business climate in Germany, notably the government's pledge to increase spending. Berlin has recently approved a constitutional amendment to its 'debt brake' rule, meaning defence spending above 1% of GDP will not be subject to borrowing limits. Chancellor Friedrich Merz wants to boost military spending to 3.5% of gross domestic product by 2029. The government has also created a €500 billion extrabudgetary fund for additional infrastructure spending, set to give businesses an added boost. Germany's economy grew by a greater-than-expected 0.4% in the first quarter of this year, partly linked to US tariff frontloading. Declining interest rates are also easing borrowing costs for German businesses. At the start of June, the ECB lowered its benchmark interest rate by a quarter point to 2%, its lowest level in more than two years. Markets widely expect the ECB to hold its benchmark interest rate steady during its next policy meeting on 23-24 July. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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German exports drop as US shipments decline ahead of tariff deadline
German exports dropped more than expected in May, declining 1.4% month-on-month, from -1.6% in April. The year-on-year rise came to 0.4% in May, the federal statistics office confirmed on Tuesday. Imports, meanwhile, dropped 3.8%, and increased 4.2% year-on-year. This brought Germany's trade balance to €18.4 billion, from €15.7bn in April. The data shows a significant decline in shipments to the US after tariff frontloading boosted month-on-month export rises to 1.8% in February and 1.3% in March. Despite this decrease, the US remains the most important destination for German products. Negotiating as part of the EU, Germany is seeking to avoid a threatened 50% tariff on its goods sent to the US by negotiating a trade framework with the Trump administration before a deadline set for 1 August. Earlier this year, when President Donald Trump announced his so-called 'reciprocal' tariffs, the EU was originally hit with a 20% tariff rate. The White House subsequently paused duties for 90 days following market turmoil, a temporary reprieve set to expire on 9 July. The administration then pushed this date back, allowing more time for last-minute negotiations. It now appears that the EU will accept a 10% baseline tariff on its US exports, although the bloc is looking for carve-outs that will lower the burden on key sectors. Separate from the so-called 'retaliatory' tariffs, the EU is also facing a 25% duty on automobiles and car parts sent to the US, as well as a 50% tariff on steel and aluminum exports. Brussels is seeking to soften these blows by securing a more advantageous trade framework. German auto exports to the US fell by 13% in April and 25% in May compared to the same months a year earlier, the VDA industry association said last week. Even without the added complication of tariffs, the German economy has been struggling these past few years, reeling from Europe's energy price spike, low productivity and a lack of infrastructure investment. Over the last two years, GDP growth has fallen into negative territory, and the head of the Deutsche Bundesbank, Joachim Nagel, has warned that new duties could put the country on track for another contraction this year. 'More generally speaking, with the hard macro data in for the first two months of the second quarter, the German economy looks set for yet another stagnation or even small contraction,' Carsten Brzesk, Global Head of Macro for ING Research, said on Tuesday. 'While retail sales and construction activity were down compared with the first quarter, the small uptick in industrial production is not enough to offset the expected drag from trade.' Related German business sentiment rises: Ifo sees sixth consecutive lift Germany's 'whatever it takes' moment: Fiscal bazooka ignites market rally In May, industrial production in Germany increased by 1.2% month-on-month after a 1.6% drop in April, according to data released by the federal statistics office on Monday. Retail sales in Germany dropped by 1.6% month-over-month in May. Despite challenges facing the country, Berlin's promise to boost spending on defence and infrastructure has cheered investors. The government recently approved a constitutional amendment to its 'debt brake' rule, meaning defence spending above 1% of GDP will not be subject to borrowing limits. Chancellor Friedrich Merz wants to boost military spending to 3.5% of gross domestic product by 2029. The government has also created a €500 billion extrabudgetary fund for additional infrastructure spending, set to give businesses an added boost.
