Latest news with #HolgerSchmieding
CNBC
24-07-2025
- Business
- CNBC
With no guarantee of an EU-U.S. trade deal, Europe keeps its options open
A trade agreement between the European Union and U.S. could be imminent, however with no guarantees Brussels continues to prepare retaliatory measures. A 15% baseline tariff rate, which includes an around 4.8% duty currently in place, is currently the base-case scenario for EU imports to the U.S., an EU diplomat told CNBC on Wednesday. However, there could also be some exemptions that are still being worked out, they added. The EU may in turn reduce its own levies on the U.S., according to the diplomat. Negotiations between the U.S. and EU have been tough going with pressure mounting ahead of the Aug. 1 deadline which would see imports from the EU to the U.S. hit with a 30% tariff. While this is lower than the 50% rate Trump had previously threatened, it would likely still heavily impact businesses and economies in both the EU and the U.S. "Relative to the risk of much higher extra tariffs such as 30% or even 50% that Trump had occasionally muted before, that would be a positive outcome," Holger Schmieding, chief economist at Berenberg, commented in a note. But the deal is by no means done yet, with an EU diplomat telling CNBC the "final decision [is] in hands of President Trump." A second EU official also appeared hesitant, telling CNBC that media reports that the EU and the U.S. are closing in on a deal are "too optimistic." "Contacts between both sides continue, but until President Trump speaks his mind we don't have anything concrete. Everything still remains in the open," they said. Trump's administration appeared to strike a similar tone Wednesday. When asked about the potential for a 15% tariff rate, White House Deputy Press Secretary Kush Desai said discussions about any potential trade deals should be considered "speculation," according to a report from Reuters. Trump is notorious for last minute changes of heart and making quick decisions, the latest example of which took place earlier this week on the U.S.-Japan trade deal. During a meeting between Trump and the Japanese delegation, discrepancies and edits were seen on a card outlining the deal on Trump's desk, according to a photo posted on X by Dan Scavino, the White House deputy chief of staff. Despite European markets on Thursday being buoyed by the prospect of a deal, the uncertainty surrounding what a EU-U.S. agreement could look like remains. In the meantime the EU is still working on countermeasures it could impose if U.S. tariffs do come into effect next week. Primarily, these are set to include retaliatory tariffs which could come into force just days after the U.S.' duties. Under the EU's new plan, previously prepared lists of countermeasures targeting goods, will be combined in one list, totalling 93 billion euros ($109.4 billion). There has also been widespread talk about the EU deploying its so-called "Anti-Coercion Instrument," which has been described as the "nuclear option." If enforced, U.S. suppliers could face restricted access to the EU market. For example they would be unable to participate in public tenders in the bloc, there could be curbs on exports and imports, and foreign direct investment could be limited. While France has so far been the only country to call "for immediate establishment of coercion," if no agreement is struck, "there seems to be a broad qualified majority voting for establishing coercion," the EU diplomat told CNBC.
Mint
08-07-2025
- Business
- Mint
Tariff uncertainty likely to weigh on global growth even after extended talks
Uncertainty about the terms under which trade will be conducted is a headwind for the global economy, but complete clarity is unlikely to be available to businesses even after freshly extended negotiations. President Trump Monday signed an executive order extending the date when his so-called reciprocal tariffs would take effect, with a pause previously scheduled to expire at 12:01 a.m. Wednesday. Economists expect higher tariffs to directly impede economic growth by weakening demand for goods in the U.S. and exports to that country from the rest of the world. But uncertainty also comes with a cost as businesses delay decisions to invest or hire while they seek clarity on their access to the world's largest market. The extension announced Monday means that clarity will not come this week, as many businesses had hoped. But it also allows time for governments to negotiate tariffs that are lower than those Trump set out on April 2, and then paused. 'Prolonged negotiations extend the uncertainty which is likely holding back investment decisions in the U.S. and its trading partners," said Holger Schmieding, chief economist at Germany's Berenberg Bank. 'However, the new timeline also strengthens the view that Trump will be flexible in the end." Most economists expect global economic growth to slow this year as a result of higher tariffs and increased uncertainty, but there are a range of possible outcomes that depend on how much clarity is available to businesses, and how high the barriers to trade rise. German insurance giant Allianz last week forecast that global economic growth will slow to 2.5% this year from 2.8% in 2024, with the U.S. seeing a much sharper deceleration to 1.5% from 2.8%. Those forecasts were based on the current level of tariffs. There are signs that the uncertainty is having a significant impact on big investment decisions. The United Nations said some measures of overseas investments hit record lows in the early months of the year as details of the tariff increases were awaited, while financial data company Mergermarket estimated that the worldwide tally of mergers, acquisitions, divestitures, financings and joint ventures in the first half of the year fell to a two-decade low. 'What concerns us is the number of businesses that are delaying decisions and only treading water," said Sam Ashdown, an underwriter at Coface, which provides insurance to exporters against the risk of non-payment. In a note to clients, Oxford Economics last week said it now expects investment spending in the Group of Seven largest rich economies to decline for the nine months from April, and by an average of 0.4% in each of those three quarters. But while most businesses would like to see an end to uncertainty over the new regime for global trade, that is unlikely to come as soon as August. Talks over the coming weeks may settle the level of so-called 'reciprocal" tariffs, but other issues will remain open. The Trump administration has launched a number of investigations into sectors that may have an impact on national security, and they will take time to reach a conclusion. But it is also possible that fresh tariffs will be imposed by Trump for other reasons. Earlier this week, Trump threatened to impose a new 10% tariff on imports from a group of large developing economies that appeared to criticize his policies. In the president's hands, tariffs have a wide range of potential applications. As a consequence, businesses are unlikely to be in a position to conclude that the tariffs they face are settled by the end of August, or in the years to come. 'Those threats are going to linger for the whole of the Trump administration," said Inga Fechner, a trade expert at ING Bank. 'If he's not happy with the general behavior of trading partners, he can opt for new tariffs."
Bloomberg
02-07-2025
- Business
- Bloomberg
Trump Ramps up Japan Threat, Powell Cheered at Sintra
US President Donald Trump threatened Japan with tariffs of up to 35% as he ramped up tensions for a third straight day, fueling fears of a worst-case scenario among market players and raising doubts over Tokyo's tactics in trade talks. Japan should be forced to 'pay 30%, 35% or whatever the number is that we determine, because we also have a very big trade deficit with Japan,' Trump said, again flagging the possibility that across-the-board tariffs could go much higher than the 24% initially penciled in for July 9. 'I'm not sure we're going to make a deal. I doubt it with Japan, they're very tough. You have to understand, they're very spoiled.' Today's guests: Stefan Hoops, DWS Group CEO, Isabelle Mateos y Lago, BNP Paribas Chief Economist, Holger Schmieding, Berenberg Chief Economist. (Source: Bloomberg)
Zawya
23-06-2025
- Business
- Zawya
Euro area bond yields edge up after US attack on Iranian nuclear sites
Euro zone government bond yields rose on Monday as investors concerned about the inflationary impact of an escalation in the Middle East conflict waited to see whether Iran will retaliate against U.S. attacks on its nuclear facilities. Iran said on Monday that the U.S. strikes expanded the range of legitimate targets for its armed forces and called U.S. President Donald Trump a "gambler" for joining Israel's military campaign against the Islamic Republic. Meanwhile, the euro zone economy flatlined for a second month in June, a survey showed on Monday. German 10-year government bond yields, which serve as the benchmark for the wider euro zone, rose 2 basis points (bps) to 2.54%. The yield on benchmark U.S. 10-year notes was up 2 bps at 4.39% in London trade. Analysts argued that a spike in oil prices could disrupt the current narrative of more disinflationary than inflationary pressures in the euro area and the U.S., leading markets to scale back their bets on central banks' rate cuts. "A protracted disruption of energy flows seems unlikely," said Holger Schmieding, chief economist at Berenberg, referring to oil and gas exports from the Gulf region. The closing of the Strait of Hormuz, the crucial conduit for around 20% of global oil and gas shipments, is the key economic risk to watch. "However, trying to throttle energy exports from the Gulf region would be a high-risk strategy for Tehran," Schmieding added, arguing that such a move would likely upset China and many other countries that do not usually side with the U.S. Oil prices were up 1% in a volatile market on Monday after jumping to their highest since January. "Even limited Iranian actions, with missile strikes, mines, cyberattacks, or jamming, could meaningfully impact tanker traffic and energy flows," said Hakan Kaya, senior portfolio manager at Neuberger Berman. Money markets priced in a European Central Bank deposit facility rate at 1.80% in December from 1.78% late Friday. A key market gauge of euro area inflation expectations rose to a fresh one-month high at 2.1345%, but still within striking distance of the 2% ECB target. "Our base case would be a period of uncertainty lasting a few weeks, but without a sharp escalation (of the conflict)," said Mohit Kumar, chief economist Europe at Jefferies. "Rates market has shown a muted reaction so far, and we agree with the assessment," he argued, adding he expects yields to move modestly higher. Investors await a NATO summit later this week which is meant to be focused on heeding Trump's call to spend 5% of GDP on defence, from the current 2% goal. The yield on the two-year German government bond – more sensitive to expectations for ECB policy rates -- was up 2 bps at 1.87%. Italy's 10-year yields rose 1.5 bps to 3.54%. The Italian yield gap versus Bunds — a market gauge of the risk premium investors demand to hold Italian debt — stood at 100 bps. (Reporting by Stefano Rebaudo, editing by David Evans)
CNBC
05-05-2025
- Business
- CNBC
Euro zone cannot sustain pace of economic growth, economist says
Holger Schmieding, chief economist at Berenberg, discusses the latest euro zone economic data and the outlook for the region.
