Trump’s tariffs rekindle global trade tensions
Swiss 39% tariffs a ‘disappointing’ development, Swiss-American Chamber of Commerce CEO says
The news of Switzerland facing 39% tariffs is “disappointing,” Rahul Sahgal, CEO of the Swiss-American Chamber of Commerce told CNBC’s “Squawk Box Europe” on Friday.
Switzerland has invested a lot of time and gone through many rounds of negotiations with various U.S. bodies and officials, he said, suggesting that an agreement had not been far off.
“That we then get slapped with 39% is at this point very disappointing,” he said, noting that he however does not think the end point has been reached.
The CEO also said that it was hard to tell what the reason behind the higher tariff rate was, but noted that the Swiss-U.S. goods trade balance had apparently been flagged by Trump.
The U.S. goods trade deficit with Switzerland amounted $38.5 billion last year, according to the Office of the United States Trade Representative.
But, Switzerland is a much smaller country than the U.S., Sahgal pointed out, saying that therefore even “if every Swiss was to drink a bottle of bourbon and eat a steak every single day and buy a Harley Davidson, we will not be able to balance the trade in goods.”
— Sophie Kiderlin
European stocks pull back
European stocks pulled back Friday, with the pan-European Stoxx 600 last trading around 1.3% lower at levels last seen in early July.
The German DAX index tumbled 1.7%, while France’s CAC 40 fell by 2.1%. The British FTSE 100 also pulled back and was last 0.6% lower.
Stoxx 600
European pharmaceutical stocks broadly pulled back on Friday after U.S. President Donald Trump sent letters to various companies, including U.S. firms, demanding cheaper drug prices.
— Sophie Kiderlin
South Korean official says there is no written agreement with the U.S.
South Korean official Yeo Han-Koo on Friday said there was no written agreement on the trade deal between the country and and the U.S., Reuters reported.
Because of time constraints, the negotiations had been oral, he told reporters.
U.S. President Donald Trump on Wednesday had announced a trade deal between the two countries. It includes 15% tariffs on South Korean goods, lower than the 25% Trump had threatened the country with in a letter last month.
— Sophie Kiderlin
Latest tariff policy ‘still not the end of the story,’ Capital Economics says
The latest U.S. tariff policy is “still not the end of the story,” Stephen Brown, deputy chief North America economist at Capital Economics, said Friday.
“President Trump’s latest flurry of tariffs implies that the US effective tariff rate will rise to about 18%, from 2.3% last year,” he noted. That’s higher than expected and carries downside risks for global economic growth projections, as well as some upside risk for U.S. inflation forecasts, Brown said.
“That said, this is unlikely to be the final word, as it still seems likely that some other countries will reach their own deals with the US, while there is a chance that the US courts will eventually strike down these tariffs,” he said.
— Sophie Kiderlin
U.S. tariffs are neither ‘justifiable or understandable,’ says Swiss lobby group
Switzerland’s biggest business lobby hit out at the U.S. tariffs, saying it is “neither justified nor understandable why Switzerland should be subject to one of the world’s highest tariff rates.”
Economiesuisse said the tariffs represent a very serious burden for Swiss export companies warning that the new duties would make make Swiss exports “more expensive, weaken companies’ competitiveness, and strain the investment climate.”
The group said Switzerland doesn’t impose any levies on U.S. imports and the country is the sixth-largest foreign investor in the U.S., with Swiss companies responsible for approximately 400,000 jobs.
A “rapid and advantageous” solution to the crisis is necessary, the lobby group said.
— Michael Considine
New Trump tariffs ‘not the worst-case scenario,’ Berenberg says
The latest changes to U.S. President Donald Trump’s tariff policies are, in some ways, “not the worst-case scenario, as Trump had previously indicated that the universal 10% baseline rate could double,” Berenberg U.S. economist, Atakan Bakiskan, said in a Friday note.
Bakiskan nevertheless added that the new levies mark a “huge blow to global commerce” and forecast that the U.S. will suffer the hit of the new levies by way of higher domestic inflation and slower growth.
“The tariffs distort competition between companies that produce in the US to serve the US market relative to those that produce abroad. But many European Japanese and South Korean-based producers compete more against each other than against US-based producers in the US market,” the economist said.
“As they all face a 15% levy, the competition between them is distorted…