STREAMING NOW: Watch Now

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: 313942

Reported Deaths: 7240
CountyCasesDeaths
DeSoto21580258
Hinds20330415
Harrison17879309
Rankin13594278
Jackson13429246
Madison10088217
Lee9970174
Jones8370163
Forrest7670152
Lauderdale7188241
Lowndes6387146
Lamar622486
Lafayette6184118
Washington5332133
Bolivar4801132
Oktibbeha462198
Panola4582106
Pearl River4506146
Marshall4435103
Warren4386121
Pontotoc420172
Monroe4107133
Union410076
Neshoba4030176
Lincoln3962110
Hancock378486
Leflore3493125
Sunflower335990
Tate333384
Pike3316105
Scott315773
Alcorn312768
Yazoo311469
Itawamba299777
Copiah296865
Coahoma295179
Simpson294988
Tippah288168
Prentiss279760
Adams278782
Marion269080
Leake267473
Wayne262641
Grenada261386
Covington258281
George247848
Newton246261
Winston227081
Tishomingo226667
Jasper221048
Attala214273
Chickasaw207757
Holmes188873
Clay185254
Stone182433
Tallahatchie178541
Clarke177980
Calhoun170532
Yalobusha164238
Smith162334
Walthall133945
Greene130533
Lawrence128524
Montgomery126742
Noxubee126734
Perry126338
Amite123042
Carroll121828
Webster114532
Jefferson Davis107033
Tunica105226
Claiborne102430
Benton99525
Humphreys96533
Kemper95728
Franklin83623
Quitman80716
Choctaw76318
Wilkinson67230
Jefferson65528
Sharkey50217
Issaquena1686
Unassigned00

Alabama Coronavirus Cases

Cases: 531404

Reported Deaths: 10985
CountyCasesDeaths
Jefferson765501522
Mobile41036805
Madison34789503
Tuscaloosa25788453
Montgomery24340589
Shelby23449249
Baldwin21154308
Lee15882171
Calhoun14511314
Morgan14306279
Etowah13843353
Marshall12232223
Houston10570281
Elmore10068205
Limestone9974151
Cullman9676194
St. Clair9661243
Lauderdale9427241
DeKalb8831186
Talladega8227176
Walker7241277
Autauga6926108
Jackson6814112
Blount6678137
Colbert6306134
Coffee5519119
Dale4838111
Russell441538
Chilton4296112
Franklin426082
Covington4129118
Tallapoosa4023152
Escambia393677
Chambers3573123
Dallas3551152
Clarke351161
Marion3122101
Pike310977
Lawrence300398
Winston274473
Bibb260964
Geneva250477
Marengo249564
Pickens234461
Barbour231057
Hale223077
Butler216069
Fayette212562
Henry188844
Cherokee185245
Randolph180542
Monroe177540
Washington167339
Macon159650
Clay156756
Crenshaw152557
Cleburne148941
Lamar142535
Lowndes138853
Wilcox127130
Bullock122841
Conecuh110529
Perry107726
Coosa107628
Sumter104732
Greene92534
Choctaw60724
Out of AL00
Unassigned00
Tupelo
Partly Cloudy
60° wxIcon
Hi: 72° Lo: 56°
Feels Like: 60°
Columbus
Cloudy
57° wxIcon
Hi: 71° Lo: 58°
Feels Like: 57°
Oxford
Partly Cloudy
55° wxIcon
Hi: 68° Lo: 53°
Feels Like: 55°
Starkville
Cloudy
54° wxIcon
Hi: 68° Lo: 55°
Feels Like: 54°
A few showers linger early in the morning. But these should gradually push away from our area, leaving us mostly cloudy and cool through the midday and afternoon hours. Some clearing may occur later in the afternoon, leaving us mostly clear by Thursday morning.
WTVA Radar
WTVA Temperatures
WTVA Severe Weather