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European carmakers win big as US backs off tariff threat

Carmakers are the big winners after the ...

Posted: Jul 26, 2018 2:49 PM
Updated: Jul 26, 2018 2:49 PM

Carmakers are the big winners after the United States and European Union announced a ceasefire on trade.

Shares in Volkswagen, BMW, Fiat Chrysler, Renault, PSA and Daimler advanced on Thursday, with some automaker stocks gaining as much as 5% in Europe.

President Donald Trump and European Commission President Jean-Claude Juncker agreed on Wednesday to work toward eliminating tariffs and barriers on trade. While thin on details, the agreement appeared to lift the immediate threat of new tariffs on European automakers.

Trump had in recent weeks suggested he would put new tariffs on cars - and car parts - imported from Europe.

Higher tariffs on cars would have dramatically increased tensions in the world's biggest trading relationship. The European Union has already responded to US steel and aluminum tariffs with punitive countermeasures.

The auto industry has warned that increased tariffs would do real damage to jobs, productivity and investment.

A report from UBS warned that 25% tariffs on global car and auto part imports would increase costs for automakers by as much as 18%. Jaguar Land Rover, Volkswagen and BMW would be among the hardest hit brands.

'No shared vision'

While carmaker stocks zoomed higher, there were significant doubts about whether the agreement would hold.

"It is telling that something with so little substance gets labeled 'a deal,' " said David Bach, a professor at the Yale School of Management. "The big picture hasn't changed - there is no shared vision for transatlantic trade and no process for getting to one."

Related: EU warns Trump's car tariffs threaten $300 billion of US exports

Negotiations to lower tariffs and trade barriers promise to be lengthy and arduous. An earlier effort to strike a transatlantic free trade deal was abandoned after encountering political opposition.

"Longer talks would be a success because they would keep Trump from raising auto tariffs; at the same time, they pose the risk of the US president losing his patience at some point," said Carsten Nickel, a research director at Teneo Intelligence. "Trump might still decide to pull the plug at any time."

Trump tweeted following the meeting that "European Union representatives told me that they would start buying soybeans from our great farmers immediately." The president added that Europe would be buying "vast amounts" of liquid natural gas (LNG).

Juncker said the European Union "will build more terminals to import LNG." That will take years, and even then it's not clear that Europeans would be willing to pay for American gas, which is generally more expensive than supplies piped in from Russia.

French Economy Minister Bruno Le Maire also quickly stipulated that "agricultural non-tariff barriers are not negotiable." The European Union is unlikely to accept food imports that don't meet its standards.

"The reason that the European Union does not import more soybeans from the United States is that many of them are [genetically-modified] strains," commented Wyn Grant, professor of International Politics at Warwick University.

Related: GM sold these money-losing brands. Now they're making hundreds of millions

The Trump administration's approach to trade negotiations with China provides another reason to question whether the EU agreement will stick.

China and the United States announced a truce in May after two rounds of negotiations that were designed to avoid a trade war. But Trump later reversed course and said the United States would impose a 25% tariff on $50 billion of Chinese exports.

Since then, each side has imposed tariffs on $34 billion of the other's imports, and they've threatened to go further.

"The next few days and weeks will be essential in determining whether increased communication between the US administration and its European counterparts is real," wrote analysts at Oxford Economics.

Mississippi Coronavirus Cases

Data is updated nightly.

Cases: 293542

Reported Deaths: 6638
CountyCasesDeaths
DeSoto19601229
Hinds18712386
Harrison16569277
Rankin12637263
Jackson12483219
Lee9671160
Madison9420196
Jones7914146
Forrest7159136
Lauderdale6798226
Lowndes6014137
Lamar585880
Lafayette5716113
Washington5182129
Bolivar4599121
Oktibbeha440391
Panola428392
Pearl River4138128
Warren4122113
Pontotoc408068
Marshall400392
Monroe3981126
Union393673
Neshoba3777167
Lincoln3491100
Hancock341674
Leflore3363118
Sunflower317385
Tate301574
Pike299193
Scott292868
Alcorn290760
Itawamba289072
Yazoo284962
Coahoma276367
Tippah276165
Copiah276057
Simpson272778
Prentiss268858
Leake252171
Marion251578
Wayne251541
Covington248278
Grenada246277
Adams233377
George231145
Newton226352
Winston221375
Jasper212744
Tishomingo211965
Attala206369
Chickasaw200851
Holmes181770
Clay178250
Stone171829
Tallahatchie170039
Clarke168971
Calhoun157128
Smith152431
Yalobusha143536
Greene127233
Walthall123640
Noxubee122829
Perry121434
Montgomery121338
Lawrence119521
Carroll117923
Amite110932
Webster110030
Jefferson Davis101231
Tunica98823
Claiborne97929
Benton93324
Humphreys92427
Kemper89623
Quitman77114
Franklin75619
Choctaw69516
Wilkinson62226
Jefferson61927
Sharkey48817
Issaquena1676
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Alabama Coronavirus Cases

Cases: 491849

Reported Deaths: 9869
CountyCasesDeaths
Jefferson707641366
Mobile35937724
Madison32307450
Tuscaloosa24024410
Montgomery22502499
Shelby21848214
Baldwin19698277
Lee14926151
Morgan13624251
Calhoun13202285
Etowah13154319
Marshall11243208
Houston10058259
Limestone9348134
Elmore9345182
Cullman8879179
St. Clair8799221
Lauderdale8588210
DeKalb8436174
Talladega7500163
Walker6509251
Jackson6483102
Autauga622890
Blount6084125
Colbert6004118
Coffee5235102
Dale4627106
Russell402930
Franklin398876
Covington3949106
Chilton386298
Escambia377472
Tallapoosa3572141
Clarke343149
Chambers3399108
Dallas3397141
Pike292972
Lawrence282284
Marion281295
Winston246266
Bibb244560
Geneva238870
Marengo233755
Pickens223954
Barbour210651
Hale209068
Fayette199956
Butler195265
Henry182041
Cherokee176438
Monroe166038
Randolph163140
Washington156334
Crenshaw144054
Clay143454
Macon141643
Cleburne137139
Lamar132432
Lowndes130749
Wilcox121425
Bullock116336
Conecuh106523
Perry105427
Sumter98331
Coosa88623
Greene87132
Choctaw54923
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