The United States decided on Wednesday to slap 10% tariffs on the EU-produced Airbus planes and 25% duties on alcohol, agricultural produce and industrial items from across the bloc.
Fresh Front in Trade Frictions
The Trump administration has now opened up the prospects of a transatlantic trade war as the world continues to grapple with the transpacific Sino-US one.
Washington’s decision followed a s ruling by the World Trade Organization that the US was right in its case against EU subsidies to Airbus. The new American tariffs are set to take come into effect later this month. EU officials had earlier warned the US of retaliation in the case of tariffs as they face further threats from Trump on EU auto parts and cars.
A statement by the US Trade Representative’s Office read that Washington would “continually re-evaluate these tariffs based on our discussions with the EU” while hoping to ‘enter talks’ for a resolution.
Stock Sell-Off Triggered, Fed Rate Cut Expected
Market reaction was wild as investors fled to safe-haven assets. Asian and American stocks lost as much as two percent, or hundreds of points.
Chances of another rate cut of 25 basis points by the US Federal Reserve during the monetary policy meeting later this month rose to nearly 75 percent, according to CME Group’s FedWatch tool.
Funo Snsures Japanese Businesses
Board member of Bank of Japan, Yukitoshi Funo warned on Thursday of continued pressure from a slowdown in the global growth, but restated that the bank was ready to respond.
“For additional easing measures, various possibilities exist such as cutting short-term and long-term interest rates, boosting asset purchases and accelerating base money expansion,” Funo told business leaders in Matsue, western Japan.
EU Sismisses Johnson’s Irish Proposal
UK Prime Minister Boris Johnson made his final Brexit proposal to the EU on Wednesday. His offer has been welcomed with high caution by EU officials as London and Brussels remain hopelessly away from an actual compromise for a deal.
Guy Verhofstadt, chair of the Brexit Steering Group that coordinates the European Parliament’s strategy, the reaction to Johnson’s proposal from his side ‘was not positive.’
Pompeo’s Two Cents on Brexit
US Secretary of State Mike Pompeo warned that there is “certainly some risk” that if the UK departs the EU without a deal, explaining it could negatively global economies.
US Energy Information Administration reported that on Wednesday that crude oil inventories, excluding the Strategic Petroleum Reserve, rose by 3.1 million barrels from the previous week, at least twice higher than the forecast.
ADP Figures Scare
US ADP Nonfarm employment change in September that came at 135 thousand. The private sector’s failure to meet market forecasts of 140 thousand in job additions increased fears of a slowdown.