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The Guardian
a day ago
- Business
- The Guardian
EU-US tariffs: five key takeaways from the trade deal
Donald Trump has announced a deal with the EU imposing tariffs of 15% on most goods entering the US from Europe and requiring the bloc to make huge investments in US energy products, averting a trade war between the two of the world's largest economies. Though the 15% rate is half of what Trump had threatened, many will be disappointed by it. When the UK accepted tariffs of 10% in its trade deal with the US in May, it was widely reported that European leaders considered it to be a bad deal. Brussels also agreed to buy, over three years, $750bn (£560bn) worth of oil, gas, nuclear fuel and semi-conductors, including liquified gas, while at the same time agreeing to invest $600bn (£446bn) in the US, including purchases of military equipment, according to Trump. One analyst suggested the deal was a 'big win' for the US president while it was less clear what the EU gained. 'A 15% tariff on European goods, forced purchases of US energy and military equipment and zero tariff retaliation by Europe, that's not negotiation, that's art of the deal.,' Prashant Newnaha, senior Asia-Pacific rates strategist at TD securities said. Here are five key takeaways: The US will keep in place a 50% tariff on steel and aluminium according to Trump, although European Commission chief Ursula von der Leyen said the tariffs on steel could be replaced with a quota system with further negotiation. There was also confusion over pharmaceuticals after Trump said the sector would not be included, however a senior US official later confirmed that they were in fact covered by the 15% tariff. According to von der Leyen, zero tariffs will apply to a range of sectors including 'all aircraft and component parts, certain chemicals, certain generics, semiconductor equipment, certain agricultural products, natural resources and critical raw materials'. But there was ongoing uncertainty for some industries – Sunday's announcement did not clear up what tariffs European wine and spirits producers will face in the US. Carsten Nickel, deputy director of research at Teneo, said Sunday's accord was 'merely a high-level, political agreement' that could not replace a carefully hammered out trade deal: 'This, in turn, creates the risk of different interpretations along the way, as seen immediately after the conclusion of the US-Japan deal.' On Sunday, a senior US administration official told reporters in Washington that Trump retained the ability to increase the tariffs in the future if European countries do not live up to the investment commitments contained in the deal. The deal creates a division on the island of Ireland, as traders in Northern Ireland can sell into the US on a 10% tariff rate, courtesy of the UK deal, while their neighbours in Ireland will be hit with the 15% rate. The disparity will make for difficult diplomatic conversations over guarantees to maintain stability on the entire island in the Good Friday agreement, which had already been rocked by the fallout from Brexit, when customs arrangements involving Northern Ireland became a huge headache for EU and UK negotiators. Ireland's deputy prime minister, Simon Harris, said he 'regretted' the 15% tariff rate but said 'certainty' was important. German Chancellor Friedrich Merz welcomed the deal, saying it averted a trade conflict that would have hit Germany's export-driven economy and its large auto sector. German carmakers, VW, Mercedes and BMW were some of the hardest hit by the 27.5% US tariff on car and parts imports now in place. But the powerful BDI federation of industrial groups was vocal in its disappointment. 'Even a 15% tariff rate will have immense negative effects on export-oriented German industry,' said Wolfgang Niedermark, a member of the federation's leadership. The country's VCI chemical trade association said the accord left rates 'too high'. The impact of the tariffs is likely to be substantial on some companies; automaker Volkswagen said it suffered a 1.3bn euro ($1.5bn) hit to profit in the first half of the year from the higher tariffs. Though von der Leyen framed the agreement as a 'good deal' that would bring 'stability' and 'predictability', Brussels' original aim in the talks was for a 'zero-for-zero' tariff deal and tariffs remain far higher than historically. 'The crippling uncertainty is largely over, the deal is bearable for the EU,' said Holger Schmieding, chief economist at Berenberg Bank. 'Trump can claim that the asymmetric deal is a 'win' for him. But of course, the outcome is still bad relative to the situation that prevailed before Trump started his trade wars.' US consumers are also likely to bear the costs of tariffs as companies pass on the expense in increased prices, many economists have warned. With agencies
Asharq Al-Awsat
07-07-2025
- Business
- Asharq Al-Awsat
Gold Falls to One-week Low as Dollar Firms after Tariff Deadline Extension
Gold prices retreated to a one-week low on Monday as the dollar firmed and traders digested US President Donald Trump's extension of his July 9 tariff deadline to August 1 and assertion that the US is close to several trade deals. Spot gold was down 0.8% at $3,307.87 an ounce at 1302 GMT after hitting its lowest since June 30 at $3,296.09. US gold futures lost 0.7% to $3,318. The stronger dollar, up 0.2% against a basket of other major currencies, makes dollar-priced gold more expensive for buyers with other currencies, Reuters reported. "The market volumes remain quiet at this moment, and price action is probably still just reflecting the latest piece of economic data, but also starting to look forward to the potential for trade deals to be announced," said Daniel Ghali, commodity strategist at TD Securities. Last week's stronger than expected US payroll data cemented expectations that the Federal Reserve is unlikely to cut interest rates as early as previously expected. Minutes of the Fed's latest policy meeting and speeches by several Fed officials are due this week for further insights into the central bank's policy path. Elsewhere, China's central bank added gold to its reserves in June for an eighth consecutive month, official data from the People's Bank of China (PBOC) showed on Monday. "The PBoC in particular has been diversifying foreign exchange reserves substantially and an uptick in uncertainty and geopolitical risk may speed up the process," said Zain Vawda, analyst at MarketPulse by OANDA. In other precious metals, spot silver fell 1.6% to $36.32 an ounce, platinum shed 2.9% to $1,350.97 and palladium lost 3% to $1,100.65.
Wall Street Journal
30-06-2025
- Business
- Wall Street Journal
Gold Edges Lower Amid Trade Deal Hopes, Risk Appetite
2347 GMT — Gold edges lower in the early Asian session. 'It looks increasingly likely the U.S. moved closer to trade deals with China and other key trading partners,' TD Securities' Bart Melek says in a research report. Also, the Iran-Israel cease-fire is reviving risk appetite, the head of Commodity Strategy says. 'While we judge that gold may still move lower, a deep rout is not expected as we see firm technical support at plus/minus $50 of $3,100/oz,' Melek adds. Spot gold is 0.2% lower at $3,267.43/oz. (
CBS News
27-06-2025
- Business
- CBS News
The Trump tariffs aren't causing U.S. prices to spike. Here's why.
Fed Chair testifies that tariffs could drive up inflation, which is why rates were held steady Despite concerns earlier this year that President Trump's tariffs would cause a renewed bout of inflation, the prices of goods and services across the U.S. have remained relatively stable. The personal consumption expenditures price index, the Federal Reserve's preferred inflation gauge, rose 2.3% in May, modestly above the central bank's 2% annual target. The May Consumer Price Index rose at an annual rate of 2.4%, cooler than economists expected. The muted inflation data reflects short-term steps taken by some companies to offset the tariff impact, such as pre-ordering inventory, absorbing the cost of some tariffs to cushion consumers from price hikes and leveraging some loopholes to delay or lower duty payments, economists say. "Many businesses have been creative and savvy in using different means to buffer the initial shock," EY-Parthenon chief economist Gregory Daco told CBS MoneyWatch. That doesn't mean consumers and businesses, who were battered by the highest inflation in decades during the pandemic, are out of the woods. Gennadiy Goldberg, head of U.S. rates strategy at TD Securities, thinks prices are likely to rise as tariffs gradually push up import costs in the second half of the year. "We still think in next few months we'll continue to see the impact of the new trade policies on price levels, and they should translate into higher inflation," Goldberg said. Here are three reasons why tariffs haven't driven up inflation as much as many economists expected, at least for now. Aggressive "front-loading" After the Trump administration announced a range of tariffs on Canada, China, Mexico and dozens of other countries earlier this year, many companies scrambled to stock up, or front-load, on products, parts and other imports to avoid incurring added tariff costs. "They tried to front-run the imposition of the duties by importing rapidly," Daco said. "They bought goods they needed and stocked them, so that was the first line of defense against the tariffs." Much of that extra inventory remains in warehouses or on store shelves, allowing importers to delay price hikes. "Lots of retailers pre-ordered inventory before the tariffs went into effect, so the inventory they're selling has not been marked up yet," Goldberg said. Waiting for clarity Some businesses facing higher tariffs are choosing to hold off on passing any cost increases through to consumers as they wait for the fog around U.S. trade policy to lift. The Trump administration in April froze most of its tariffs for 90 days to allow time for negotiations, with that pause due to expire on July 9. And after announcing tariffs of as much as 145% on Chinese imports earlier this year, Mr. Trump and Chinese officials on Thursday said the two countries have agreed on the framework for a trade deal. "We have had literally dozens of changes in tariff policy in the last five months. In that highly uncertain environment, companies that sell items that are subject to tariff may be cautious about raising prices immediately," Charley Ballard, professor of economics emeritus at Michigan State University, told CBS MoneyWatch. Companies often refrain from raising prices to avoid scaring away consumers and losing market share to competitors. Added Daco: "Essentially, some business decided to not immediately pass on the cost. They said, 'Let's see if we can hold out for a month, delay some imports, use the inventory on hand and be creative in terms of our broader pricing strategy'." Although tariffs are paid by importers, which typically pass those costs on to consumers, some foreign exporters have also been willing to take a hit. Lower tariff costs Although Mr. Trump has announced sky-high tariff rates, the actual duties collected at the U.S. border so far are lower than the official rates. That's because some importers have been able to skirt the levies by storing goods in so-called bonded warehouses or foreign trade zones. Businesses can use bonded warehouses, which are usually located near major commercial ports, to temporarily store goods, components and other inputs without immediately having to pay tariffs or taxes. "If you make use of a warehouse or so-called foreign trade zone, you are able to delay the payment of tariffs until these goods are put into commerce," Daco said. "So it's a free-trade zone, or imaginary area that is not subject to tariffs." Additionally, the U.S. has implemented a number of tariff exemptions and exclusions. In practice, that has resulted in the actual levies on imports often being lower than the nominal rate initially announced the White House. As of June, the effective U.S. tariff rate on all imports was around 10%, compared with an official average tariff rate of 15%. Still, business can't hold the line on price hikes indefinitely if tariffs remain elevated, experts say. Federal Reserve Chair Jerome Powell told lawmakers this week that tariffs could yet spark higher inflation, likely starting this summer, "Part of that is due to the start-stop nature of the tariffs that have been introduced," James Rossiter, head of global macro strategy at TD Securities, told CBS MoneyWatch. "For us it's a question of patience more than a mystery as to where it is," he added. "The typical pass-through takes some time. We expect July to be when you start to see it more."
CTV News
27-06-2025
- Business
- CTV News
Gold prices to grow further against a weak U.S. dollar, diversification of assets: analyst
As the price of gold rallied significantly this year, an analyst predicts the precious metal will grow even further as the U.S. dollar weakens on the global market. John Zechner, chairman of J. Zechner Associates says central banks in China, India and Japan are diversifying assets away from U.S. reserve holdings towards the rich commodity, which will likely contribute to continued price growth. He says countries have been turning away from the commodity because of global trade tensions and geopolitical risks from U.S. President Donald Trump's tariffs war. 'It has now surpassed the Euro as the second biggest holding, next to the U.S. dollar,' Zechner told BNN Bloomberg in a Thursday interview. 'Given what's going on the U.S., I can only see that going further.' The price of gold floated around US$3,330 due to the de-escalation of the Israel and Iran conflict. Meanwhile, the U.S. dollar plummeted to a three-year low as expectations from the Federal Reserve eased amidst speculation that Trump may nominate a new chief who is more likely to cut interest rates , according to Reuters. Lower interest rates tend to depress a currency. Investors have flocked to gold in recent months viewing the commodity as a safe haven, according to a commodity strategist with TD Securities. 'I think these central banks are massive buyers,' said Zechner. 'That will continue. They have to diversify their currency holdings, probably out of fiat currencies in general.'Zechner does, however, say countries might consider adopting cryptocurrencies.' I have yet to see a major central bank, or even a mid-level central bank, start to embrace Bitcoin or cryptocurrencies in general,' said Zechner. 'In the meantime, they can buy gold. I think they will continue to do it.' Torex Gold Resources (TXG TSX) Zechner favours Torex Gold Resources, a Canadian intermediate gold producer engaged in mining, developing and exploring in Mexico. The company has been extracting the commodity at a 29,000-hectare property. The company's stock is hovering around $42, up 109.8 per cent from last year. He said the company has made strategic moves operating undergrounds mines El Limon and Media Luna extending their reserves and improving their financial position. 'We've held it for a while now,' said Zechner. 'They started to do really well in the past year in the big Morales property in Mexico. They had the largest single mine there, and the El Limon mine. The problem was, it got a low valuation, because they're running out of the existing open pit. It's running down. They're going to have to sort of roll it off. People were not paying much for future growth but on that same property to the south of it, they had a property called Media Luna. They've been able to bring the Media Luna online to replace this almost seamlessly in the past year, right on budget and right on time. It is almost unheard of. At the same time, you've gone underground at a El Limon as well as Media Luna. That's going to extend the reserves a little bit further.' Reyna Silver, an exploration and development company focused on exploring high-grade, district-scale silver deposits in Mexico and the United States recently announced acquisition by Torex Gold and Concurrent Financing.
