Trump Tweaks Tariff Burden On US Automakers

China–U.S. Trade War

Economic

Summary:

President Donald Trump's administration has offered to offset the 25pc tariff on foreign-made auto parts, scheduled to start on 3 May, and to exempt auto parts from any ...

President Donald Trump's administration has offered to offset the 25pc tariff on foreign-made auto parts, scheduled to start on 3 May, and to exempt auto parts from any additional tariffs they face from other import taxes imposed in recent months.

Trump, who today announced the change in tariffs ahead of a political rally in Michigan, a key US car manufacturing state, cast his decision in terms of giving US automakers a reprieve from his tariff policies.

But as in other cases when he changed his mind on tariffs, the US auto industry will still face a substantial burden from import taxes imposed since Trump took office.

Trump's 25pc tariffs on foreign cars went into effect on 3 April, and a 25pc tariff on imported auto parts was scheduled to go into effect on 3 May.

Under an executive order Trump signed today, the auto makers can be partially refunded the cost of the tariffs on imported auto parts, subject to a cap of 15pc of the value of an assembled car until April 2026, dropping to a 10pc cap until April 2027. The refund cannot exceed 3.75pc of a car's manufacturer suggested retail price in the first year, dropping to 2.5pc in the second year.

The idea behind the adjustment is to force US automakers to become wholly reliant on auto parts made in the US in the next two years, commerce secretary Howard Lutnick explained. In theory, at least, a US-made car that is made with 85pc domestic components would not face an additional tariff cost.

A separate executive order clarifies that the tariffs on foreign-made cars and auto parts will not be calculated in addition to any other tariffs Trump has imposed on Canada and Mexico, and will not be counted on top of tariffs imposed on steel, aluminum and their derivative products.

"This is just a little transition," Trump told reporters at the White House today, announcing the latest reversal of his tariff policy. "We're just giving them a little chance, because in some cases, they can't get the parts fast enough."

Source: Argus Media

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Economic

British business sentiment fell to its lowest level in three months and employers were concerned about implications of U.S. tariffs and the wider economy as they grapple with higher employment costs, two industry surveys showed on Wednesday.

The Lloyds Bank Business Barometer measure of confidence among companies fell by 10 points to 39% in April, the lowest since January when it stood at 37%, though it was still above its long-run average of 29%.

The survey's gauge of economic optimism fell by 13 points to 28%.

Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, said the fall reflected concerns about the economy due to U.S. Donald Trump's tariffs and recent market volatility.

Britain's economy in February grew at the fastest pace in 11 months, but markets are focussed on Trump's trade war which Bank of England Governor Andrew Bailey warned last week would hit growth.

The headline inflation rate slowed to 2.6% last month, but the BoE expects it will reach around 3.7% later this year, nearly double its 2% target against a backdrop of rising household bills and higher labour costs.

Lloyds' gauge of price intentions increased in April, with 70% of businesses expecting to raise prices in the coming 12 months. Firms' own trading prospects declined this month.

A separate survey from the Confederation of British Industry, published on Wednesday, showed private sector output declined in the three month to April and is expected to fall again in the three months to July.

"Private sector activity remains subdued, with our surveys pointing to weaker economic momentum than implied by official data," Alpesh Paleja, CBI's deputy chief economist, said.

"Uncertainty has ramped up over the last few weeks, following the back-and-forth on tariffs levied by the US and, subsequently, big movements in financial markets."

The CBI said companies were expecting to reduce hiring due to higher employment costs, a rise in the minimum wage and the government's planned Employment Rights Bill.

Source: Reuters

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Catherine Richards

Political

Pakistan's information minister Attaullah Tarar said on Wednesday that the country has credible intelligence that India intends to launch a military strike within the next 24 to 36 hours.

This comes as tensions rise between the two nuclear-armed nations rise as India has said there were Pakistani elements to the attack that killed 26 men at a tourist spot in Indian Kashmir last week.

Islamabad has denied any role and called for a neutral investigation.

Since the attack, the nuclear-armed nations have unleashed a raft of measures against each other, with India putting the critical Indus Waters Treaty in abeyance and Pakistan closing its airspace to Indian airlines.

"Pakistan has credible intelligence that India intends to launch a military strike within the next 24 to 36 hours using the Pahalgam incident as a false pretext," Tarar said in a post on social media platform X.

"Any act of aggression will be met with a decisive response. India will be fully responsible for any serious consequences in the region," he added.

India's foreign ministry did not immediately respond to a Reuters' request for comment.

Indian Prime Minister Narendra Modi has vowed to pursue and punish the attackers.

Muslim-majority Kashmir is claimed in full by both Hindu-majority India and Islamic Pakistan. Each controls only part of it and have fought wars over the Himalayan region.

Pakistan's Defense Minister Khawaja Muhammad Asif told Reuters that a military incursion by India was imminent.

Pakistan was on high alert but would only use its nuclear weapons if "there is a direct threat to our existence," Asif said in an interview at his office in Islamabad.

Source: Reuters

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Manuel

Economic

China–U.S. Trade War

President Donald Trump's approval rating held steady this week, but discontent is rising over his handling of the economy and hardline approach to immigration, amid concern about a global trade war and a push to increase deportations, a new Reuters/Ipsos poll found.

The three-day poll completed on Sunday showed 42% of respondents approved of the Republican leader's performance in office, unchanged from a prior Reuters/Ipsos poll conducted a week earlier. The share of people who disapprove of his presidency was also steady at 53%.

The share of respondents who approve of Trump's economic stewardship declined a percentage point to 36%, the lowest level in his current term or in his 2017-2021 presidency, while disapproval rose 5 points to 56%.

Fears of a recession have surged in recent weeks as Trump has launched a global trade war, hiking tariffs so high that economists warn that trade with some countries - notably China - could grind nearly to a halt. The moves have shaken investors and companies.

Inflation continued to be a sore spot. Trump's victory in the November presidential election came after inflation accelerated under his Democratic predecessor, Joe Biden. But the pace of inflation has barely eased under Trump and 59% of respondents to the latest Reuters/Ipsos poll disapproved of his handling of the cost of living in America, compared with 32% who approved.

Trump gets higher marks on his performance on immigration than on any other issue Reuters/Ipsos polled on, with 45% of respondents approving his handling of it, steady with the prior finding.

But discontent also grew here, with his disapproval rating on the topic ticking 2 points higher to 48%. Trump launched an aggressive enforcement campaign after taking office on January 20, sending troops to the southern border and pledging to deport millions of immigrants in the U.S. illegally.

Democrats and civil rights advocates have criticized Trump's heightened enforcement tactics, including the cases of several children who are U.S. citizens who were recently deported with their parents. One of the children has a rare form of cancer, according to the American Civil Liberties Union.

Some 11% of respondents in the Reuters/Ipsos poll said immigration was the most important problem facing the United States, compared to 14% in late January. The share who said the economy was the top concern in the latest poll was little changed at 22%. The share who said the biggest problem was political extremism and threats to democracy stood at 26%, up from 20% in late January.

Source: Reuters

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Manuel

Cryptocurrency

Political

A recent decision by a US district court has removed sanctions from Tornado Cash, sparking discussions within the legal world. Earlier this year, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) placed sanctions on Tornado Cash through smart contracts in 2022. However, an appeals court later found that these actions exceeded legal boundaries, leading to the removal of sanctions. Despite this ruling, the legal deliberations have unveiled uncertainties, suggesting potential for similar actions in the future.

Why Was the OFAC Sanction Deemed Unlawful?

The court deemed OFAC’s sanction as illegal, with Judge Robert Pitman from the US Western District of Texas underscoring the invalidity of the sanctions on Tornado Cash. Preventive measures have now been set to dissuade future reinstatement of these sanctions by OFAC.

What Are the Stakeholders’ Responses?

In response to the rulings, six Tornado Cash users initiated legal action to have the sanctions annulled. They argued that despite the appeals court’s directive, the process of delisting remained unclear. The legal representation for the plaintiffs urged for the immediate enforcement of the appeals court’s decision, stressing that OFAC’s stance should be considered unlawful and rescinded.

The judgment cast doubt on OFAC’s legal foundation for its actions. Judge Pitman noted that the delisting seemed reliant on broad principles and legal assessments rather than concrete legal grounds. Concurrently, the US Department of Justice is continuing its investigation into allegations against Tornado Cash developers, highlighting ongoing legal scrutiny in the crypto realm.

US Deputy Attorney General Todd Blanche issued a memo pinpointing revised enforcement priorities for crypto assets. This includes pausing certain investigations and reevaluating cases related to end-user violations in decentralized platforms or offline wallets.

This ruling has cascaded effects across legal proceedings within the crypto industry. Investigations, such as those involving Samourai Wallet’s founders, are under reconsideration. Notable crypto sector figures have also petitioned White House authorities for regulatory amendments via the DeFi Education Fund.

Key insights from these proceedings include:

– Tornado Cash’s case strengthens the scrutiny against OFAC’s authority.

– The legal framework remains ambiguous, suggesting scope for future litigation.

– Judge Pitman’s decision may serve as a benchmark for judicial balance in the crypto sector.

Judge Pitman’s ruling reflects the dynamic nature of legal interpretations and their implications in the cryptocurrency sphere. The marked doubts regarding enforcement highlight potential areas for legal reform and the need for a more balanced approach to regulation.

Source: Bitcoinhaber

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Manuel

Economic

Forex

Brazil's central government posted a smaller-than-expected March primary budget surplus, Treasury data showed on Tuesday, but still delivered a strong first-quarter result, helped by the postponement of court-ordered payments.

Treasury Secretary Rogerio Ceron said at a press conference that the postponement of court-ordered payments was aimed at avoiding fiscal expansion in the first quarter and adding pressure on economic activity at this time to support the central bank's drive to cool inflation by slowing the economy.

The country's primary budget surplus reached 1.1 billion reais ($195 million) in March, below the 1.3 billion reais forecast by economists polled by Reuters.

Despite the miss, the result reversed the 1 billion reais deficit recorded in the same month last year.

In the first quarter, the primary surplus reached 54.5 billion reais, more than double the 20.2 billion reais surplus posted in the same period of 2024.

The stronger year-on-year performance was largely driven by a calendar effect, as court-ordered payments fell by 31 billion reais due to a later payment schedule this year.

According to Ceron, about 70 billion reais in court-ordered decisions that the government lost will be paid in July. Last year, the bulk of these payments were in February.

Over the 12-month period through March, the primary deficit stood at 10.9 billion reais, or 0.07% of gross domestic product (GDP), broadly in line with President Luiz Inacio Lula da Silva's target of a balanced primary result this year, with a tolerance margin of 0.25% of GDP.

Following the discovery of a corruption scheme involving billions of reais in illegal deductions from social security pensions, Ceron said the Treasury is not currently being asked to reimburse the affected amounts.

Ceron also acknowledged that measures approved by Congress last year failed to offset costly payroll tax exemptions as intended, and said the government is now awaiting legal clarity on how to proceed with the compensation.

Source: Reuters

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Manuel

Economic

Stocks

U.S. stocks closed solidly in positive territory on Tuesday, after seesawing between modest gains and losses in choppy trading as investors assessed the latest round of corporate earnings, economic data and changes on the trade policy front.

U.S. Treasury Secretary Scott Bessent predicted China could lose 10 million jobs quickly due to tariffs, but signaled progress on trade deals with other countries including Japan and India.

The world's two largest economies have been at the center of a global trade war, sparked by tariff announcements on April 2 by the Trump administration on countries around the globe, which has stoked investor concerns about rapidly slowing global growth and a rekindling of price pressures.

Commerce Secretary Howard Lutnick said U.S. President Donald Trump will sign an order on Tuesday giving automakers building vehicles in the U.S. relief from part of his new 25% vehicle tariffs to allow them time to bring parts supply chains back home.

Automaker shares showed little reaction to the potentially lighter tariffs, and General Motors (GM.N), opens new tab shares ended lower after the company reported strong quarterly results but rescinded its annual forecast.

The blue-chip Dow (.DJI), opens new tab was led by gains in Honeywell (HON.O), opens new tab, which jumped after reporting a rise in adjusted profit for the first quarter, and paint maker Sherwin-Williams (SHW.N), opens new tab, which rallied after its quarterly profit beat estimates.

Also among Dow components, Coca-Cola (KO.N), opens new tab closed higher after beating revenue and profit estimates.

"A lot of the economic data is going to be mixed, it's going to be really hard to discern tariff impacts probably for the next month or two," said Anthony Saglimbene, chief market strategist at Ameriprise Financial in Troy, Michigan.

"Corporate profits, the companies that are most impacted by tariffs, are doing what we would expect, they're cutting guidance or they're suspending guidance."

Economic data pointed to an increasing impact from the trade picture. The U.S. trade deficit in goods widened to a record high in March as businesses ramped up efforts to bring in merchandise ahead of tariffs while a separate report from the Conference Board showed its consumer confidence index dropped to its lowest reading since May 2020, while job openings indicated a relatively stable labor market.

"Trump‘s tariffs have pushed expectations off a cliff," said Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin. "Maybe the silver lining is that it’ll be hard to not see some improvement in expectations over the next few months."

According to preliminary data, the S&P 500 (.SPX), opens new tab gained 31.93 points, or 0.56%, to end at 5,560.68 points, while the Nasdaq Composite (.IXIC), opens new tab gained 93.33 points, or 0.54%, to 17,459.46. The Dow Jones Industrial Average (.DJI), opens new tab rose 289.91 points, or 0.72%, to 40,517.50.

More economic data is due this week, culminating in Friday's key government payrolls report, along with earnings from several of the "Magnificent Seven" group of megacap stocks such as Apple (AAPL.O), opens new tab and Microsoft (.MSFT.O), opens new tab, with investors likely to home in on any signs of tariff impact.

United Parcel Service (UPS.N), opens new tab slipped after its quarterly results and said it would cut 20,000 jobs as it sheds deliveries for Amazon.com (AMZN.O), opens new tab. While each of three major indexes remains in negative territory for the year, stocks have shown signs of stabilizing in recent weeks, with the S&P 500 registering its sixth straight session of gains, its longest win streak since a seven-day run in November.

HSBC became the latest brokerage to trim its year-end target for the S&P 500 index, cutting it to 5,600 from 6,700 earlier.

Wells Fargo (WFC.N), opens new tab gained after announcing a stock buyback program of up to $40 billion.