Trump rejected the EU offer to lift automobile tariffs

Daily Analysis - 31/08/2018

Trump threats to withdraw US from the World Trade Organization 

automobile-tariffs


President Donald Trump told Bloomberg that he would withdraw the United States from the World Trade Organization doesn't if they don’t "shape up,” Trump once more criticized the international trading group's treatment of the United States. Trump's comments follow previous reports that he had told White House aides that he is considering to withdraw from the WTO. On the other hand, Trumps administration officials are not as eager to get out of the global trade regulator. Commerce Secretary Wilbur Ross told CNBC In July, that to get out of the WTO talks was "a little premature." Ross said on "Squawk Box." "We've made no secret of our view that there are some reforms needed at the WTO," Trump's statement comes amid a slew of trade scuffles, that they pressured trade-sensitive stocks. On Thursday, U.S. stocks got a 4-day winning streak, after Bloomberg reported that the president of the United States actually wants to proceed with the proposed tariffs on an additional $200 billion in Chinese goods.

EU looks worried after the Rejection of the Auto tariffs


The President of the United States rejected an offer made by the European Union that proposing the withdraw of tariffs on cars if the U.S. did the same. That rejection came after an interview with Bloomberg on Thursday.EU Trade Commissioner Cecilia Malmstrom told the European Parliament's trade committee that the EU is "willing to bring down even our car tariffs to zero, all tariffs to zero if the U.S. does the same “Later that day. President Trump stated that the offer is "not good enough," and added that European "consumer habits are to buy their cars, not to buy our cars."

At the moment, the U.S. imposes a 25% tariff on pickups and light trucks and 2.5% to smaller cars. On the other hand, the EU imposes a 10% tariff on all passenger vehicles. Last month, European automotive stocks fell after the president Trump met with European Commission President, The two leaders promised that they will try to work on eliminating tariffs for non-auto industrial goods. On Thursday Malmstrom's statement took a step forward than Trump and Juncker's agreement, and that caused European auto stocks to jump up in the beginning before giving again their gains. Interview President Trump also said that the EU is "almost as bad as China, just smaller." And he added that he continues to supports tariffs on an additional $200 billion in Chinese.

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Dollar went after the latest round of US-China trade tensions


The Greenback went up versus the rest today. It found a support as the latest round of U.S.-China trade tensions eases investors risk appetite. The weakness in emerging market currencies is also a positive clue for the US Dollar.

Now the dollar index versus a box of six major currencies was a little higher at 94.748. The index had nudged up about 0.15 % during the night and ended almost a week’s losing streak.

The greenback, which most of the times is a safe haven asset in times of market uncertainty and political tensions, went down to its latest support while investors prepared for the next round of the U.S.-China trade conflict. Yesterday on Bloomberg U.S. President Donald Trump reported that he is prepared to go further with the trade war with China and has told aides he is ready to impose tariffs on $200 billion more in Chinese imports next week. Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo said.

"There is an ongoing trend to buy the dollar on the trade friction theme, which has negatively affected emerging market currencies and in turn fuels the dollar's rise," "The euro has also taken hits, due to the euro zone's perceived exposure to emerging market economies."

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Asia markets broadly lower after Trumps Comments


The Asia markets went down on Friday and Wall Street ended it’s almost a week winning streak in the last. That was Donald Trump said that he supporting the plan to move forward with more proposed tariffs. The Nikkei 225 regain some profits from some of its earlier losses but went down by 0.15% as most sectors slipped. South Korea's Kospi went up by about 0.30 % as industry giant Samsung Electronics gained about 1.10%.

The ASX 200 went down about 0.37%, with the telecommunications sector falling by almost 4.40, and gave up gains from a day earlier. A proposed merger between TPG Telecom and Hutchison Telecommunications (Australia) came after that. In the China region, markets still are in a downtrend for the past few days. The Shanghai composite slid slightly by 0.08% while the Shenzhen composite dropped by around 0.540%.

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