US to Levy Fees on China-linked Ships, Push Allies to Do Likewise, Draft Executive Order Says

Economic

Summary:

The United States is planning to charge fees for docking at US ports on any ship that is part of a fleet that includes Chinese-built or Chinese-flagged vessels and will push allies to act similarly or face retaliation, a draft executive order stated.

The administration of US President Donald Trump is drafting the executive order in a bid to resuscitate domestic shipbuilding and weaken China's grip on the global shipping industry.

Addressing China's growing dominance of the seas and diminishing US naval readiness is a rare point of consensus between US Republican and Democratic lawmakers.

Chinese shipbuilders account for more than 50% of all merchant vessel cargo capacity produced globally each year, up from just 5% in 1999, according to the Center for Strategic and International Studies.

That gain came at the expense of shipbuilders in Japan and South Korea. US shipbuilding peaked in the 1970s and now accounts for a sliver of the industry output.

The draft executive order, dated February 27 and reviewed by Reuters on Thursday, proposes fees should be imposed on any vessel that enters a US port, "regardless of where it was built or flagged, if that vessel is part of a fleet that includes vessels built or flagged in the PRC (People's Republic of China)."

The US administration and Chinese officials could not be immediately reached for comment.

The document draws from a US Trade Representative's office proposal last month to levy fees of up to US$1.5 million on Chinese-built vessels entering US ports after a probe into China's growing domination of global shipbuilding, maritime and logistics sectors.

A key difference is that the draft executive order does not include USTR language stating that port fees on fleets would be imposed when Chinese-built ships account for 25% or more of vessels operating, slated for delivery or on order.

It also did not put a dollar value on those fees or say how they would be calculated.

The plan could inflict significant costs on major container carriers including China's COSCO, Switzerland's MSC, Denmark's Maersk and Taiwan's Evergreen Marine as well as on operators of ships that carry bulk food, fuel and autos.

MSC CEO Soren Toft said earlier this week the world's largest container carrier could visit fewer US ports to limit its exposure to the new fees.

Retaliation threat

The draft executive order also calls on US officials to engage allies and partners to enact similar measures or risk retaliation.

The US would also impose tariffs on Chinese cargo-handling equipment, according to the draft order.

"The national security and economic prosperity of the United States is further endangered by the People's Republic of China's unfair trade practices in the maritime, logistics, and shipbuilding sectors," the draft order said.

Reuters had reported on Wednesday on plans to impose fees on imports arriving on Chinese-made ships from a draft fact sheet of the 18-point executive order.

French carrier CMA CGM said on Thursday it would spend the next four years expanding its US-flagged American President Lines fleet to 30 from 10 currently.

CMA CGM is the world's third-largest container shipping line and is part of a vessel-sharing alliance with companies

including COSCO. It counts global retailer Walmart as a top customer and last week said the proposed US port fees on China-built ships would affect all shipping firms.

Source: Theedgemarkets

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Alex

Economic

Oil prices gained on Friday but were set for their biggest weekly decline since October as the uncertainty around US tariff policy is creating concerns about demand growth at the same time major producers are set to increase output.

Brent futures rose 50 cents, or 0.72%, to US$69.96 a barrel by 0746 GMT. US West Texas Intermediate futures rose 47 cents, or 0.71%, to US$66.83 a barrel.

However, for the week Brent is down 4.9%, set for its biggest weekly decline since the week of October 14. WTI is set to drop 4.8%, also its biggest weekly fall since that week.

Markets, including oil, have been whipsawed by fluctuating trade policy in the US, the world's biggest oil consumer.

"It looks like the financial markets are in full panic mode, no longer easily pacified by Trump’s one-month postponements and exemptions on import tariffs," said Vandana Hari, founder of oil market analysis provider Vanda Insights.

"That leaves crude stuck around four-month lows, albeit vulnerable to further slides," she added.

On Thursday, US President Donald Trump suspended the 25% tariffs he had imposed on most goods from Canada and Mexico until April 2, although steel and aluminium tariffs would still go into effect on March 12 as scheduled.

The amended order does not fully cover Canadian energy products, which are under a separate 10% levy.

The tariffs themselves are considered a drag on economic growth and therefore oil demand growth. But the uncertainty over the policy is also slowing business decisions, which is also impacting the economy.

"The risks to oil prices remain tilted to the downside with new supply from Opec+ and non-Opec producers expected to push the market well into an oversupply," Fitch's research unit, BMI, said in a note.

Brent prices on Wednesday fell to their lowest since December 2021 after US crude inventories rose and in the wake of the decision by the Organization of the Petroleum Exporting Countries and its allies, known as Opec+, to increase their output quotas.

The group said on Monday that it had decided to proceed with a planned April output increase, adding 138,000 barrels per day to the market.

Some of the downward momentum in prices has eased as the US is looking at steps to halt exports from key Opec producer Iran.

"We are going to shut down Iran's oil sector and drone manufacturing capabilities," US Treasury Secretary Scott Bessent said in his first major speech to Wall Street executives.

Reuters reported on Thursday that Trump is considering a plan to inspect Iranian oil tankers at sea using an accord aimed at weapons of mass destruction, according to sources, part of the US president's "maximum pressure" to drive Iranian oil exports down to zero.

Source: Theedgemarkets

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Warren Takunda

Economic

The European Central Bank has cut interest rates across the 20-member eurozone for the second time this year, and warned that trade war fears are hurting Europe’s economy.

The Frankfurt-based rate setter cut its benchmark deposit rate by a quarter of a percentage point to 2.5%, in line with City economist expectations, as Trump prepared to impose 25% tariffs on all goods imported from the EU.

The ECB president, Christine Lagarde, blamed a “high level of trade and policy uncertainty” for a downgrade in expected growth this year.

There was some better news on the battle against inflation, which the ECB said was moderating.

“The disinflation process is well on track,” the ECB said. “Inflation has continued to develop broadly as staff expected, and the latest projections closely align with the previous inflation outlook.”

The central bank cut its growth forecasts for this year and next year, warning that “the economy faces continued challenges”.

“The downward revisions for 2025 and 2026 reflect lower exports and ongoing weakness in investment, in part originating from high trade policy uncertainty as well as broader policy uncertainty,” the ECB said.

It now expects growth of just 0.9% in 2025, 1.2% in 2026 and 1.3% in 2027. It had previously forecast growth of 1.1% for this year, and 1.4% in 2026.

But it lifted its forecast for inflation this year, from 2.1% to 2.3%, because of higher energy prices.

After six cuts in the cost of borrowing in the last year, ECB officials are understood to be hesitant about going further while the international situation remains volatile and the recent fall in inflation could reverse.

Price pressures eased in February, as inflation fell to 2.4% from 2.5% in January, according to a flash estimate by Eurostat, and services inflation dropped to 3.7% – below 3.9% for the first time since April 2024.

However, increases in energy prices in response to the uncertainty surrounding “peace talks” to end the Russian invasion of Ukraine could upend projections that inflation will fall back to the 2% target by the first quarter of 2026.

Markets were volatile at the moment, Lagarde told a press conference in Frankfurt. “From one day to the other, the situation changes dramatically, and our projections, the measure of underlying inflation, the price of energy, you know, you just name it, risks are all over the place.”

Lagarde warned that a rise in energy prices could feed through to higher food prices, delaying an expected return of inflation to 2% next year.

The deposit rate sets the interest that banks receive when they make overnight deposits with the Eurosystem.

The ECB also cut its main refinancing rate, paid by banks when they borrow funds from the central bank on a weekly basis, by a quarter of one percentage point, to 2.65%.

The marginal lending facility rate, charged when banks borrow overnight from the ECB, has been cut from 3.15% to 2.90%.

The ECB said its interest rate had become “meaningfully less restrictive”, signalling that further rate cuts would be modest, and possibly delayed until at least the summer, especially when the impact of previous rate cuts had yet to feed through to the wider economy.

The ECB is also under pressure to prevent a steep rise in eurozone government borrowing costs after the German chancellor-in-waiting, Friedrich Merz, said his country would “do whatever it takes” to rearm.

Merz is keen to lift a debt brake that has prevented successive German governments since the 2008 financial crash from lifting borrowing significantly.

The European Commission has set out a five-part plan to bolster Europe’s defence industry to raise nearly €800bn (£660bn) and help provide urgent military support for Ukraine after the US suspended aid to Kyiv.

Ursula von der Leyen, the head of the commission, said on Tuesday the 27-member bloc would propose giving member states more fiscal space for defence investments, as well as €150bn in loans for those investments, and would also aim to mobilise private capital.

This sparked a surge in German borrowing costs this week, and a knock-on impact on Italian and French bonds, which have risen sharply in recent days, putting pressure on Paris and Rome to make spending cuts to balance the books.

Mark Wall, chief European economist at Deutsche Bank, said: “The ECB finds itself in a challenging position between the threat of US tariffs in the near-term that could warrant further rate cuts and the growing commitment to higher defence spending over the next several years, which will be required to secure Europe’s strategic autonomy.”

He said the ECB would need “a deft hand on the monetary policy lever” to manage the conflicting pressures to maintain growth without inflation rising again.

Source: Theguardian

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Owen Li

Economic

Most emerging Asian currencies ticked higher on Friday while stocks were mixed, as US President Donald Trump's fast-changing tariff policy fuelled investor uncertainty in a turbulent week.

The Malaysian ringgit and the Indonesian rupiah gained 0.2% each. The rupiah was on track to rise 1.7% for the week, its biggest weekly gain since mid-September.

Trump on Thursday suspended the 25% tariffs he imposed earlier this week on most goods from Canada and Mexico until April 2 — the day he has threatened to impose a global regime of reciprocal tariffs on all US trading partners.

The Mexican peso rose 0.1%, following its 0.7% jump on Thursday. The US dollar index languished near four-month lows.

The ever-shifting US trade policy has sent global markets into a tailspin. Emerging Asian equity markets faced sizeable foreign investment withdrawals in February, driven by the potential for Trump's policies to disrupt global economic growth.

"Emerging market asset volatility is likely to remain elevated amid a host of factors that show no sign of letting up," analysts at Barclays said in a note.

While a loss of US growth momentum may help emerging markets, weaker US demand and tariffs hurt EM assets disproportionately, the analysts said.

The Thai baht was up 0.1%, while Bangkok stocks jumped 0.5% after data showed inflation rose in line with the central bank's target range and market expectations in February.

The Philippine peso rose 0.3% while the Taiwan dollar gained 0.1%. Inflation data from Taiwan is due later in the day.

Stocks in Jakarta were up 0.5% and on course to post a weekly rise of 6.1%, their biggest since March 2020. This follows a 7.8% decline last week.

Philippine stocks were up 1.3%, on track for their fifth straight day of gains, while Kuala Lumpur shares fell 0.7% to hit a one-month low.

Bank Negara Malaysia (BNM) maintained its key overnight policy rate on Thursday for the eleventh consecutive meeting. Central banks in Indonesia and Thailand have cut interest rates so far this year.

"The monetary policy stance appeared to position BNM as less pre-emptive than some Asean-6 central banks that have eased monetary policy this year to safeguard economic growth," DBS analysts said in a note.

Chinese stocks closed 0.3% lower the yuan ended flat as the country's exports and imports for the January-February period came in weaker than expected.

Source: Theedgemarkets

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Warren Takunda

Stocks

Asian shares were mostly lower on Friday, with Tokyo’s benchmark down more than 2% after a sell-off on Wall Street.

U.S. futures and oil prices were higher.

Bitcoin was trading near $88,266, down 3.4% according to CoinDesk, after President Donald Trump signed an executive order Thursday establishing a government reserve of bitcoin, a key marker in the cryptocurrency’s journey towards possible mainstream acceptance.

China reported lower than expected exports and imports for January-February, with exports growing just 2.3% and imports sinking 8.4%, the government said. China’s trade data for the first two months of the year are usually combined to make up for distortions from Lunar New Year holidays.

U.S. stocks fell after President Donald Trump offered another temporary reprieve from his 25% tariffs on many goods imported from Mexico and Canada, underscoring the uncertainty the tariffs have created for the global economy. Investors showed little enthusiasm, unlike the bounce stocks got the prior day from his giving a one-month exemption specifically for automakers.

In Tokyo, the Nikkei 225 fell 2.2% to 36,887.17 on heavy selling of technology related shares. Computer chip-maker Tokyo Electron’s shares dropped 3.1% and testing equipment maker Advantest gave up 2.3%. Both saw steep drops in their U.S.-listed shares overnight.

Hong Kong’s Hang Seng reversed early gains, dropping 0.7% to 24,204.97, while the Shanghai Composite index handed back 0.3% to 3,372.55.

In Australia, the S&P/ASX 200 tumbled 1.8% to 7,948.20. South Korea’s Kospi fell 0.5% to 2,563.48 after a court ordered impeached President Yoon Suk Yeol to be released from jail, more than a month after he was arrested and indicted over his short-lived imposition of martial law.

The Taiex in Taiwan declined 0.6%.

India’s Sensex was nearly unchanged and SET in Bangkok gained 0.3%.

On Thursday, the S&P 500 tumbled 1.8% to 5,738.52 to resume its slide after a mini-recovery from the prior day clawed back some of its sharp drop over recent weeks. The Dow Jones Industrial Average dropped 1% to 42,579.08, while the Nasdaq composite tumbled 2.6% to 18,069.26, finishing more than 10% below its record set in December.

Stocks have been buoyed by hopes that Trump may be using tariffs as a negotiating tactic rather than a permanent policy and that he may avoid a worst-case trade war that grinds down economies and sends inflation higher.

But Trump is still pressing ahead with other tariffs scheduled to take effect April 2. And the dizzying back-and-forth moves on tariffs is amping up uncertainty. U.S. businesses are already saying they’re confronting “chaos” because of all the uncertainty coming out of Washington. while households are bracing for higher inflation.

Next up for Wall Street is a report Friday from the U.S. Labor Department on how many workers U.S. employers hired last month. A solid job market so far, along with the solid spending by U.S. households that it’s allowed, have been linchpins in preventing a recession. Economists are expecting to see an acceleration in hiring for February.

Semiconductor companies and their suppliers, which soared to staggering heights because of the frenzy around artificial-intelligence technology, led losses. Nvidia, fell 5.7%, while Broadcom lost 6.3% ahead of the release of its earnings report.

In other dealings early Friday, U.S. benchmark crude oil bounced back, gaining 44 cents to $66.80 per barrel. Brent crude, the international standard, advanced 47 cents to $69.93 per barrel.

The U.S. dollar fell to 147.54 Japanese yen from 147.98 yen. Rising labor costs have reinforced expectations that the Japanese central bank may raise its benchmark interest rate soon to counter surging inflation.

“Japan’s trade unions are requesting an even larger pay hike in this year’s spring wage negotiations than they did a year ago and we expect employers to comply,” Marcel Thieliant of Capital Economics said in a report.

The euro rose to $1.0841 from $1.0786, gaining after the European Central Bank cut interest rates Thursday, as expected.

Source: AP

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Justin

Economic

China’s crude oil imports over the first two months of the year fell 5% on 2024 as the parting round of sanctions that the Biden administration imposed on Russian energy affected international flows.

The total that China imported over the first two months of the year came in at 83.85 million tons, according to a Reuters report, which translated into an average daily import rate of 10.38 million barrels. A year ago, the average daily was 10.74 million barrels.

Natural gas imports also slowed during the first two months of the year, by a sizable 7.7% to a total 20.31 million tons in pipeline flows and LNG imports. A relatively warm February contributed to the weaker demand, which led to China slipping to the global number-two spot in LNG imports, overtaken by energy-hungry Japan. In addition to the weather, demand in China was also weaker due to lower industrial activity and ample gas in storage.

Crude oil imports into China also declined last year, for the first time in some 20 years, excluding the pandemic lockdown period. The daily average stood at 11.04 million barrels, down by 1.9% from 2023. The 2023 figure, however, was an outlier with record imports of 11.28 million barrels daily.

The import growth rates of the last 20 years are unlikely to return as China’s economy moves to a more measured pace of growth as it matures. Both China’s state energy giants CNPC and Sinopec have predicted peak oil demand growth on the horizon, with CNPC forecasting it for this year and Sinopec sees the peak coming in 2027.

The biggest reason for the decline in oil demand in the world’s biggest importer, according to most observers, is the penetration of electric vehicles, which is the highest in the world. However, Chinese driers have lately been shifting to hybrids, which suggests that while it may yet start to decline, demand for oil from the Chinese transport sector is more resilient than expected by some.

Source: OILPRICE

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Warren Takunda

Economic

Stocks

London stocks were set to fall again on Friday following losses in the US and Asia, as investors eyed the latest US non-farm payrolls report.

The FTSE 100 was called to open down around 55 points.

Trump’s tariffs were still very much in focus. After the London close on Thursday, it emerged that the US President had signed executive actions to delay until 2 April tariffs on all products from Mexico and Canada that are covered by the USMCA free trade treaty.

Earlier announced import tariffs of 25% on steel and aluminium are still scheduled to take effect on 12 March.

The main focus on the macro front will be the US non-farm payrolls report for February due at 1330 GMT, along with average earnings and the unemployment rate.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "Investors will be closely watching the US jobs data this Friday. The data is expected to print 159K new non-farm job additions in February, with slowing wages growth on a monthly basis and a stable unemployment rate at 4%. But the risks are tilted to the downside due to the mass firing at the federal agencies and their implications for the broader economy.

"A set of softer-than-expected jobs figures could further weigh on the US dollar, while the worse-case-scenario for the markets would be a lower-than-expected NFP print combined with higher-than-expected wages growth - a combination that would leave the Fed facing a slowing economy with limited room to give support."

On home shores, investors will be mulling the latest data from Halifax, which showed that house prices unexpectedly dipped in February.

Prices nudged down 0.1% following a 0.6% increase in January, and versus expectations for them to tick up 0.3%.

On the year, house prices were up 2.9% in February, unchanged on the previous month.

The average price of a home stood at £298,602, down from £298,815.

Amanda Bryden, head of mortgages at Halifax, said: "February's figures highlight the delicate balance within the UK housing market. While there’s been talk of a last minute rush on new mortgages ahead of the changes to stamp duty, inevitably we’ve seen some of the demand that was brought forward start to fade as the April deadline ticks closer, given the time needed to complete a purchase.

"That may help to explain why growth in first-time buyer property prices eased in February, falling to +2.4%, in contrast to homemover price inflation which accelerated, reaching +3.7%

"While house price growth has slowed overall, market activity remains strong and comparable to pre-pandemic levels, demonstrating a resilience amongst buyers that’s been evident in the face of higher borrowing costs.

"While those affordability challenges persist, the ongoing shortage of housing supply coupled with sustained demand suggests property prices will continue to rise this year, albeit at a more measured pace compared to last year."

Also on Friday, industry research showed that retail footfall nudged higher in February, although at a far slower rate than seen in January.

According to the latest BRC-Sensormatic monitor, footfall increased by 0.2% year-on-year.

The second consecutive monthly increase, it was, however, well below January’s 6.6% jump.

Retail parks reported a 2% rise, well ahead of high streets and shopping centres, which both posted a more modest 0.1% uptick in footfall.

Andy Sumpter, EMEA retail consultant at Sensormatic, said: "After January’s jump-start, retail footfall stalled, with retailers seeing only the slimmest improvements.

"While the good news is that shopper counts remained steady, many would have been hoping for a more substantial leap, building on a strong start to the year.

"With Easter falling late and well into April this year, this will undoubtedly put added pressure on retailers as we head into March."

In corporate news, AstraZeneca said its Imfinzi drug when used with chemotherapy had shown “statistically significant and clinically meaningful improvement” in survival in resectable early-stage gastric and gastroesophageal cancers before surgery.

The findings come from results of the Matterhorn Phase 3 trial of 948 patients.

Just Group saw full-year operating profits jump by a third. The financial services group had pledged to double its profit over five years, but has now managed that feat two years ahead of schedule.

Underlying operating profit was up by 34% to £504m. Management cited new business sales growth, higher recurring in-force profit and more scale.

Adjusted profit before tax fell by 7.3% to £482m, due to lower non-operating items. The company's total dividend per share rose by 20% to 2.5p, thanks to a 1.8p final payout.