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CNBC
4 days ago
- Business
- CNBC
What the U.S.-Vietnam trade deal tells us about the future of tariffs
Global attention turned to Vietnam on Thursday, after U.S. President Donald Trump announced a trade deal with Hanoi just days before Washington's reciprocal tariffs come back in full force. Under the agreement, the U.S. will apply a 20% duty on Vietnamese imports — sharply below the 46% rate Trump had imposed in early April. U.S. imports to Vietnam will meanwhile not be subject to tariffs. Trump also said that Vietnam had agreed to a 40% duty on any products that originally came from another country, but were sent to Vietnam for final shipment to the U.S. China has reportedly repeatedly relied on this practice, known as transshipping, to avoid trade barriers. Vietnam is one of the few countries that has struck a trade deal with the White House, while the clock ticks down on Trump's 90-day temporary reprieve. Many nations have been left wondering how the future of their trade relationship with the world's largest economy could shape up. "What we learned from the Vietnam deal is, if anything, the tariffs are going to go up from here, not down," Sebastian Raedler, head of European equity strategy at BofA, told CNBC's "Europe Early Edition" on Thursday. The deal could be cause for concern for other emerging market economies like Vietnam, economists and strategists at Citi said in a note Thursday. "On balance, we believe there is more for EM Asia to worry about than expect gains if this deal reflects what is to come soon," they noted. While the development removes uncertainty and suggests other agreements could emerge in the coming days, the 20% tariff rate is higher than the expected 10% levy on goods, according to Citi's experts. They add that the separate 40% rate on transshipped goods suggests other countries may also need to agree to such a duty. "Thailand followed by Malaysia might be more exposed than other EM Asia peers (apart from Vietnam). A separate and more punitive tariff on transshipped goods was least expected by the market," the note said. "Additionally, there may be spillovers to other exporters that have set up factories in Vietnam in past years," for example Korea, it added. While the Vietnam-U.S. deal suggests more deals likely lie ahead for other Asian countries, it does not necessarily mean that the same is true for the European Union, Lavanya Venkateswaran, senior ASEAN economist at OCBC Bank, told CNBC. "The Vietnamese authorities have been clear about their intent to negotiate with the US, even before the reciprocal announcements were made in April," she said by email, adding that the same was true for other regional economies like Indonesia and Malaysia. "Compared to these economies, the case with [the] EU has not always been smooth sailing and the US has been more public in its criticism of the EU at different times in the past few months," Venkateswaran said. Trade negotiations between the EU and U.S. have been challenging and slow to develop, with sources telling CNBC that a bare-bones "political" deal with scant initial details may be the the EU's best hope at this point. Analysts and economists have also expressed uncertainty about the likelihood of a trade agreement, given key sticking points like big tech regulation, taxation, and broadly mismatched world views. Trump has called for tariffs as high as 50% on the EU, while the bloc has threatened wide-ranging countermeasures, which have also been paused until next week.
CNBC
25-06-2025
- Business
- CNBC
Europe must wake up amid 'very complicated' relations with the U.S., former Italy PM says
The European Union needs to step up its role in global affairs as tensions with U.S. President Donald Trump build up, according to former Italian Prime Minister Matteo Renzi. His comments to CNBC come after Trump said that the EU was "not going to be able to help" ending the conflict in the Middle East, where Iran and Israel have been at war. A ceasefire between the two regional foes was in effect, according to Trump, but the situation remains delicate and uncertain. Regardless, Trump's criticism of Europe follows other events where the continent has struggled to have a seat around the table, including in peace conversations between Ukraine and Russia. "There is a very complicated situation, because our best ally, United States of America, and POTUS, President of the United States of America, attack[s] us every day, every week, every month," said Renzi, now leader of the Italia Viva party. "And please remember now, in this moment, there is not an agreement about tariffs, and that is a tragedy," Renzi told CNBC's "Europe Early Edition" on Tuesday. The U.S. and the EU have been at odds over trade, with Turmp announcing several rounds of tariffs since taking office. The transatlantic alliance is currently trying to reach an agreement that prevents some, if not all, of the duties put in place. The idea is to reach a compromise before a deadline of July 9. However, the two sides have also not seen eye-to-eye when it comes to defense and foreign policy matters, with European nations increasingly anxious at the idea Trump might scale back U.S. military presence on the European continent. Renzi said that Europe grew up with the idea that its alliance with the U.S. is the best, but given the challenges in the relationship, the region must "wake up and try to play a role as Europeans." This is an idea shared by others on the European continent. Enrico Letta, another former Italian prime minister, said in a Financial Times op-ed published Sunday that: "Donald Trump's actions in his second term make clear that we are dealing with a long-term strategic vision that aims to reshape America's global role, weaken multilateralism and increase pressure on allies, especially Europe". As such, Letta defended that Europe "must strengthen its autonomy and capacity to act." Meanwhile, the German and French leaders acknowledged on Monday that the U.S. has different priorities under the presidency of Trump and that as such the region needs to commit to spend more on defense. "We will live for the foreseeable future in a deeply destabilised environment, and in a world in which our allies will have other dilemmas and priorities," the two heads of state said in a separate Financial Times op-ed, adding: "We will have to rise to these challenges."
Ya Libnan
23-06-2025
- Business
- Ya Libnan
Shipowners avoid the Strait of Hormuz to reduce exposure after U.S. strikes on Iran
An Islamic Revolutionary Guard Corps speed boat sailing along the Arabian Gulf during the IRGC marine parade to commemorateArabian Gulf National Day, near the Bushehr nuclear power plant in the seaport city of Bushehr, in the south of Iran, on April 29, 2024. HIGHLIGHTS The number of vessels navigating the critically important Strait of Hormuz appears to be declining, according to the world's largest shipping association, amid deepening fears of a widening conflict in the Middle East. Jakob Larsen, head of security at Bimco, which represents global shipowners, said all shipowners were closely monitoring developments in the region and some have already paused transits in the Strait of Hormuz due to the deterioration of the security situation. His comments come shortly after the U.S. on Saturday attacked three major Iranian nuclear enrichment facilities, a massive escalation in its involvement with Israel's effort to cripple Tehran's nuclear program. Iran has condemned the attack, saying it reserves all options to defend its sovereignty and people. 'Before the US attack, the impact on shipping patterns was limited,' Bimco's Larsen said. 'Now, after the US attack, we have indications that the number of ships passing is reducing. If we begin to see Iranian attacks on shipping, it will most likely further reduce the number of ships transiting through the [Strait of Hormuz],' he added. The Strait of Hormuz, which connects the Persian Gulf to the Arabian Sea, is recognized as one of the world's most important oil chokepoints . In 2024 and the first quarter of 2025, for instance, flows through the narrow waterway made up roughly 20% of global oil and petroleum product consumption, according to the U.S. Energy Information Administration . Around 20% of global liquified natural gas (LNG) also transited through the Strait of Hormuz last year, primarily from Qatar. The inability of oil to traverse through the waterway, even temporarily, can ratchet up global energy prices, raise shipping costs and create significant supply delays. Yet, in the aftermath of the U.S. attacks on key nuclear sites, Iran's parliament reportedly approved the closure of the waterway, risking alienating its neighbors and trade partners. Standby mode Andy Critchlow, EMEA head of news at S&P Global Commodity Insights, said some anecdotal evidence suggested a slowdown in shipping navigation through the Strait of Hormuz following the U.S. strikes on Fordo, Natanz and Isfahan. 'The pace at which tankers are entering the Strait of Hormuz has definitely slowed. We have indications from shippers that they are putting tankers and vessels on standby, so they are waiting for an opportune moment to enter the Strait,' Critchlow told CNBC's ' Europe Early Edition ' on Monday. 'At the same time, there have been reports that suppliers of LNG, for example, in the Gulf have told lifters of LNG to wait before entering, so [as] not to loiter in the Gulf, keep vessels out of that region,' he added. Japan's Nippon Yusen , one of the world's largest ship operators, recently introduced a standby to enter the Strait of Hormuz to limit the length of its stay in the Persian Gulf, according to S&P Global Commodity Insights, citing a company spokesperson. Nippon Yusen's policy, which comes as part of a precautionary measure following the escalation of Isreal-Iran tensions since June 13, means ships are asked to pause for a day or a couple of days when there is flexibility in the shipping schedule, S&P Global Commodity Insights reported on Monday. The company has not implemented a navigation halt in the Strait of Hormuz, however. Japan's Mitsui O.S.K Lines also instructed vessels to limit time spent in the Gulf following U.S. strikes on Iranian nuclear facilities, Reuters reported Monday, citing a company spokesperson. Spokespeople at Nippon Yusen and Mitsui OSK Lines were not immediately available to comment when contacted by CNBC. German container shipping firm Hapag-Lloyd said it is continuing to sail through the Strait of Hormuz. 'However, the situation is unpredictable and could change within a matter of hours. In this case, our emergency and response plans, which we maintain as part of our crisis management system, come into effect,' a Hapag-Lloyd spokesperson said. Insurance costs to spike Peter Sand, chief analyst at pricing platform Xeneta, said container shipping activity in the Persian Gulf and upper Indian Ocean appears to be continuing as expected for now. 'All companies access the risk individually – but the current situation requires them all to do so several times a day. Staying in close dialogue with national intelligence agencies and their own captains onboard the ships,' Sand told CNBC by email. Insurance costs, meanwhile, have 'probably' been hiked again, Sand said, noting Iran's parliament reportedly approved the closure of the Strait of Hormuz. Any final decision to close the waterway rests with the country's national security council, and its possibility has raised the specter of higher energy prices and aggravated geopolitical tensions, with Washington calling upon Beijing to prevent the strait's closure. CNBC
CNBC
23-06-2025
- Business
- CNBC
Shipping groups avoid the Strait of Hormuz to reduce exposure after U.S. strikes on Iran
The number of vessels navigating the critically important Strait of Hormuz appears to be declining, according to the world's largest shipping association, amid deepening fears of a widening conflict in the Middle East. Jakob Larsen, head of security at Bimco, which represents global shipowners, said all shipowners were closely monitoring developments in the region and some have already paused transits in the Strait of Hormuz due to the deterioration of the security situation. His comments come shortly after the U.S. on Saturday attacked three major Iranian nuclear enrichment facilities, a massive escalation in its involvement with Israel's effort to cripple Tehran's nuclear program. Iran has condemned the attack, saying it reserves all options to defend its sovereignty and people. "Before the US attack, the impact on shipping patterns was limited," Bimco's Larsen said. "Now, after the US attack, we have indications that the number of ships passing is reducing. If we begin to see Iranian attacks on shipping, it will most likely further reduce the number of ships transiting through the [Strait of Hormuz]," he added. The Strait of Hormuz, which connects the Persian Gulf to the Arabian Sea, is recognized as one of the world's most important oil chokepoints. In 2024 and the first quarter of 2025, for instance, flows through the narrow waterway made up roughly 20% of global oil and petroleum product consumption, according to the U.S. Energy Information Administration. Around 20% of global liquified natural gas (LNG) also transited through the Strait of Hormuz last year, primarily from Qatar. The inability of oil to traverse through the waterway, even temporarily, can ratchet up global energy prices, raise shipping costs and create significant supply delays. Yet, in the aftermath of the U.S. attacks on key nuclear sites, Iran's parliament reportedly approved the closure of the waterway, risking alienating its neighbors and trade partners. Andy Critchlow, EMEA head of news at S&P Global Commodity Insights, said some anecdotal evidence suggested a slowdown in shipping navigation through the Strait of Hormuz following the U.S. strikes on Fordo, Natanz and Isfahan. "The pace at which tankers are entering the Strait of Hormuz has definitely slowed. We have indications from shippers that they are putting tankers and vessels on standby, so they are waiting for an opportune moment to enter the Strait," Critchlow told CNBC's "Europe Early Edition" on Monday. "At the same time, there have been reports that suppliers of LNG, for example, in the Gulf have told lifters of LNG to wait before entering, so [as] not to loiter in the Gulf, keep vessels out of that region," he added. Japan's Nippon Yusen, one of the world's largest ship operators, recently introduced a standby to enter the Strait of Hormuz to limit the length of its stay in the Persian Gulf, according to S&P Global Commodity Insights, citing a company spokesperson. Nippon Yusen's policy, which comes as part of a precautionary measure following the escalation of Isreal-Iran tensions since June 13, means ships are asked to pause for a day or a couple of days when there is flexibility in the shipping schedule, S&P Global Commodity Insights reported on Monday. The company has not implemented a navigation halt in the Strait of Hormuz, however. Japan's Mitsui O.S.K Lines also instructed vessels to limit time spent in the Gulf following U.S. strikes on Iranian nuclear facilities, Reuters reported Monday, citing a company spokesperson. Spokespeople at Nippon Yusen and Mitsui OSK Lines were not immediately available to comment when contacted by CNBC. German container shipping firm Hapag-Lloyd said it is continuing to sail through the Strait of Hormuz. "However, the situation is unpredictable and could change within a matter of hours. In this case, our emergency and response plans, which we maintain as part of our crisis management system, come into effect," a Hapag-Lloyd spokesperson said. Peter Sand, chief analyst at pricing platform Xeneta, said container shipping activity in the Persian Gulf and upper Indian Ocean appears to be continuing as expected for now. "All companies access the risk individually - but the current situation requires them all to do so several times a day. Staying in close dialogue with national intelligence agencies and their own captains onboard the ships," Sand told CNBC by email. Insurance costs, meanwhile, have "probably" been hiked again, Sand said, noting Iran's parliament reportedly approved the closure of the Strait of Hormuz. Any final decision to close the waterway rests with the country's national security council, and its possibility has raised the specter of higher energy prices and aggravated geopolitical tensions, with Washington calling upon Beijing to prevent the strait's closure.
CNBC
10-06-2025
- Business
- CNBC
China's rare-earth mineral squeeze puts defense giants in the crosshairs
The automotive and robotics industries have been hit particularly hard by China's rare earth export restrictions in recent weeks, but analysts warn Western defense giants will also feel the heat. Top U.S. and Chinese officials are resuming trade talks in London for a second consecutive day on Tuesday, pushing to de-escalate tensions over rare-earth minerals and advanced technology. The White House has signaled a willingness to ease chip export controls if Beijing accelerates rare earth exports, boosting investor hopes of a breakthrough. Both sides have accused each other of reneging on a preliminary trade deal struck in Geneva last month. China's Ministry of Commerce in early April imposed export restrictions on several rare earth elements and magnets widely used in the automotive and defense sectors. The curbs were part of a response to U.S. President Donald Trump's tariff increase on Beijing's exported products. National Economic Council Director Kevin Hassett on Monday told CNBC's "Squawk Box" that he expected a deal on rare earths to be struck quickly. "So, our expectation is that ... immediately after the handshake any export controls from the U.S. will be eased, and the rare earths will be released in volume, and then we can go back to negotiating smaller matters," Hassett said. China is the undisputed leader of the critical minerals supply chain, producing roughly 60% of the world's supply of rare earths and processing almost 90%, which means it is importing these materials from other countries and processing them. U.S. officials have previously warned that this dominance poses a strategic challenge amid the pivot to more sustainable energy sources. William Bain, head of trade policy at the British Chambers of Commerce, said it appeared some progress had been made on the first day of U.S.-China trade talks, but it remains "absolutely vital" to achieve a further breakthrough on rare earth policy. "We've seen some relaxation over the weekend with licenses granted in sectors connected with robotics and electric vehicles, but if you take, for example, a critical mineral like samarium, within magnets, that's absolutely essential for F-35 fighter jet construction in the U.S," Bain told CNBC's "Europe Early Edition" on Tuesday. "They can't make them without that. And not having access to that is severely affecting both U.S. construction in that area, but also perhaps its national security if that remains in place," he added. Shares of some European defense giants were trading lower on Tuesday morning ahead of the fresh U.S.-China negotiations. German tank gearbox manufacturer Renk tumbled nearly 8% to lead losses on the pan-European Stoxx 600 index. Sweden's Saab and Germany's Rheinmetall, meanwhile, both fell more than 3.5%. CNBC has contacted the U.S. Department of Defense and the European Commission, the European Union's executive arm, for comment. The restrictions imposed by China's Ministry of Commerce in early April require firms to apply for a license for the export of rare earths and magnets. Rare earth elements play an integral role in modern defense technologies, according to the SFA-Oxford consultancy, enabling advanced radar and sonar systems, laser guidance and propulsion technologies in combat environments. Automotive industry groups have complained about the cumbersome process of trying to get necessary approvals, warning of increasing production threats as inventories deplete. China nevertheless appeared to offer U.S. and European auto giants something of a reprieve over the weekend. China's Ministry of Commerce on Saturday said it was willing to establish a so-called "green channel" for eligible export license applications to expedite the approval process to European Union firms. Beijing also granted rare earth licenses to suppliers of U.S. auto giants General Motors, Ford and Jeep-maker Stellantis, Reuters reported on Friday, citing unnamed sources. Gracelin Baskaran, director of the critical minerals security program at the Center for Strategic and International Studies (CSIS), a Washington-based think tank, said it was just a matter of time before the defense industry sounds the alarm over a rare earth shortage — noting that many of them have already done so behind closed doors. "Defense companies are in the front line of impact, given we need thousands of pounds of rare earths in each submarine and fighter jet," Baskaran told CNBC by email. The U.S., European Union and Australia must coordinate supply- and demand-side interventions to boost rare earths production, CSIS' Baskaran said, adding that this need arises primarily because of prevailing price dynamics. "If the price of praseodymium-neodymium (PrNd) oxide—a critical input for rare earth permanent magnets—remains below $60 per kilogram by 2030, nearly half of the projected non-Chinese supply would become financially unviable. On the supply side, this will necessitate measures such as production tax credits and subsidies," Baskaran said. "On the demand side, implementing incentives to procure minerals from allied nations—similar to the provisions in the Inflation Reduction Act—will be essential," she added. Last month, China temporarily paused export restrictions targeting 28 American companies following a trade truce reached between Washington and Beijing in Switzerland. China continued to block exports from that country of seven rare earth metals to the U.S., however. Many of the 28 American companies given a reprieve on dual-use export restrictions are common targets of Beijing's sanctions because of their activity in the defense sector. Henry Sanderson, associate fellow at the Royal United Services Institute (RUSI), a London-based defense and security think tank, said the defense industry hasn't been nearly as vocal as the automotive sector when it comes to concerns over the impact of a rare earth shortage. "Defense is hard because its less transparent, but they definitely use rare earths and rare earth magnets and especially what's called samarium cobalt magnets, but it's a much smaller demand than EVs or robots or anything like that," Sanderson told CNBC by phone. "I'm less clear whether defense is as worried as the civilian industries, but saying that, looking at the level of magnet production in the West, it is very small," he added.
