US impose new trade tariffs; EU, Mexico pledge to retaliate

Rolled up steel sits in the ArcelorMittal Dofasco steel plant in Hamilton, Ontario, Canada. The Trump administration announced it will impose tariffs on steel and aluminum imports from Europe, Mexico and Canada. (Reuters)
Updated 31 May 2018
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US impose new trade tariffs; EU, Mexico pledge to retaliate

  • The US says it will impose stiff tariffs on steel and aluminum imports from the EU, Canada, Mexico,
  • World stocks jitter as fears returned of a global trade war sparked by US tariffs

WASHINGTON: The Trump administration announced Thursday it will impose tariffs on steel and aluminum imports from Europe, Mexico and Canada after failing to win concessions from the American allies. Europe and Mexico pledged to retaliate quickly, exacerbating trans-Atlantic and North American trade tensions.
Commerce Secretary Wilbur Ross said the tariffs would be 25 percent on steel and 10 percent on aluminum, and go into effect on Friday, as the administration followed through on the penalties after earlier granting exemptions to buy time for negotiations. President Donald Trump had announced the tariffs in March, citing national security concerns.
The European Commission’s president, Jean-Claude Juncker, said Trump’s decision amounted to trade protectionism and that Europe would respond with countermeasures. “This is protectionism, pure and simple,” Juncker said. Mexico said it would penalize US imports including pork bellies, apples, grapes, cheeses and flat steel.
The tariffs directed at some of the US’s most ardent allies represented the latest move in Trump’s “America First” agenda that has roiled financial markets and raised the specter of a trade war involving the US, China and some of the globe’s most dominant economies.
The trade actions have opened the US to criticism that it’s burning bridges at a time when Trump is seeking to rid North Korea of nuclear weapons and help stabilize the Middle East.
“We are alienating all of our friends and partners at a time when we could really use their support,” said Wendy Cutler, a former US trade negotiator who is now vice president at the Asia Society Policy Institute.
Ross told reporters that talks with Canada and Mexico over revising the North American Free Trade Agreement were “taking longer than we had hoped.” Talks with Europe had “made some progress” but not enough for additional exemptions, he said in a conference call from Paris.
“We continue to be quite willing and indeed eager to have further discussions,” Ross said. He said he planned to travel to China on Friday for trade talks between the world’s two biggest economies.
European officials had braced for the tariffs and the EU has threatened to retaliate against US orange juice, peanut butter and other goods in return. In terms of the NAFTA talks, the tariffs could hinder the negotiations among the North American neighbors.
On NAFTA, Ross said there was “no longer a very precise date when they may be concluded and therefore (Canada and Mexico) were added into the list of those who will bear tariffs.”
Brazil, Argentina and Australia have agreed to limit steel shipments to the US in exchange for being spared the tariffs, the Commerce Department said. Tariffs will remain on imports from Japan.
Fears of a global trade war are already weighing on investor confidence and could hinder the global economic upturn. European officials argue that tit-for-tat tariffs will hurt growth on both sides of the Atlantic and Canada said before the announcement that it would respond in kind.
“Canada considers it frankly absurd that we would in any way be considered to be a national security threat to the United States,” Canadian Foreign Minister Chrystia Freeland said before the tariffs were announced. “The government is absolutely prepared to and will defend Canadian industries and Canadian jobs. We will respond appropriately.”
German Chancellor Angela Merkel stressed her opposition even before the US announcement, saying the looming tariffs were incompatible with World Trade Organization (WTO) rules. She said if there were no exemptions, “We will respond in an intelligent, decisive and joint way.”
German Foreign Minister Heiko Maas slammed US import duties, pledging a united European front against protectionist measures.
“Our answer to ‘America First’ can only be ‘Europe united’,” he said in a statement.
“Trade wars don’t have any winners.”
France’s finance minister, Bruno Le Maire, called the US tariffs “unjustified, unjustifiable and dangerous.”
“This will only lead to the victory of those who want less growth, those who don’t think we can develop our economies across the world. We think on the contrary that global trade must have rules in a context of multilateralism. We are ready to rebuild this multilateralism with our American friends,” he said.
The EU trade commissioner, Cecilia Malmstrom, said the EU “did everything to avoid this outcome.” Noting her discussions with US officials, she said.
She said the EU will launch a case at the WTO against the US move.
“The US has sought to use the threat of trade restrictions as leverage to obtain concessions from the EU. This is not the way we do business, and certainly not between longstanding partners, friends and allies,” she said.
“Now that we have clarity, the EU’s response will be proportionate and in accordance with WTO rules. We will now trigger a dispute settlement case at the WTO, since these US measures clearly go against agreed international rules.
“We will also impose rebalancing measures and take any necessary steps to protect the EU market from trade diversion caused by these US restrictions.”
“I have argued for the EU and the US to engage in a positive trans-Atlantic trade agenda, and for the EU to be fully, permanently and unconditionally exempted from these tariffs.”
Tariffs on steel and aluminum imports to the US can help local producers of the metals by making foreign products more expensive. But they can increase costs more broadly for US manufacturers that cannot source all their needs locally and have to import the materials. That hurts the companies and can lead to more expensive consumer prices, economists say.
“Unilateral responses and threats over trade war will solve nothing of the serious imbalances in world trade. Nothing,” French President Emmanuel Macron said Wednesday.
In a clear reference to Trump, Macron added: “These solutions might bring symbolic satisfaction in the short term. ... One can think about making voters happy by saying, ‘I have a victory, I’ll change the rules, you’ll see.’“
But Macron said those “who waged bilateral trade wars ... saw an increase in prices and an increase in unemployment.”
Britain said also it was deeply disappointed by the US decision.
“We are deeply disappointed that the US has decided to apply tariffs to steel and aluminum imports from the EU on national security grounds,” a government spokesman said.
“The UK and other European Union countries are close allies of the US and should be permanently and fully exempted from the American measures on steel and aluminum.”
Besides the US steel and aluminum tariffs, the US is also investigating possible limits on foreign cars in the name of national security.
Ross criticized the EU for its tough negotiating position. But German Economy Minister Peter Altmaier insisted the Europeans were ready to negotiate special trade arrangements, notably for liquefied natural gas and industrial goods, including cars.
World stocks jittered Thursday as fears returned of a global trade war sparked by US tariffs, just after global equities had started to recover from concerns over a fresh eurozone crisis.
The US market opened in the red just before Ross announced steep tariffs steel and aluminum imports from the European Union, Canada and Mexico.
For weeks the markets had been on a roller coaster ride after Trump announced the tariffs in March.
Since then, world leaders have made repeated appeals to safeguard the international trade system.
European stocks were also down in afternoon trading, even though they had appeared to be on the path to recovery in earlier action, with investor fears fading after the worst of the political storm in Italy.
The euro climbed as inflation in the eurozone leaped to the ECB’s target in May, fueled by a huge increase in oil prices as the US decided to pull out of a nuclear deal with Iran.
Asian equities earlier Thursday bounced back from the previous day’s mauling as fears of turmoil in Italy were soothed by conciliatory noises from the country’s two biggest populist parties.
“Fears over an Italian snap election have receded,” noted Joshua Mahony, market analyst at IG traders.
The news had provided relief to global markets beginning Wednesday after they were sent spinning by the crisis in Italy — the eurozone’s third biggest economy — which many feared could lead to fresh elections that could essentially become a referendum on euro membership.
Oil prices were down but holding up after they also rallied Wednesday in response to a report that said OPEC would likely lift output gradually, soothing concerns about a new supply glut.
Crude markets have been hammered since OPEC kingpin Saudi Arabia and Russia last week indicated they could lift a cap on production, which has supported prices for two years, as an oversupply crisis eases.
Investors are looking forward to the release Friday of key US jobs figures, which could provide some idea about the Federal Reserve’s plans for raising interest rates.
Payrolls firm ADP estimated US private sector job growth at 178,000 in May, down from 204,000 in April and slightly below analysts’ expectations.
However, while sentiment is positive, analysts warned that ongoing geopolitical issues and the unresolved China-US trade row continue to dog trading floors.
“We are going to be filled with tremendous uncertainty over the course of the summer,” David Ader, chief macro strategist at Informa Financial Intelligence, told Bloomberg Television.
“If you look at things like the various economic surprise indices out there they have been slowing down, but on the other hand you still have a Fed hike coming in June. I see a lot of uncertainty, which results in a lot of volatility.”


Saudi Arabia raises $3.09bn in sukuk issuances for December

Updated 24 December 2024
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Saudi Arabia raises $3.09bn in sukuk issuances for December

RIYADH: Saudi Arabia’s National Debt Management Center has successfully concluded its riyal-denominated sukuk issuance for December, raising SR11.59 billion ($3.09 billion).

This marks a substantial 239.88 percent increase from the previous month, when the Kingdom raised SR3.41 billion in sukuk. Saudi Arabia had raised SR7.83 billion in October and SR2.6 billion in September.

Sukuk, which are Shariah-compliant Islamic bonds, provide investors with partial ownership of the issuer’s assets until the bonds mature. The rise in sukuk issuance aligns with positive global market projections.

A Moody’s report released in September forecasted that the global sukuk market would remain robust in 2024, with total issuance expected to reach between $200 billion and $210 billion, an increase from just under $200 billion in 2023.

The December sukuk issuance by NDMC was structured into four tranches, each with varying maturities. The largest tranche, valued at SR5.58 billion, is set to mature in 2027. Another tranche, worth SR3.90 billion, will mature in 2029, while a third tranche, valued at SR706 million, is due for repayment in 2031. The final tranche, amounting to SR1.4 billion, will mature in 2034.

This surge in sukuk issuance comes as the Kingdom is expected to lead the Gulf Cooperation Council region in bond and sukuk maturities between 2025 and 2029.

A report by Kamco Invest, released earlier this month, projected that Saudi Arabia’s total bond and sukuk maturities during this period would reach $168 billion, with government-issued bonds and sukuk accounting for $110.2 billion of that total.

In December, Fitch Ratings also highlighted that the GCC debt capital market crossed the $1 trillion threshold in outstanding debt by the end of November.

Earlier in October, Fitch had noted that the growth in sukuk issuance was driven by improving financing conditions, especially after the US Federal Reserve’s rate cut to 5 percent in September. Looking ahead, Fitch expects interest rates to decline further, reaching 4.5 percent by the end of 2024 and 3.5 percent by the end of 2025, which is likely to spur more sukuk issuances in the short term.


Saudi, Nigerian ministers hold talks to strengthen economic relations

Updated 24 December 2024
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Saudi, Nigerian ministers hold talks to strengthen economic relations

RIYADH: Saudi Arabia and Nigeria held high-level talks to discuss financial and economic developments, focusing on regional and global challenges, as well as opportunities for collaboration. 

The meeting, led by the kingdom’s Minister of Finance Mohammed Al-Jadaan, included a delegation from the African country headed by Finance Minister Wale Edun and Budget and Economic Planning Minister Abubakar Atiku Bagudu.

The discussions aimed to strengthen economic ties and explore joint strategies to navigate evolving financial landscapes. 

This comes as trade between Nigeria and Saudi Arabia showed a significant imbalance in 2023, with Nigeria exporting goods worth $76.29 million to the Kingdom, while imports from Saudi Arabia amounted to $1.51 billion, according to the UN COMTRADE database on international trade.


Closing Bell: Saudi main index closes in red at 11,914

Updated 24 December 2024
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Closing Bell: Saudi main index closes in red at 11,914

  • Parallel market dropped by 0.11% to 30,920.40
  • MSCI Tadawul Index shed 3.17 points to close at 1,496.90

RIYADH: Saudi Arabia’s Tadawul All Share Index slipped on Tuesday, as it shed 34.84 points, or 0.29 percent, to close at 11,913.95. 

The Kingdom’s parallel market also dropped by 0.11 percent to 30,920.40, while the MSCI Tadawul Index shed 3.17 points to close at 1,496.90. 

The total trading turnover of the benchmark index was SR3.83 billion ($1.02 billion), with 64 of the listed stocks advancing, while 168 declining. 

The best-performing stock of the day was Al-Baha Investment and Development Co., as its share price surged by 9.09 percent to SR0.48. 

Other top performers were Saudi Chemical Co., increasing 4.66 percent to SR9.66, and Shatirah House Restaurant Co., rising 4.44 percent to SR21.30. 

The share price of United Electronics Co. slipped by 6.77 percent to close at SR92.20. 

First Milling Co. announced the successful expansion of its Mill A, boosting production capacity from 300 tonnes to 550 tonnes per day. 

In a Tadawul filing, the company, which produces flour, feed, and bran, said that the financial impact of the expansion will be reflected in the fourth quarter of this year. 

The company’s share price gained 1.35 percent, closing at SR59.90. 

Banque Saudi Fransi announced that its shareholders approved a 107.4 percent capital increase, raising its capital from SR12.05 billion to SR25 billion. 

The bank said that the decision was finalized during an extraordinary general meeting held on Dec. 23. 

Banque Saudi Fransi’s share price dropped 0.62 percent to close at SR15.94. 

Meanwhile, retail investors began subscribing to 3.47 million shares of Saudi-based online beauty brand Nice One on the main market. 

The company announced on Dec. 16 that it set the final offer price for its initial public offering at SR35 per share, aiming to raise SR1.2 billion. 

The retail subscription period, which started on Dec. 24, will run through Dec. 25. 

Saudi Arabia’s Capital Market Authority approved Ejada Systems Co.’s request to float 20.05 million shares, representing 45 percent of its share capital. 

In a statement on Tadawul, the company said that its prospectus will be published well ahead of the subscription period. 

It will provide investors with key information, including financial statements, business activities, and management details to support informed investment decisions. 

The CMA approved a request by Umm Al Qura for Development and Construction Co. to float 130.78 million shares, representing 9.09 percent of the firm’s share capital. 

The authority also approved Ratio Specialty Co. to float 5 million shares, equal to 25 percent of the company’s share capital, on the Kingdom’s parallel market. 


EBRD supports Africa’s largest onshore wind project in Egypt with $275m loan

Updated 24 December 2024
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EBRD supports Africa’s largest onshore wind project in Egypt with $275m loan

  • 1.1 GW wind farm in Egypt will reduce annual CO2 emissions by more than 2.2 million tonnes
  • Loan to Suez Wind consists of $200 million A loan from the EBRD and $75 million in B loans from Arab Bank and Standard Chartered

JEDDAH: The European Bank for Reconstruction and Development is supporting Egypt in launching Africa’s largest wind farm, backed by a $275 million syndicated loan.

The loan to Suez Wind consists of a $ 200 million A loan from the EBRD and $ 75 million in B loans from Arab Bank and Standard Chartered, the international financial institution said in a press release.

It added that the initiative is being co-financed by the African Development Bank, British International Investment, and Deutsche Investitions- und Entwicklungsgesellschaft, as well as the OPEC Fund for International Development and the Arab Petroleum Investments Corporation.

The wind farm in the Gulf of Suez will have an installed capacity of 1.1 gigawatts, delivering clean, renewable energy at a lower cost than conventional power generation. It is expected to produce over 4,300 GWh of electricity annually and reduce CO2 emissions by more than 2.2 million tons per year, supporting Egypt’s energy sector alignment with its commitments under the Paris Agreement.

Rania Al-Mashat, Egypt’s minister of planning, economic development, and international cooperation, said that her country is committed to advancing its renewable energy ambitions, aiming to derive 42 percent of its energy mix from renewable sources by 2030, in line with their nationally determined contributions.

“Through our partnership with the EBRD, a key development partner within the energy sector of Egypt’s country platform for the NWFE program, we are mobilizing blended finance to attract private-sector investments in renewable energy,” said Al-Mashat, who also serves as governor of the north African country to the EBRD

The minister added: “So far, funding has been secured for projects with a capacity of 4.7 gigawatts, and we are working collaboratively to meet the program’s targets to reduce Egypt’s fuel consumption and expand clean energy projects.”

Managing Director of the EBRD’s Sustainable Infrastructure Group, Nandita Parshad, expressed pride in the bank’s role as the largest financier of the landmark 1,100-megawatt wind farm in the Gulf of Suez, which is also the largest onshore wind farm in EBRD’s operational countries to date.

“Egypt continues to be a trailblazer for large-scale renewables in Africa: first with the largest solar farm and now the largest windfarm on the continent. Great to partner on both with ACWA power and to bring new partners in this project, Hassan Allam Utilities and Meridiam,” she said.

Suez Wind is a special project company jointly owned by Saudi energy giant ACWA Power and HAU Energy, a recently established renewable energy equity platform that the EBRD is investing in alongside Hassan Allam Utilities and Meridiam Africa Investments.

The EBRD, of which Egypt is a founding member, is the principal development partner in the republic’s energy sector under the Nexus of Water, Food, and Energy program, launched at COP27. This wind farm is one of the first projects within NWFE’s energy pillar, advancing progress toward the country’s 10-gigawatt renewable energy goal.

It plays a vital role in supporting Egypt’s efforts to decarbonize its fossil fuel-dependent power sector and achieve its ambitious renewable energy targets.

Since the EBRD began operations in Egypt in 2012, the bank has invested nearly €13.3 billion in 194 projects across the country. These investments span various sectors, including finance, transport, and agribusiness, as well as manufacturing, services, and infrastructure, with a particular emphasis on power, municipal water, and wastewater projects, according to the same source.

Last month, EBRD announced it was supporting the development and sustainability of Egypt’s renewable-energy sector by extending a $21.3 million loan to Red Sea Wind Energy.

The loan was established to fund the development and construction of a 150-megawatt expansion to the 500-megawatt wind farm currently being constructed in the same region.


UAE non-oil sectors push GDP growth to 4% in 2024: CBUAE

Updated 24 December 2024
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UAE non-oil sectors push GDP growth to 4% in 2024: CBUAE

  • Growth is projected to accelerate to 4.5% in 2025 and 5.5% in 2026
  • Non-oil GDP growth is forecast to remain robust, expanding by 4.9% in 2024 and 5% in 2025

RIYADH: The UAE economy is expected to grow by 4 percent in 2024, driven by robust performance across key non-oil sectors, according to official projections. 

The Central Bank of the UAE’s Quarterly Economic Review for December indicates that growth will be supported by sectors including tourism, transportation and financial services, as well as insurance, construction, real estate, and communications. 

Looking ahead, growth is projected to accelerate to 4.5 percent in 2025 and 5.5 percent in 2026, as the country continues to benefit from economic diversification policies aimed at reducing its dependence on oil revenues. 

Non-oil GDP growth is forecast to remain robust, expanding by 4.9 percent in 2024 and 5 percent in 2025. 

The report attributed this growth to strategic government policies aimed at attracting foreign investment and promoting economic diversification. 

In the second quarter, non-oil GDP grew by 4.8 percent year on year, compared to 4.0 percent in the first quarter, supported by manufacturing, trade, transportation and storage, and real estate activities. 

In September, the CBUAE revised its GDP growth forecast for the year upward by 0.1 percentage points, citing expected improvements in the oil sector. 

Initially projecting a 3.9 percent growth for 2024, the central bank adjusted the figure to 4 percent. In its second-quarter economic report, the CBUAE forecasted a growth rate of 6 percent for 2025. 

The UAE’s 16 non-oil sectors continued their steady growth in the third quarter of the year, with wholesale and retail trade, manufacturing, and construction being key contributors. 

The manufacturing sector has benefited from increased foreign direct investment, aligning with both federal and emirate-level strategies. 

The first nine months of the year also saw strong performance in the construction sector, reflecting significant investment in infrastructure and development projects. 

Non-oil trade exceeded 1.3 trillion dirhams ($353.9 billion) in the first half of the year, representing 134 percent of the country’s GDP, a 10.6 percent year-on-year increase. 

This growth underscores the success of the UAE’s economic diversification agenda and its comprehensive economic partnership agreements with various countries, which have strengthened trade relationships and driven exports.

The UAE has set ambitious economic targets to diversify its economy and reduce dependence on oil revenues.  

Under the We the UAE 2031 vision, the country aims to double its GDP from 1.49 trillion dirhams to 3 trillion dirhams, generate 800 billion dirhams in non-oil exports, and raise the value of foreign trade to 4 trillion dirhams.  

Additionally, the UAE plans to increase the tourism sector’s contribution to GDP to 450 billion dirhams. 

Oil production averaged 2.9 million barrels per day in the first 10 months of the year and is forecasted to grow by 1.3 percent for the year, with further acceleration to 2.9 percent in 2025.  

The fiscal sector also performed strongly in the first half of the year, with government revenue rising 6.9 percent on a yearly basis to 263.9 billion dirhams, equivalent to 26.9 percent of GDP.  

This increase was fueled by a significant 22.4 percent rise in tax revenues. Meanwhile, the fiscal surplus reached 65.7 billion dirhams, or 6.7 percent of GDP, marking a 38.8 percent increase from the 47.4 billion dirhams surplus, or 5.1 percent of GDP, recorded in the first half of 2023.  

Government capital expenditure surged by 51.7 percent year on year to 11 billion dirhams, reflecting the UAE’s commitment to advancing large-scale infrastructure projects and enhancing the country’s economic and investment landscape.

In the private sector, economic activity remained robust, with the UAE’s Purchasing Managers’ Index reaching 54.1 in October this year, signaling continued optimism among businesses driven by sustained demand and sales growth.

Dubai’s PMI stood at 53.2 in October, closely aligning with the national average, indicating consistent growth in the emirate’s non-oil private sector.

Employment and wages also showed strong performance, with the number of employees covered by the CBUAE’s Wages Protection System rising by 4 percent year-on-year in September. 

Average salaries increased by 7.2 percent yearly during the same period, reflecting strong domestic consumption and sustainable GDP growth.