Europe's carmakers still nervous despite EU-US trade deal
After months of tariff turbulence that threatened to escalate into a trade war, US President Donald Trump and EU chief Ursula von der Leyen struck the agreement Sunday that will see EU exports taxed at 15 percent.
This across-the-board rate also applies to exports from Europe's critical auto sector to America, and is far below a previous rate of 27.5 percent for cars and vehicle parts that came into force in April.
European auto industry group ACEA welcomed the "de-escalation" as the United States is a major destination for the continent's vehicle shipments, accounting for 22 percent of the EU export market in 2024.
It is an "important step towards easing the intense uncertainty surrounding transatlantic trade relations in recent months," the group said.
French automotive supplier Forvia echoed the message, saying the accord "helps reduce volatility and uncertainty... for all economic players".
There was still a great deal of concern -- the tariffs remain far higher than a 2.5 percent rate that European manufacturers exporting to the United States faced before Trump returned as president.
The 15-percent levy "will continue to have a negative impact not just for industry in the EU but also in the US," said ACEA director general Sigrid de Vries.
- German industry woes -
The German auto sector stands to be hit particularly hard, with the United States the top market for German vehicle exports last year, receiving about 13 percent of the total.
The 15-percent tariff "will cost German automotive companies billions annually and burdens them", said Hildegard Mueller, president of Germany's main auto industry group, the VDA.
This comes at a time when top German carmakers Volkswagen, BMW and Mercedes-Benz were already struggling with falling sales in China, weak demand in Europe and a slower than expected transition to electric vehicles.
The impacts of the higher rates introduced earlier this year are already being felt.
Volkswagen, Europe's biggest automaker, reported a 1.3 billion euro hit for the first half of the year due to the tariffs.
Stellantis, whose brands include Jeep, Citroen and Fiat, has seen North American vehicles sales plummet, and Swedish automaker Volvo's earnings were hit by tariffs.
Some industry leaders have proposed solutions.
BMW's chief Oliver Zipse suggested in June that Europe should drop its import tariffs on cars imported from the United States.
Volkswagen boss Oliver Blume has said the group could forge its own agreement with Washington that took into account the investments the group plans in the United States, the world's biggest economy.
But for now there is little relief on the horizon, and carmakers will have to adapt.
In the long term, higher tariffs in the United States than in Europe could create "big losers" in Germany's automotive industry, said Ferdinand Dudenhoeffer, director of the Center Automotive Research institute.
If BMW and Mercedes boost production in the United States to skirt tariffs, they could start shipping a growing number of vehicles to Europe that are subject to lower import levies, Dudenhoeffer said.
Struggling auto plants in Europe "will reduce their production", he warned, which could lead to up to 70,000 jobs being cut in Germany and shifted to America.
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The Advertiser
4 hours ago
- The Advertiser
India will continue to buy Russian oil, officials say
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The White House did not immediately respond to requests for comment. Indian refiners are pulling back from Russian crude as discounts shrink to their lowest since 2022, when Western sanctions were first imposed on Moscow, due to lower Russian exports and steady demand, sources said earlier this week. The country's state refiners - Indian Oil Corp, Hindustan Petroleum Corp, Bharat Petroleum Corp and Mangalore Refinery Petrochemical Ltd - have not sought Russian crude in the past week or so, four sources familiar with the refiners' purchase plans told Reuters. On July 14, Trump threatened 100 per cent tariffs on countries that buy Russian oil unless Moscow reaches a major peace deal with Ukraine. Russia is the top supplier to India, responsible for about 35 per cent of India's overall supplies. Russia continued to be the top oil supplier to India during the first six months of 2025, accounting for about 35 per cent of India's overall supplies, followed by Iraq, Saudi Arabia and the United Arab Emirates. India, the world's third-largest oil importer and consumer, received about 1.75 million barrels per day of Russian oil in January-June this year, up one per cent from a year ago, according to data provided to Reuters by sources. Nayara Energy, a major buyer of Russian oil, was recently sanctioned by the European Union as the refinery is majority-owned by Russian entities, including oil major Rosneft. In July, Reuters reported that Nayara's chief executive had resigned after the imposition of EU sanctions and company veteran Sergey Denisov had been appointed as CEO. Three vessels laden with oil products from Nayara Energy have yet to discharge their cargoes, hindered by the new EU sanctions on the Russia-backed refiner, Reuters reported in July. India will keep purchasing oil from Russia despite US President Donald Trump's threats of penalties, two Indian government sources say, not wishing to be identified due to the sensitivity of the matter. "These are long-term oil contracts," one of the sources said. "It is not so simple to just stop buying overnight." Trump indicated in a Truth Social post in July that India would face additional penalties for purchases of Russian arms and oil. On Friday, Trump told reporters that he had heard India would no longer be buying oil from Russia. The New York Times on Saturday quoted two unnamed senior Indian officials as saying there had been no change in Indian government policy, with one official saying the government had "not given any direction to oil companies" to cut back imports from Russia. Reuters reported this week that Indian state refiners stopped buying Russian oil in the past week after discounts narrowed in July. "On our energy sourcing requirements ... we look at what is there available in the markets, what is there on offer, and also what is the prevailing global situation or circumstances," India's foreign ministry spokesperson Randhir Jaiswal told reporters during a regular briefing on Friday. Jaiswal said India had a "steady and time-tested partnership" with Russia, and that New Delhi's relations with various countries stood on their merit and should not be viewed from the prism of a third country. The White House did not immediately respond to requests for comment. Indian refiners are pulling back from Russian crude as discounts shrink to their lowest since 2022, when Western sanctions were first imposed on Moscow, due to lower Russian exports and steady demand, sources said earlier this week. The country's state refiners - Indian Oil Corp, Hindustan Petroleum Corp, Bharat Petroleum Corp and Mangalore Refinery Petrochemical Ltd - have not sought Russian crude in the past week or so, four sources familiar with the refiners' purchase plans told Reuters. On July 14, Trump threatened 100 per cent tariffs on countries that buy Russian oil unless Moscow reaches a major peace deal with Ukraine. Russia is the top supplier to India, responsible for about 35 per cent of India's overall supplies. Russia continued to be the top oil supplier to India during the first six months of 2025, accounting for about 35 per cent of India's overall supplies, followed by Iraq, Saudi Arabia and the United Arab Emirates. India, the world's third-largest oil importer and consumer, received about 1.75 million barrels per day of Russian oil in January-June this year, up one per cent from a year ago, according to data provided to Reuters by sources. Nayara Energy, a major buyer of Russian oil, was recently sanctioned by the European Union as the refinery is majority-owned by Russian entities, including oil major Rosneft. In July, Reuters reported that Nayara's chief executive had resigned after the imposition of EU sanctions and company veteran Sergey Denisov had been appointed as CEO. Three vessels laden with oil products from Nayara Energy have yet to discharge their cargoes, hindered by the new EU sanctions on the Russia-backed refiner, Reuters reported in July. India will keep purchasing oil from Russia despite US President Donald Trump's threats of penalties, two Indian government sources say, not wishing to be identified due to the sensitivity of the matter. "These are long-term oil contracts," one of the sources said. "It is not so simple to just stop buying overnight." Trump indicated in a Truth Social post in July that India would face additional penalties for purchases of Russian arms and oil. On Friday, Trump told reporters that he had heard India would no longer be buying oil from Russia. The New York Times on Saturday quoted two unnamed senior Indian officials as saying there had been no change in Indian government policy, with one official saying the government had "not given any direction to oil companies" to cut back imports from Russia. Reuters reported this week that Indian state refiners stopped buying Russian oil in the past week after discounts narrowed in July. "On our energy sourcing requirements ... we look at what is there available in the markets, what is there on offer, and also what is the prevailing global situation or circumstances," India's foreign ministry spokesperson Randhir Jaiswal told reporters during a regular briefing on Friday. Jaiswal said India had a "steady and time-tested partnership" with Russia, and that New Delhi's relations with various countries stood on their merit and should not be viewed from the prism of a third country. The White House did not immediately respond to requests for comment. Indian refiners are pulling back from Russian crude as discounts shrink to their lowest since 2022, when Western sanctions were first imposed on Moscow, due to lower Russian exports and steady demand, sources said earlier this week. The country's state refiners - Indian Oil Corp, Hindustan Petroleum Corp, Bharat Petroleum Corp and Mangalore Refinery Petrochemical Ltd - have not sought Russian crude in the past week or so, four sources familiar with the refiners' purchase plans told Reuters. On July 14, Trump threatened 100 per cent tariffs on countries that buy Russian oil unless Moscow reaches a major peace deal with Ukraine. Russia is the top supplier to India, responsible for about 35 per cent of India's overall supplies. Russia continued to be the top oil supplier to India during the first six months of 2025, accounting for about 35 per cent of India's overall supplies, followed by Iraq, Saudi Arabia and the United Arab Emirates. India, the world's third-largest oil importer and consumer, received about 1.75 million barrels per day of Russian oil in January-June this year, up one per cent from a year ago, according to data provided to Reuters by sources. Nayara Energy, a major buyer of Russian oil, was recently sanctioned by the European Union as the refinery is majority-owned by Russian entities, including oil major Rosneft. In July, Reuters reported that Nayara's chief executive had resigned after the imposition of EU sanctions and company veteran Sergey Denisov had been appointed as CEO. Three vessels laden with oil products from Nayara Energy have yet to discharge their cargoes, hindered by the new EU sanctions on the Russia-backed refiner, Reuters reported in July.
News.com.au
11 hours ago
- News.com.au
Donald Trump's tariffs have a large role to play in Australia's interest rates cycle
When the RBA handed down its most interest rate decision last month, it shocked economists and the public by holding the cash rate at 3.85 per cent. The widely held consensus had been strongly in favour of another 0.25 per cent cut to follow the previous one in May. In the weeks since the Reserve Bank's decision, economic data has been mixed, with some elements such as the recent retail sales report providing support for the RBA's message of caution, while on the other hand, the recent substantial rise in unemployment was far more supportive of the cash rate being cut. In several important ways the RBA's uncertainty about the path forward for interest rates is arguably justified. Trump, Trade And Global Uncertainty At a global scale, the implementation of the Trump Administration's various tariffs and threats of even greater trade barriers to nation's not willing to make a swift agreement with the United States remains a source of major questions for central banks around the world. The challenge posed by tariffs to the path of interest rates was recently summed up by JPMorgan Chase (the world's most valuable bank) CEO Jamie Dimon at an event hosted by the Irish government. 'The market is pricing a 20% chance (of rising interest rates). I would price in a 40-50% chance I would put that as a cause for concern,' Dimon said. Dimon went on to cite the Trump administration's tariffs, the restructuring of global trade and the growing U.S government budget deficit as inflationary forces impacting the path forward for interest rates. While U.S interest rates can and do rise and fall independently of those of other nations, they are also the most important global benchmark. Theoretically, the U.S Federal Reserve holding a higher interest rate than the RBA can have two major knock on effects for Australia. It can force a repricing of Australian interest rates to better reflect the global benchmark. Or if the RBA chooses to allow the distance between the RBA cash rate and the U.S federal funds rate to expand, it places downward pressure on the value of the Australian dollar in a vacuum. A Mixed Bag For Australia At a domestic level, there is also a high degree of uncertainty impacting the path forward for interest rates. With government currently the driving force behind broader economic growth and employment growth in generally taxpayer funded sectors of the economy (public administration, education and, healthcare and social assistance) the main driver of the resilience of the labour market, it's challenging for the RBA to know exactly when a rate cut would be appropriate. Meanwhile, the deeply mixed nature of retail sales growth depending on the lens with which it is viewed also complicates matters. For example, looking at the latest headline retail sales showing a 1.2 per cent rise in turnover or June in a vacuum, it would be hard to justify a rate cut. But when the focus is shifted to an inflation adjusted figure that looks at retail sales per working age adult, the data for the June quarter reveals a return to recession in per capita terms. This is due to expansion of the population, the vast majority of which is occurring via migration acting as more or less the only driver of the retail economy in aggregate. History And Market Pricing Based on RBA rate cut cycles seen in the last 35 years, where the cash rate has been cut by at least one percentage point, the average rate cut cycle sees mortgage rates fall by approximately 33.3 per cent. If we remove the rate cut cycles driven by major emergencies such as the Global Financial Crisis and the early 1990s recession, the average reduction in mortgage rates falls to 27.0 per cent. If we were to see a similar reduction in interest rates today, we would see a total fall in the cash rate of approximately 1.75 percentage points. This would leave the average payable rate on a variable mortgage for an owner occupier at 4.58 per cent. In terms of the pricing of the future path of interest rates from financial markets, the next full 0.25 per cent rate cut is priced in for the RBA's August meeting, with the next expected to follow in November. Overall, market pricing has interest rates falling by a total 1.33 percentage points, with the cash rate hitting a low of 3.02 per cent during the middle of next year. The Outlook For Rates While the direction of interest rates is ultimately in the hands of the Reserve Bank, under the current circumstances government is also playing a significantly greater role in influencing the path forward than has been historically normal. With the growth in the domestic consumer economy concentrated in the 65 and over age demographic and otherwise reliant on population growth, the level of migration set by the Albanese government will be vital in determining to what degree aggregate consumer demand is weak enough to warrant further cuts in interest rates. Meanwhile, the level of employment growth stemming from government policy will also be a key consideration. If the current pullback continues without a corresponding increase from the private sector, the urgency and magnitude with which the RBA approaches the ongoing rate cut cycle may intensify significantly. Ultimately, it's entirely possible that events beyond our shores end up playing a significant role in the direction of Australian interest rates, whether that be as a result of President Trump's tariffs or the Chinese economy slowing more swiftly than expected due to the ongoing trade conflict and still simmering domestic economic issues.
The Advertiser
14 hours ago
- The Advertiser
Trump fires jobs data commissioner after dismal report
US President Donald Trump has removed the head of the agency that produces the monthly jobs figures after a report showed hiring slowed in July and was much weaker in May and June than previously reported. Trump, in a post on his social media platform on Friday, alleged the figures were manipulated for political reasons and said that Erika McEntarfer, the director of the Bureau of Labor Statistics, who was appointed by former president Joe Biden, should be fired. He provided no evidence for the charge. "I have directed my Team to fire this Biden Political Appointee, IMMEDIATELY," Trump said on Truth Social. "She will be replaced with someone much more competent and qualified." After his post, Labour Secretary Lori Chavez-DeRemer said on X that McEntarfer was no longer leading the bureau and that William Wiatrowski, the deputy commissioner, would serve as the acting director. "I support the president's decision to replace Biden's commissioner and ensure the American people can trust the important and influential data coming from BLS," Chavez-DeRemer said. Friday's jobs report showed that just 73,000 jobs were added in July and that 258,000 fewer jobs were created in May and June than previously estimated. McEntarfer was nominated by Biden in 2023 and became the Commissioner of the Bureau of Labor Statistics in January 2024. Commissioners typically serve four-year terms but since they are political appointees can be fired. The commissioner is the only political appointee of the agency, which has hundreds of career civil servants. Trump focused much of his ire on the revisions the agency made to previous hiring data. Job gains in May were revised down to just 19,000 from 125,000, and for June they were cut to 14,000 from 147,000. In July, only 73,000 positions were added. The unemployment rate ticked up to a still-low 4.2 per cent from 4.1 per cent. "No one can be that wrong? We need accurate Jobs Numbers," Trump wrote. "She will be replaced with someone much more competent and qualified. Important numbers like this must be fair and accurate, they can't be manipulated for political purposes." The monthly employment report is one of the most closely-watched pieces of government economic data and can cause sharp swings in financial markets. The disappointing figure sent US market indexes about 1.5 per cent lower Friday. While the jobs numbers are often the subject of political spin, economists and Wall Street investors — with millions of dollars at stake — have always accepted US government economic data as free from political manipulation. US President Donald Trump has removed the head of the agency that produces the monthly jobs figures after a report showed hiring slowed in July and was much weaker in May and June than previously reported. Trump, in a post on his social media platform on Friday, alleged the figures were manipulated for political reasons and said that Erika McEntarfer, the director of the Bureau of Labor Statistics, who was appointed by former president Joe Biden, should be fired. He provided no evidence for the charge. "I have directed my Team to fire this Biden Political Appointee, IMMEDIATELY," Trump said on Truth Social. "She will be replaced with someone much more competent and qualified." After his post, Labour Secretary Lori Chavez-DeRemer said on X that McEntarfer was no longer leading the bureau and that William Wiatrowski, the deputy commissioner, would serve as the acting director. "I support the president's decision to replace Biden's commissioner and ensure the American people can trust the important and influential data coming from BLS," Chavez-DeRemer said. Friday's jobs report showed that just 73,000 jobs were added in July and that 258,000 fewer jobs were created in May and June than previously estimated. McEntarfer was nominated by Biden in 2023 and became the Commissioner of the Bureau of Labor Statistics in January 2024. Commissioners typically serve four-year terms but since they are political appointees can be fired. The commissioner is the only political appointee of the agency, which has hundreds of career civil servants. Trump focused much of his ire on the revisions the agency made to previous hiring data. Job gains in May were revised down to just 19,000 from 125,000, and for June they were cut to 14,000 from 147,000. In July, only 73,000 positions were added. The unemployment rate ticked up to a still-low 4.2 per cent from 4.1 per cent. "No one can be that wrong? We need accurate Jobs Numbers," Trump wrote. "She will be replaced with someone much more competent and qualified. Important numbers like this must be fair and accurate, they can't be manipulated for political purposes." The monthly employment report is one of the most closely-watched pieces of government economic data and can cause sharp swings in financial markets. The disappointing figure sent US market indexes about 1.5 per cent lower Friday. While the jobs numbers are often the subject of political spin, economists and Wall Street investors — with millions of dollars at stake — have always accepted US government economic data as free from political manipulation. US President Donald Trump has removed the head of the agency that produces the monthly jobs figures after a report showed hiring slowed in July and was much weaker in May and June than previously reported. Trump, in a post on his social media platform on Friday, alleged the figures were manipulated for political reasons and said that Erika McEntarfer, the director of the Bureau of Labor Statistics, who was appointed by former president Joe Biden, should be fired. He provided no evidence for the charge. "I have directed my Team to fire this Biden Political Appointee, IMMEDIATELY," Trump said on Truth Social. "She will be replaced with someone much more competent and qualified." After his post, Labour Secretary Lori Chavez-DeRemer said on X that McEntarfer was no longer leading the bureau and that William Wiatrowski, the deputy commissioner, would serve as the acting director. "I support the president's decision to replace Biden's commissioner and ensure the American people can trust the important and influential data coming from BLS," Chavez-DeRemer said. Friday's jobs report showed that just 73,000 jobs were added in July and that 258,000 fewer jobs were created in May and June than previously estimated. McEntarfer was nominated by Biden in 2023 and became the Commissioner of the Bureau of Labor Statistics in January 2024. Commissioners typically serve four-year terms but since they are political appointees can be fired. The commissioner is the only political appointee of the agency, which has hundreds of career civil servants. Trump focused much of his ire on the revisions the agency made to previous hiring data. Job gains in May were revised down to just 19,000 from 125,000, and for June they were cut to 14,000 from 147,000. In July, only 73,000 positions were added. The unemployment rate ticked up to a still-low 4.2 per cent from 4.1 per cent. "No one can be that wrong? We need accurate Jobs Numbers," Trump wrote. "She will be replaced with someone much more competent and qualified. Important numbers like this must be fair and accurate, they can't be manipulated for political purposes." The monthly employment report is one of the most closely-watched pieces of government economic data and can cause sharp swings in financial markets. The disappointing figure sent US market indexes about 1.5 per cent lower Friday. While the jobs numbers are often the subject of political spin, economists and Wall Street investors — with millions of dollars at stake — have always accepted US government economic data as free from political manipulation. US President Donald Trump has removed the head of the agency that produces the monthly jobs figures after a report showed hiring slowed in July and was much weaker in May and June than previously reported. Trump, in a post on his social media platform on Friday, alleged the figures were manipulated for political reasons and said that Erika McEntarfer, the director of the Bureau of Labor Statistics, who was appointed by former president Joe Biden, should be fired. He provided no evidence for the charge. "I have directed my Team to fire this Biden Political Appointee, IMMEDIATELY," Trump said on Truth Social. "She will be replaced with someone much more competent and qualified." After his post, Labour Secretary Lori Chavez-DeRemer said on X that McEntarfer was no longer leading the bureau and that William Wiatrowski, the deputy commissioner, would serve as the acting director. "I support the president's decision to replace Biden's commissioner and ensure the American people can trust the important and influential data coming from BLS," Chavez-DeRemer said. Friday's jobs report showed that just 73,000 jobs were added in July and that 258,000 fewer jobs were created in May and June than previously estimated. McEntarfer was nominated by Biden in 2023 and became the Commissioner of the Bureau of Labor Statistics in January 2024. Commissioners typically serve four-year terms but since they are political appointees can be fired. The commissioner is the only political appointee of the agency, which has hundreds of career civil servants. Trump focused much of his ire on the revisions the agency made to previous hiring data. Job gains in May were revised down to just 19,000 from 125,000, and for June they were cut to 14,000 from 147,000. In July, only 73,000 positions were added. The unemployment rate ticked up to a still-low 4.2 per cent from 4.1 per cent. "No one can be that wrong? We need accurate Jobs Numbers," Trump wrote. "She will be replaced with someone much more competent and qualified. Important numbers like this must be fair and accurate, they can't be manipulated for political purposes." The monthly employment report is one of the most closely-watched pieces of government economic data and can cause sharp swings in financial markets. The disappointing figure sent US market indexes about 1.5 per cent lower Friday. While the jobs numbers are often the subject of political spin, economists and Wall Street investors — with millions of dollars at stake — have always accepted US government economic data as free from political manipulation.
