Latest news with #globalEconomy
Yahoo
10 hours ago
- Business
- Yahoo
EU Commission 'strongly' regrets announced increase in US steel tariffs
BRUSSELS (Reuters) - The European Commission said on Saturday that it "strongly" regrets an announced increase in U.S. tariffs on steel imports. U.S. President Donald Trump said on Friday he planned to increase tariffs on imported steel and aluminum to 50% from 25%, putting more pressure on global steel producers and deepening his trade war. "We strongly regret the announced increase of U.S. tariffs on steel imports from 25% to 50%," a European Commission spokesperson said in an emailed statement. "This decision adds further uncertainty to the global economy and increases costs for consumers and businesses on both sides of the Atlantic," the spokesperson said, adding that "the tariff increase also undermines ongoing efforts to reach a negotiated solution".
News24
a day ago
- Business
- News24
Reserve Bank trims interest rate amid global uncertainty and explores lower inflation target
The Central Bank reduced the repo rate by 25 basis points amid slowing inflation and a subdued global growth outlook. Governor Lesetja Kganyago confirmed ongoing work towards potentially lowering the inflation target. A lower inflation target could lead to lower interest rates over time, potentially benefiting borrowers and supporting economic growth and job creation. The SA Reserve Bank (SARB) has reduced its policy rate by 25 basis points, effective 30 May, in response to a complex mix of global economic uncertainty, subdued domestic growth, and well-contained inflation. The decision, announced by Governor Lesetja Kganyago following the monetary policy committee (MPC) meeting on Thursday, reflects both local and international headwinds, as well as a growing policy debate around lowering the inflation target. Five MPC members supported the 25 basis point cut, while one preferred a more aggressive 50 basis point reduction. The move brings the repo rate down in a context where global interest rates have generally softened, despite volatile financial markets and increased geopolitical risks. Kganyago noted that global economic conditions had remained volatile since the MPC's previous meeting. The US had introduced higher import tariffs only to partially reverse them, contributing to market fluctuations. US assets have sold off, while alternative safe havens, such as gold and the euro, have performed well. Lesetja Kganyago The Reserve Bank has revised its global growth forecast downwards, citing elevated uncertainty and higher trade barriers. Inflation prospects remain mixed. While tariffs and supply chain disruptions could push inflation up in some economies, other forces such as lower oil prices and subdued global demand could pull inflation down. The US Federal Reserve has left its rates unchanged, but other central banks, including the Bank of England and European Central Bank, have eased monetary policy. Domestic growth and inflation outlook At home, the SARB has lowered its GDP growth projection for this year to 1.2%, expecting a gradual rise to 1.8% by 2027. The first quarter's official growth data is still pending, but indicators from sectors such as mining and manufacturing have been weaker than expected, and unemployment has increased. Inflation, meanwhile, fell below 3% last month, driven largely by lower fuel costs. Core inflation, which excludes volatile items, was at the bottom end of the bank's target range. The central bank has also revised its inflation forecast downwards, supported by a stronger rand, lower oil prices and the cancellation of a previously expected VAT increase. Despite this benign inflation environment, the MPC assessed risks as balanced, citing possible currency volatility due to both global and local developments. The rand briefly touched multi-year lows against the US dollar last month but has since stabilised. Inflation target review underway In addition to the rate decision, Kganyago addressed ongoing work to review the country's inflation targeting framework. He said the Reserve Bank, together with the National Treasury, was considering whether SA should adopt a lower inflation target, possibly 3%, down from the current 3% to 6% band. 'Much of the heavy technical work has been done,' said Kganyago. 'We've benchmarked against both advanced and emerging economies. Many countries have revised their targets lower over time.' We are now assessing the transition, how to move from one target to another, over what period, and what support would be needed from other areas of economic policy. Lesetja Kganyago Kganyago cited international trends, noting that advanced economies typically target 2%, while the median inflation target among emerging markets is around 3%. He said that interest rates in countries with lower inflation targets are also generally lower. Responding to questions from journalists, Kganyago rejected the notion that lower inflation targets necessarily imply higher interest rates. 'That argument just baffles me,' he said. 'Countries with 2% inflation targets often have lower rates than we do.' If adopted, a lower inflation target could result in structurally lower interest rates over time, which would benefit borrowers. According to the SARB's modelling, in a 3% inflation scenario, the policy rate would fall to just under 6%, compared to remaining above 7% under the current framework. 'We would be a low inflation, low interest rate country,' Kganyago said. However, the governor acknowledged that the transition would require coordination beyond monetary policy. Administered price setters, for example, may need to adjust their pricing behaviour in line with a lower inflation environment. A move to lower inflation targeting could also support longer-term growth and job creation. 'You end up with higher growth over the forecast horizon,' said Kganyago. 'A growing economy should also create jobs.'
Reuters
2 days ago
- Business
- Reuters
US-China tariff talks 'a bit stalled,' needs Trump, Xi input, Bessent says
May 29 (Reuters) - U.S. trade talks with China are "a bit stalled" and getting a deal over the finish line will likely need the direct involvement of President Donald Trump and Chinese President Xi Jinping, U.S. Treasury Secretary Scott Bessent said on Thursday. Two weeks after breakthrough negotiations led by Bessent that resulted in a temporary truce in the trade war between the world's two biggest economies, Bessent told Fox News that progress since then has been slow, but said he expects more talks in the next few weeks. "I believe we may at some point have a call between the president and party Chair Xi," Bessent said. "Given the magnitude of the talks, given the complexity ... this is going to require both leaders to weigh in with each other," he said. "They have a good relationship, and I am confident that the Chinese will come to the table when President Trump makes his preferences known." The U.S.-China agreement to dial back triple-digit tariffs for 90 days prompted a massive relief rally in global stocks. But it did nothing to address the underlying reasons for Trump's tariffs on Chinese goods, mainly longstanding U.S. complaints about China's state-dominated, export-driven economic model, leaving those issues for future talks. Since the mid-May deal, the Trump administration has concentrated on tariff negotiations with other major trading partners, including India, Japan and the European Union. Trump last week threatened 50% tariffs on EU goods, only to delay that threat. A U.S. trade court on Wednesday ruled that Trump overstepped his authority in imposing the bulk of his tariffs on imports from China and other countries under an emergency powers act. But less than 24 hours later, a federal appeals court reinstated the tariffs, saying it was pausing the trade court ruling to consider the government's appeal. The appeals court ordered the plaintiffs to respond by June 5 and the administration to respond by June 9. Bessent said earlier that some trading partners, including Japan, were negotiating in good faith and that he detected no changes in their postures as a result of the trade court ruling. Bessent said he would meet with a Japanese delegation on Friday in Washington.
The Independent
2 days ago
- Business
- The Independent
Trump fury over US court bid to block tariffs – as experts warn uncertainty could hit economy
A cloud hangs over the global economy, experts have warned after a bombshell court ruling blocked Donald Trump's tariffs, creating more global economic 'confusion and uncertainty'. Financial markers reacted positively to the unanimous ruling by three judges, but the decision enraged the White House, with Trump's official spokesman Stephen Miller calling it another 'judge coup'. The White House has appealed the decision, but it means all of the president's 'Liberation Day' tariffs now face a protracted legal process that could overshadow trade talks and delay the implementation of existing deals, including with Britain. Only the 25 per cent tariffs on steel, aluminium, and cars are unaffected by the ruling. Chris Southworth, secretary general of the International Chamber of Commerce United Kingdom (ICCUK), said months of legal wrangling would further weaken economic confidence. He said: 'It just puts a whole cloud over the top of any negotiation with the US because it's unclear what the US is negotiating and what their position will be from a legal standpoint. 'The problem is, these tariffs change almost every day with the US at the moment, and this uncertainty isn't good for business.' Marco Forgione, director general of the Chartered Institute of Export and International Trade, is also worried about the impact. He said: 'It's clear that we live now in a time of growing uncertainty. But businesses, especially our world-leading food and drink producers, should not rush to react. Whatever the outcome of the legal appeal, keeping calm is the best approach. 'The UK must keep backing open, rules-based trade to give our exporters the certainty they need to succeed.' Trade economist Simon Evenett told The Independent that the ruling could mean tariffs on sensitive sectors such as cars, steel, aluminium and pharmaceuticals intensify instead of coming down, as they're not covered by the judgement. He said: "Britain's principal interests lay in the area of cars, steel, aluminium and pharmaceuticals. All of these are covered by investigations under national security and are not covered by the ruling yesterday. This means the risks to the UK in those sensitive sectors remain, and are likely to intensify.' However, an ally of the Trump administration – Andrew Hale, a trade expert from the influential Heritage Foundation – told The Independent that the judges' decision is 'good news' for the UK. Mr Hale described the deal signed by Trump and Sir Keir Starmer earlier this month as 'just a framework document with very little in it'. He added: 'It was meant to be a start for further trade negotiations and deal with some of the tariffs. So [the ruling] is good news [for the UK] because it prevents the [Trump administration] because it is detrimental to the Trump administration; negotiations. They cannot use the International Emergency Economic Powers Act (IEEPA) to impose tariffs quickly and broadly as a negotiating tactic in negotiations.' In a speech on Thursday, Sir Keir Starmer defended his deal with Trump despite new question marks over the terms – and revelations the US has yet to lower tariffs on car and steel exports from the UK as originally agreed. The prime minister highlighted how the deal will ultimately help workers at Jaguar Land Rover (JLR), whose jobs had been under threat. But the uncertainty created by levies has already led to smaller firms in the UK abandoning the US market, according to Federation of Small Business (FSB) policy chair Tina McKenzie. She said: 'This court decision offers the possibility of short-term relief for small businesses trading across the Atlantic, many of whom have spent the last few months caught in a tangle of uncertainty, shifting rules and sudden extra costs. In fact, one in five said they had already stopped, or may stop, exporting to the US altogether.' The Commons select committee on business and trade is set to open an inquiry on trade with the US. Labour committee chairman Liam Byrne said: 'There's still considerable uncertainty about when the sector-specific exemptions in the recent deal actually come into effect, and what UK firms need to do to access them. This is a key thing we want to cover next week. On the broader tariffs, my understanding is that these now go back to the previous level.' Meanwhile, Lib Dem leader Sir Ed Davey demanded that the foreign secretary David Lammy summoned the new US ambassador, Warren Stephens to explain the situation. He said: 'The levels of chaos from Trump's economic policy is putting Liz Truss to shame.'
Zawya
2 days ago
- Business
- Zawya
Tariff turmoil causes issues for carriers amid global uncertainty
AIRLINES worldwide are grappling with the trade whiplash initiated by the U.S., and operators are preparing for various types of scenarios. The global economy faces much more uncertainty than before the Trump administration's tariff announcements. For those attempting to plan, the range of possibilities is broad. When average tariffs were low and change, when they happened, were only minimal, businesses could work within a more predictable range of possibilities. That world is in the past Businesses must attempt scenario planning for an unprecedented range of future tariff outcomes. These could be positive or negative, but the key point is that the much wider range of uncertainty makes planning for the future challenging. An obvious consequence is that investment decisions will be delayed or even cancelled. For aviation, the outlook is deteriorating. Tariffs and trade wars do not boost economic growth. Risks of an economic slowdown, possibly a recession, are growing. Inflationary pressures and higher borrowing costs add to the uncertainties. These economic concerns are likely to mean lower demand for air travel and for air cargo transport, which is faster but costlier than road, train or maritime options. For aerospace manufacturers, the imposition of increased tariffs will lead to higher costs of production. This will ultimately feed through to higher fares. Aviation supply chains are complex and global, with components arriving from suppliers and subcontractors all over the world, regardless of the location of final assembly. Raised prices and a consequent reconfiguring of global aviation supply chains are likely to lead to even more delivery delays and capacity constraints for airlines. A more fundamental impact is likely to be felt by airlines in the form of weaker demand, both in passenger and cargo traffic. Passenger demand is linked to GDP growth, and the outlook for the global economy has deteriorated. This reflects a number of factors that include reduced trade flows; the impact of falling stock markets on individual wealth; increased bond yields signalling higher government borrowing costs; and concerns about rising inflation. All these can lead to economic downturns. ALSO READ FROM NIGERIAN TRIBUNE: PDP labels Tinubu's two years a 'nightmare' The consequences for flag carriers/long-haul airlines are likely to be more challenging than for LCCs or those with less exposure to the U.S. market. Major U.S. airlines warned in March about weaker domestic demand, both corporate and consumer, because of growing economic uncertainty. Airlines exposed to the North Atlantic market face particular demand uncertainty. There is already evidence that recent actions by the Trump administration are leading people to put off booking travel to the U.S. Tighter border and immigration controls, new tariffs on imports into the U.S., and expansionist territorial claims are unlikely to be seen as positives by non-American visitors. Premium cabins drive long-haul profitability, especially in markets like the North Atlantic, but filling them could become more difficult. Reduced trade flows lead to lower business traffic and falling demand for business class. Demand for premium cabins from private leisure travelers has helped to make up for lower business traffic in the recovery from the pandemic. However, this demand is vulnerable to the falling net worth of individuals resulting from stock market declines. This also typically has a negative impact on consumer spending. In the latest update of its World Economic Outlook, the International Monetary Fund cut its global growth forecasts. The U.S. and Europe are forecast to have weaker GDP growth than any other major world region, which is likely to mean weakening demand for North Atlantic air traffic. Indeed, there was a 17% year-on-year fall in visitors by air from Western Europe to the U.S. in March. Schedules for the 2025 second quarter indicate that airlines are starting to trim North Atlantic capacity. Air cargo traffic growth, closely linked to trade flows, is also correlated to GDP growth. A trade war is bad news for air cargo demand and for those airlines with significant cargo operations. Tariffs, regardless of level, will add to the downward pressure on demand. LCCs, which tend to be more focused on short- or medium-haul, the economy cabin and passenger traffic, are better placed than flag carriers. Nevertheless, a softer economic outlook is not welcomed by any airline. There are two factors that may provide some relief to airlines, particularly those outside the US. One is a weaker dollar, which will lower the cost to non-U.S. airlines of USD-denominated costs, the most significant being aircraft and oil. However, airlines with significant U.S.-originated sales will suffer from a negative revenue impact in their own currency. The second positive factor is the recent fall in oil prices, which leads to lower jet fuel prices. The cost of Brent crude has fallen. For non-U.S. airlines, the fall in the dollar further lowers the cost of jet fuel in their own local currency. However, the fall in crude oil prices is itself a signal of a weaker global economic outlook. In the U.S., there was a hope among some in the airline industry that the second Trump term could be positive for aviation, with the president expected to reduce regulation. Senior airline executives and other U.S. aviation leaders said at the CAPA Airline Leader Summit Americas in Grand Cayman in April that dialogue between the industry and government officials had significantly improved under the new leadership. Now, U.S. airlines arguably find themselves stuck in a psychological tug of war in which they remain optimistic that Trump will initiate positive changes for the industry but are reeling from a whiplash of the trade policies that are upending their financial forecasts. It is a safe bet to assume that airlines are not as concerned about transportation policy as they are about their profitability for 2025 and beyond. There's an argument to be made that if the tariff turmoil continues, there could be fewer airlines. Copyright © 2022 Nigerian Tribune Provided by SyndiGate Media Inc. (
