‘Protectionist’ Trump tariffs ‘offend’ Germany

EU trade commissioner Cecilia Malmstrom said Friday that “dialogue is always the prime option of the European Union,” amid growing trade tensions with the US. (AFP)
Updated 09 March 2018
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‘Protectionist’ Trump tariffs ‘offend’ Germany

FRANKFURT: US President Donald Trump is “offending” allies and risking a global trade war with his controversial tariffs on steel and aluminum, Germany’s economy minister said Friday.
“This is protectionism which offends close partners like the EU and Germany and which limits free trade,” Brigitte Zypries said in a statement.
“We will stand firmly by the side of our companies and their workers and will now work closely with the European Commission to answer coolly and clearly” Trump’s imposition of 10 percent tariffs on aluminum imports and 25 percent on steel, she added.
Thursday’s announcement from the White House that it would slap levies on imports of the key metals was met with anger from major trading partners like China, Japan and the EU.
While the immediate financial impact of the border duties is small, observers fear they could spark an eye-for-an-eye spiral of countermeasures, as other capitals feel forced to act to protect their own industries.
Brussels has warned it could tax imports of politically sensitive American products such as orange juice or motorcycles in response to Trump’s tariffs.
But Trump said he would simply up levies on car imports from the EU in retaliation — a potentially painful blow for “car nation” and export champion Germany.
In calmer language than seen last weekend, EU Trade Commissioner Cecilia Malmstrom said Friday that “dialogue is always the prime option of the European Union,” adding that Brussels was “counting on being excluded” from the tariffs after Trump said close allies might be exempt.
But as he announced the tariffs Thursday, Trump declared that “many of the countries that treat us the worst on trade and the military are our allies.”
He singled out Germany for criticism, which books massive trade surpluses and has long failed to meet NATO defense spending targets.
“That’s not fair,” Trump said.
Germany’s exports to the US — its largest trading partner — outweighed imports by €50.5 billion ($62.2 billion) across 2017 and €3.5 billion in January this year, figures released by federal statistics authority Destatis showed Friday.
Strained relations between Washington and its traditional EU allies have grown so bad that European Central Bank chief Mario Draghi issued a call for calm in a Thursday press conference.
“There is a certain worry or concern about the state of international relations, because if you put tariffs against what are your allies, one wonders who the enemies are,” Draghi said.
“Disputes should be discussed and resolved in a multilateral framework,” rather than tit-for-tat exchanges, he added.
News of the US tariffs came as other indicators for the German economy pointed to continuing strong growth into 2018 if it is spared major upsets.
“At least in the near term, prospects for German industry have never looked rosier,” economist Carsten Brzeski of ING Diba bank said after official data showed industrial production held steady in January.
Nevertheless, “the biggest risk for German exports seems to come from the US ... the risk for Germany is for real,” he added.
Some comfort from Berlin comes from the fact that destinations for its exports are “very diversified” around Europe and further afield, Brzeski said.
German business groups offered a mixed response to Trump’s tariff assault, with the German Chambers of Commerce and Industry calling for a proportionate response from the EU.
By contrast, Holger Bingmann of exporters’ association BGA warned that “the EU may now take steps we wouldn’t want ... we call urgently for level-headedness.”


Oil prices pressured by economic slowdown, but OPEC cuts support

Updated 20 March 2019
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Oil prices pressured by economic slowdown, but OPEC cuts support

  • Analysts said an economic slowdown could soon dent fuel consumption
  • OPEC has pledged to withhold around 1.2 million barrels per day of crude supply

SINGAPORE: Oil prices were on Wednesday weighed down by economic growth concerns that dampened the outlook for fuel consumption, but supported by voluntary supply cuts led by producer club OPEC and by US sanctions against Iran and Venezuela.
International Brent crude oil futures were at $67.55 a barrel at 0432 GMT, down 6 cents, or 0.1 percent, from their last close. Brent on Tuesday touched its highest since Nov. 16 at $68.20 a barrel.
US West Texas Intermediate (WTI) crude futures were at $58.92 per barrel, down 11 cents, or 0.2 percent, from their previous settlement. WTI on Tuesday reached its strongest level since Nov. 12 at $59.57 a barrel.
Analysts said an economic slowdown could soon dent fuel consumption.
“Global growth concerns and ongoing oversupply fears (are) creating headwinds for the commodity,” said Lukman Otunuga, analyst at futures brokerage FXTM.
Asian business confidence held near three-year lows in the first quarter as a US-China trade dispute dragged on, pulling down a global economy that is already on a downward path, a Thomson Reuters/INSEAD survey found on Wednesday.
The dips come after crude prices rose by more than a quarter this year, pushed up by a pledge led by the Organization of the Petroleum Exporting Countries (OPEC) to withhold around 1.2 million barrels per day (bpd) of supply as well as by US sanctions against oil exporters Iran and Venezuela.
“The shaky supply outlook with regard to Venezuela and Iran, as well as the petro-nations’ output restrictions are top of mind in the oil market,” said Norbert Ruecker, head of economics at Swiss bank Julius Baer.
Ruecker said oil prices were likely capped around $70 per barrel as fuel price inflation, as seen last year, would hit demand at that level.
At the same time, he said oil prices were supported above $50 per barrel as investment into US shale output growth would cease below that price.
Between those price levels, Ruecker said “the US shale boom almost fully meets global oil demand growth mirrored by the strongly expanding crude oil exports,” which hit a record 3.6 million bpd in February.
“We see ... roughly 1.2 million bpd of US shale oil growth over the coming year,” Ruecker said, which is in line with most global oil demand growth forecasts of 1 million to 1.3 million barrels per day for 2019.
The US Energy Information Administration is due to publish its weekly crude production and storage level report around 1700 GMT on Wednesday.