Daily Picks Wednesday: Industry Pressure on Governments
June 27, 2018
7 Min Read
Trump says finishing U.S. study on tariffs on cars from EU
- “We are finishing our study of Tariffs on cars from the E.U. in that they have long taken advantage of the U.S. in the form of Trade Barriers and Tariffs. In the end it will all even out - and it won’t take very long!” Trump tweeted.
- Trump threatened to impose a 20% tariff on all imports of EU-assembled cars, a month after his administration launched an investigation into whether auto imports posed a national security threat.
- The Alliance of Automobile Manufacturers, a group representing General Motors Co, Toyota Motor Corp, Volkswagen AG and other major automakers, will file written comments warning that a 25% on imported passenger vehicles would cost American consumers $45 billion annually, or $5,800 per vehicle.
- Consumers would also face higher costs of imported auto parts when buying vehicles from both U.S. and foreign automakers.
- A senior European Commission official said the EU would respond to any U.S. moves to raise tariffs on cars made in the bloc.
- The United States currently imposes a 2.5% tariff on imported passenger cars from the EU and a 25% tariff on imported pickup trucks. The EU imposes a 10% tariff on imported U.S. cars.
Trump Trade Threats Turn Exxon, Chevron From Backers to Critics
- Top executives from Exxon Mobil Corp., Chevron Corp. and Total SA all took shots at Trump’s trade plans at the World Gas Conference in Washington, expressing concern that U.S. tariffs are a risk to oil and gas demand, and that restrictions on importing steel could impede one of the country’s fastest-growing major industries.
- Restricting trade hurts investor confidence, risking major energy projects from shale pipelines to gas export terminals. It’s a reversal from six months ago when 'Big Oil' was singing Trump’s praises for slashing corporate taxes.
- Trump has made energy a centerpiece of his plan to boost economic growth, and until now executives have been largely supportive of his policies, such as a plan to open up more than 90% of the U.S. coastline to oil exploration.
- Trump’s administration has been keen to push this trend of an energy superpower. However, the industry’s success has been built upon free trade, Total SA’s chief executive officer said.
- “We certainly try to buy steel in the U.S., but not everything we need here is made here. Certain alloys and sizes of pipe are not made by U.S. steel manufacturers. We have to procure those elsewhere. It runs the risk of being a drag rather than a huge negative.” - Chevron
- Meanwhile, the Trump administration’s plan to "bail out" unprofitable coal and nuclear power plants is an example of "regulatory uncertainty,"
- "We don’t want something that is going to just benefit one of the fuels; it needs to be a competitive market that works” - BP
Largest US nail manufacturer 'on the brink of extinction' because of the steel tariffs
- The Mid-Continent Nail plant in Poplar Bluff, Missouri, laid off 60 of its 500 workers last week because of increased steel costs.
- Orders for nails plunged 50% after the company raised its prices to deal with higher steel costs.
- The company is in danger of shutting production by Labor Day unless the Commerce Department grants it an exclusion from paying the tariffs.
- The company might relocate to Mexico, where it could buy the steel without the tariffs — and then export the finished nails back to the United States without tariffs, which only apply to raw materials.
- The company had doubled its work force since 2013, and thrived despite increased competition from China.
- The US Chamber of Commerce has estimated that 2.6 million US jobs are at risk because of the Trump administration's hard-line policies on trade, although that estimate includes the impact of ending NAFTA. The tariffs that have already been proposed could cost the US economy about 700,000 jobs by next summer, according to Moody's Analytics.
Unions join business leaders to demand urgency in Brexit talks
- The TUC and the CBI released a rare joint statement with their continental counterparts calling for “measurable progress”.
- They are calling on the UK government and the EU to inject pace and urgency in the negotiations, bringing about measurable progress, in particular a backstop arrangement to avoid a hard border in Ireland.
- “Decisions will be needed in June and October to finalise the withdrawal agreement and the transitional arrangement, and put economic interests and people’s jobs, rights and livelihoods first.” It added: “The cost of disagreement between the UK and the EU would be dire for firms, workers and the communities where they live.”
- May tried to allay some of the concerns on Tuesday by saying it is “right that we listen to the voice of business”.
- “We have listened carefully to the voices of business throughout, and your input has helped to shape our negotiating position,” the prime minister added, two days before she is due to head to Brussels for a European Council meeting.
- “If we cannot cut through the fog of the uncertainty there will be casualties, For this year are more ominous, contingency planning, job losses, investment halved to less than £350m so far year, that’s the cost of uncertainty, that that’s the price we pay for slow decision-making,.” - SMMT
Business survey results signal "absolute disaster" if government doesn’t get a grip on Brexit very soon
- A UBS survey of 600 companies that spells out the reality of a Brexit “dividend” for British business could signal disaster if the government doesn’t get a grip on the process soon.
- The survey showed 35% of companies plan to reduce UK investment post-Brexit.
- A further 41% plan to move a large amount of capacity out of the UK and 42% plan to shift capacity to the euro zone.
- The results come hot on the heels of news that safeguarded jobs in the UK have fallen 54% in the past year after the number of UK projects funded by Foreign Direct Investment (FDI) dropped 9%.
- Figures from the Department for International Trade showed projects in Wales have fallen 33%, with Scotland witnessing a 23% fall, Northern Ireland an 18% drop and London a 17% decline.
Threat of collapse looms over German coalition after crisis talks fail to resolve migrant row
- The dispute is over plans drawn up by Merkel’s interior minister and the head of Bavaria’s conservative Christian Social Union, to send back migrants who have registered in other EU states at the German border.
- This is anathema to the usually flexible Merkel as it would undermine her open-door migrant policy and be a major setback to the EU’s Schengen free border system.
- A breakup of the 70-year old alliance between the CDU and CSU would lead to a collapse of a coalition it took 6 months to negotiate and rob Merkel of a parliamentary majority.
- The main options then look like a Merkel-led minority government or a new election. Merkel, who has been chancellor for nearly 13 years, may also lose support in her own CDU.