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The European Union is very unlikely to impose crippling tariffs on India or China, the main buyers of Russian oil, as U.S. President Donald Trump has urged the bloc to do, EU sources said.

An EU delegation, including the EU's Russia sanctions chief, flew to Washington this week to discuss how the two sides can coordinate on sanctions against Russia over its full-scale invasion of Ukraine.

Officials said Trump urged the EU to hit India and China with up to 100% tariffs in order to put pressure on Russian President Vladimir Putin, who relies on energy revenues to fund his country's war in Ukraine.

The European Commission did not respond to a request for comment.

The European Union has imposed extensive sanctions on Russia and also listed two Chinese banks as well as a major Indian refinery in its last package in July.

However, the EU treats tariffs in a different way to sanctions and only imposes them after an investigation typically lasting months to establish a legally sound justification, the sources said.

The bloc has so far only imposed tariffs in the context of the Ukraine war on Russian and Belarusian fertilizers and farm products. The justification for the measures was to prevent creating a dependency that could be exploited and to avoid harm to EU fertiliser producers.

"So far, there is no discussion on possible tariffs neither on India...nor with China," an EU diplomat said.

Furthermore, the EU is in the midst of finalising a trade deal with India, which the bloc is unlikely to want to jeopardize.

Trump's position on India also appeared to ease by Wednesday, when he said he was looking to reset trade relations with New Delhi.

Another EU source said such tariffs were risky and could be too broad and it was easier to sanction specific entities and open the door to delist them if they ended their business with Russia.

Up to now, the EU had limited itself to listing small and unknown entities in third countries, which were often shell companies used to funnel military equipment or dual-use goods for use by Russia's military.

The EU is planning to list banks in two central Asian countries in its 19th package of sanctions as well as Chinese refineries, which could be proposed as soon as Friday.

Source: TradingView

U.S. producer prices unexpectedly fell in August amid a compression in trade services margins and mild increase in the cost of goods, suggesting that domestic businesses were probably absorbing some of the tariffs on imports.

The lack of strong producer price pressures, despite import duties, could also be signaling softening domestic demand against the backdrop of a struggling labor market. The Federal Reserve is expected to cut interest rates next Wednesday, with a quarter-percentage-point reduction fully priced in, after pausing its easing cycle in January because of uncertainty over the impact of President Donald Trump's sweeping tariffs."Inflation barely has a heartbeat at the producer level which shows the tariff effect is not boosting across-the-board price pressures yet," said Christopher Rupkey, chief economist at FWDBONDS. "As time goes on one has to wonder if there are slow-growth reasons and weak economic demand that is keeping inflation in check. There is almost nothing to stop an interest rate cut from coming now."

The Producer Price Index for final demand dipped 0.1% last month after a downwardly revised 0.7% jump in July, the Labor Department's Bureau of Labor Statistics said on Wednesday. Economists polled by Reuters had forecast the PPI would advance 0.3% after a previously reported 0.9% surge in July.A 0.2% drop in the prices of services accounted for the fall in the PPI. That followed a 0.7% rebound in July. Services were last month held down by a 1.7% decline in margins for trade services, reflecting a 3.9% decrease in margins for machinery and vehicle wholesaling.

But the cost of services less trade, transportation and warehousing increased 0.3% while prices for transportation and warehousing services shot up 0.9%.

Portfolio management fees increased 2.0%. Airline fares rose 1.0% while the cost of hotel and motel rooms increased 0.9%. Prices for dental services accelerated 0.6%.

Goods prices edged up 0.1% after increasing 0.6% in the prior month. Food prices gained 0.1%, with declines in the costs of eggs and fresh fruits partially offsetting more expensive beef and coffee because of tariffs. Wholesale beef prices surged 6.0% while those for coffee vaulted 6.9%.

Energy prices fell 0.4%. Excluding the volatile food and energy components, producer goods prices rose 0.3% after climbing 0.4% in July, indicating some pass through from tariffs. In the 12 months through August, the PPI increased 2.6% after climbing 3.1% in July.

Economists are expecting price pressures from tariffs to lift consumer inflation in August.

U.S. stocks opened higher. The dollar eased against a basket of currencies. U.S. Treasury yields fell.

Labor market weakness has raised concerns that the economy was stagnating. The government estimated on Tuesday that the economy likely created 911,000 fewer jobs in the 12 months through March than previously estimated.

That data followed the release last Friday of the monthly employment report, which showed job growth almost stalled in August and the economy shed jobs in June for the first time in four and a half years.

Source: Kitco

Source: Bloomberg

The Labor Department's Office of Inspector General said Wednesday it is reviewing the "challenges" that the Bureau of Labor Statistics is facing in its data-collection efforts.

The internal watchdog, in a letter, said it was initiating that probe in light of BLS announcing a reduction in its data collection for two key inflation metrics.

The probe also comes in light of BLS recently issuing a "large downward revision of its estimate of new jobs in the monthly Employment Situation Report," assistant inspector general for audit Laura Nicolosi wrote.

The letter was addressed to William Wiatrowski, who has served as BLS' acting commissioner since President Donald Trump fired the agency's former head in early August in response to a weak monthly jobs report.

Source: CNBC

BEIJING — Nearly half of U.S. businesses have redirected planned China investments to other regions over the past year — the highest on record — the American Chamber of Commerce in Shanghai said Wednesday.The business chamber's survey of members from May 19 to June 20 came shortly after an escalation in U.S.-China trade tensions and a temporary rollback of some tariffs from mid-May. The two countries last month agreed to extend the trade truce by another 90 days, to mid-November.

"For a company, 90 days, that's just way too short," Eric Zheng, President of AmCham Shanghai, told reporters, pointing out that the supply chain planning is far longer term."At least we don't need to deal with even higher tariffs [for now], but the issue is not going away, it's still here," Zheng said.As many as 47% of the survey respondents said that they had diverted investments planned for China, primarily to Southeast Asia. That's the highest share since the survey first asked the question about plans to shift investments away from China in 2017.

The Indian subcontinent, which includes Bangladesh, was the second-most popular destination for redirected investments, while the U.S. and Mexico ranked far lower.U.S. President Donald Trump has sought to encourage businesses to bring manufacturing back to America, with Trump criticizing Apple's plans to expand production in India. A few companies, especially in advanced technology, have made high-profile announcements to invest in the U.S.AmCham Shanghai's members include Apple, Ford, Honeywell, Meta and Tesla. Jeffrey Lehman, the business group's chair, pointed out that members are affected not just by U.S. tariffs on China, but Beijing's retaliatory duties, since materials needed to build the product often come from the U.S.

U.S. tariffs on Chinese goods stand at nearly 58%, while China's are around 33%, according to the U.S.-based Peterson Institute for International Economics. Tariff rates can vary by product.Competition in China's domestic market is also increasing, while confidence about the five-year local business outlook hit a record low for a fourth-straight year, the AmCham Shanghai study found.

Only 28% of respondents said that their China operating margins in 2024 were higher than that of their global business, while 33% said their China performance was actually worse.U.S. companies also said their Chinese competitors were more advanced in six out of eight categories, especially speed to market and adoption of artificial intelligence. The survey found 41% of respondents said Chinese companies were more advanced in adopting AI, with the share rising to 62% in the retail and consumer industry.AmCham Shanghai members only saw overwhelming advantages over their Chinese competition in product quality and development.

Improving business environment

While trade tensions and worries about China's economic slowdown weighed on the near-term outlook, the survey respondents indicated significant improvement in the local regulatory environment.Nearly half, or 48%, said that the regulatory environment was transparent for their industry, a large jump from just 35% in 2024. The share of businesses saying that lack of transparency was hindering operations fell by 12 percentage points to 16%.The share of respondents indicating that foreign and local companies were treated equally rose by 5 percentage points to 37%.

Beijing in recent years has ramped up its efforts to attract and retain foreign investment, with increased engagement and friendlier policy announcements. Earlier this year, China released an "action plan" that included measures for making it easier for foreign businesses to invest in biotechnology, while clarifying standards for government procurement.However, the AmCham Shanghai survey still found that 14% of the respondents reported a worsening environment for foreign business in China, with the tech sector seeing the highest level of challenges at 31% of industry respondents.

Source: CNBC

Source: Bloomberg