French Power Slips on Wind Surge, Deepening Discount to Germany
The French month-ahead contract fell as much as 3% to €45 per megawatt-hour, the lowest since July 1, according to data from European Energy Exchange AG. The German equivalent rose 1.6% to trade as high as €80.79 per megawatt-hour on Monday.
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USA Today
an hour ago
- USA Today
Trump's trade deal with the EU: What it means for your wallet
Tariffs, including the new 15% rate for most imports from the EU, would raise consumer prices by 1.8% in the short run, according to the Yale Budget Lab. Here's where shoppers could see higher prices. Imported cars, pharmaceuticals, apparel and more could grow more expensive in the months to come as the United States imposes a 15% tariff on most imports from the European Union. Analysts have labeled the agreement, announced July 27, as a win for President Donald Trump, whose administration had been working to complete deals by a self-imposed Aug. 1 deadline. U.S. stocks opened mostly higher on July 28, with the S&P 500 and Nasdaq reaching record highs after Trump announced a tariff far below the 30% rate threatened earlier in the month. But for U.S. consumers, even the reduced tariff is expected to spur higher prices. The Yale Budget Lab estimates that Trump's tariffs, including the new rate for EU imports, would raise prices by 1.8% in the short run, the equivalent of an average household income loss of roughly $2,400. While the increase may sound insignificant, 'the Federal Reserve's inflation target is 2%. So we're talking about almost a year's worth of inflation above and beyond the inflation that we would've gotten anyways,' said Ernie Tedeschi, director of economics at the Yale Budget Lab. 'So that's meaningful.' Here are some of the sectors that could see higher prices in the months to come. European cars Automobiles, one of the EU's largest export sectors, will likely see some of the most noticeable price hikes, according to Gary Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics. While the 15% tariff is a relief from the current 27.5% rate, Hufbauer said the auto industry's margins are thin enough that EU companies won't want to absorb the higher cost. 'I suspect European auto prices sold in the U.S. will go up probably at least 10%,' he told USA TODAY. German Association of the Automotive Industry President Hildegard Müller warned the 15% tariff could cost the German automotive industry 'billions annually.' Already, Volkswagen has trimmed its full-year sales forecast after reporting a $1.5 billion hit from tariffs over the first half of the year. Automobile price hikes will likely vary across European makes and models, according to Tedeschi, since many already operate factories in North America. That means trade deals with Canada and Mexico could also influence pricing. 'Consumers should keep an eye out for rising prices for European car imports, but they should not assume that all European brands are going to go up in price because of how complicated the supply chain is,' he said, adding that he expects to see price increases tied to the new EU tariffs play out this summer and fall. What were the EU tariffs before? What to know after trade deal Furniture Furniture is another sector that could get hit by tariffs, according to Stephen Brown, Capital Economics' deputy chief North America economist. The Swedish company IKEA, for instance, relies on China, Poland, Italy, Germany and Sweden to supply 'the majority' of products, according to its website. The company did not immediately respond to a request for comment, but Inter IKEA ‒ which produces IKEA furniture ‒ told Reuters in November that just 10% of the products it sells in the U.S. are made in the region. 'Unless they find somewhere else to import from or move around their supply chain, furniture prices ... could see some effects,' Brown said. Pharmaceuticals While certain sectors like wine and spirits appear to still be under negotiation, EU Commission President Ursula von der Leyen said pharmaceuticals will be covered by the 15% tariff, with certain generic drugs not subject to tariffs. The EU is behind about 60% of pharmaceutical imports to the U.S., according to Reuters, making them the largest European export to the U.S. by value. But Brown noted that pharmaceutical companies may be able to more easily shift production to the U.S. compared to other industries. For instance, the Danish manufacturer behind the GLP-1s Wegovy and Ozempic, Novo Nordisk, already has a presence in North Carolina and has plans to expand. 'Although there could be some short-term price increases, those might not be as durable as they are for other products,' Brown said. Additionally, consumers may not pick up on the industry's price hikes if their insurance covers the imported drug. Luxury items Luxury items like imported designer handbags and apparel could also see higher prices, as well as imported food. 'The difference between China and Europe, in terms of tariffs, is that the tariffs on China increase what people buy in Walmart and Target. The tariffs on European imports will mainly hit what people buy at Whole Foods and high-end retail stores,' said Hufbauer of the Peterson Institute for International Economics. He noted that the companies behind luxury goods tend to have higher margins, though, and may be more willing to absorb some of the higher costs tied to tariffs. Machinery Machinery and appliances are also major exports from the EU, accounting for roughly 20% of U.S. imports from the EU in 2021, according to the Commerce Department. While consumers won't buy machinery directly, experts warn the higher prices could eventually trickle down as manufacturers adjust to higher costs. 'These are not necessarily products that immediately or directly impact the consumers, but they can indirectly affect consumers, especially after many years,' Tedeschi said.
Politico
an hour ago
- Politico
Trump got his tariff hike. The rest remains murky.
Asked about the discrepancy, Trump administration officials pointed back to the joint statement to emphasize that Indonesia had agreed to lift the ban on nickel ore. 'These countries made these agreements,' the White House officials said. 'We expect them to abide by their commitments and if they reneg, the president reserves the ability to raise their tariffs again.' The deals Trump has reached have made some gains on historically thorny issues surrounding U.S. exports. Tokyo has committed to importing more U.S. rice — which is culturally sensitive in Japan — and the EU promised to eliminate tariffs on U.S. cars, which should help German companies that manufacture in the U.S. Indonesia, too, promised to adopt U.S. vehicle standards, which could ease the way for American auto companies to sell more cars to the country of more than 281 million people. And the Philippines also promised to eliminate all of its tariffs on certain U.S. goods, like autos. The most significant development, however, is that Trump has effectively reset the United States' role in the global trading system, with little retaliation so far from trading partners or blowback from financial markets. Over close to a century now, the U.S. kept its tariffs around 2 percent, part of a system it helped create after World War II to foster integrated global supply chains, lower prices and expand consumer choice. Trump's duties have also led to an influx of new tariff revenue — paid by the people and companies importing foreign goods (and not, as Trump regularly asserts, foreign governments) — coming into the country. In just a few months, the tariffs have brought in more than $136 billion, with the higher rates still yet to take effect. And, on the whole, Trump's trade policies have yet to drive a surge in consumer prices, with inflation just starting to tick up in July. That's thanks in part to the fact that companies loaded up on inventory early in the year and some have thus far absorbed the costs. Consumer sentiment has slightly improved over the past two months, further emboldening the White House.
CNBC
2 hours ago
- CNBC
The EU-U.S. trade deal could have one unexpected winner: The UK
As world leaders and economists across Europe digest the news of the EU-U.S. trade agreement, some experts told CNBC that while it may be bad news for the bloc, the deal could serve as an unexpected boost to the U.K. The European Union is facing a higher 15% tariff rate on its goods imported to the U.S. compared to the 10% levy the U.K. has agreed to. "In theory, the UK benefits," Philip Shaw, chief economist at Investec, told CNBC. "The new EU tariff of 15% means that UK exports to the US have become relatively cheaper, which could boost British trade with the US as American firms buy goods from Britain rather than the EU," he explained. U.K. goods would also be cheaper for U.S. consumers due to the lower tariff rate, meaning they may favor British products over those manufactured in the EU, Alex Altmann, partner and head of Lubbock Fine LLP's German desk, suggested in a note published shortly after the EU-U.S. deal was announced. "The UK's lower US tariffs do offer a major incentive for EU companies to shift some of their manufacturing bases to the UK or to expand their existing UK facilities," he added. EU-based manufacturers with low profit margins in particular could find the idea of moving to the U.K. attractive to avoid a further squeeze on those margins, Altmann explained, noting that the U.K. has spare manufacturing capacity due to Brexit. "The UK could be a big indirect winner of this agreement," Altmann added. But the benefits to the U.K. are not only linked to the country's lower tariff rate. Indeed, the EU managing to secure a 15% levy, which is far lower compared to the 30% the bloc was threatened with by U.S. President Donald Trump, could also be a positive for the U.K. according to Investec's Shaw. "The EU has escaped from a possible major downturn from a more onerous (i.e. 30%) tariff regime and possibly a series of retaliatory measures between the two trading blocs. Here the UK benefits from its major trading partner averting a recession which could have resulted in a decline in UK exports to the EU," he said in written comments. The EU-U.S. reaching an agreement has also hampered the potential impact, Beth McCall, an international trade lawyer at Dentons told CNBC. "If the US had proceeded with 30% tariffs against most EU goods, UK goods with a 10% tariff, which is paid by the US importer in most circumstances, could have appeared significantly more attractive," she said. McCall noted that the expected difference in the baseline tariff rate, which amounts to just 5%, may still make some U.K. goods more attractive. However, she noted, "this will take time to be seen as existing contracts come to an end and US importers search for imports from countries carrying a lower tariff." Questions have been raised about the timeframe for the impact of tariffs being felt around the world has been a frequently debated question. Companies have already flagged that tariffs are expected to weigh on their earnings, and there have been widespread warnings of how the duties could impact economic growth. But as many details of the trade agreements have yet to be ironed out, their precise exact impact is still unclear. Some of the effects may also take time to be felt, for example rising costs for consumers may only materialize after some time. Ultimately, both the U.K. and EU are now facing a more difficult environment, McCall said. "Whether the new rate is 10% or 15%, UK and EU businesses will still face far higher tariffs when exporting to the US than they did three months ago," she said.
