Bid to Avoid Trump’s Tariffs
The EU is seeking to accelerate trade talks with the US, ahead of Trump’s threatened 50% tariffs
- The EU’s trade chief, Maros Sefcovic, will lead political negotiations on industries such as steel, automobiles, and pharmaceuticals, while technical discussions on tariffs and non-tariff barriers will happen in parallel
- The EU is preparing countermeasures, including tariffs on €116 billion of US goods, and officials believe the chances of a good deal remain slim
Swiss Exports to US plummet
Swiss exports to the US plummeted in April, showing the fallout from President Donald Trump’s tariff policy
- Foreign sales, adjusted for seasonal swings, declined 36% from March. Imports from the US fell 15%
- The data come after two months of strong export numbers to the US, suggesting frontloading took place by exporters seeking to get goods into US ports in time to avoid the impact of tariffs that Trump had already threatened to impose on April 2
- US Treasury Secretary Scott Bessenthas said that Switzerland is “at the front of the queue” for a trade deal. The country initially was hit with 31% tariffs before Trump announced the suspension of many of his global levies to a uniform 10%
- Switzerland’s total trade numbers also saw a drop in exports and imports, bringing its overall surplus to a record 6.3 billion francs
France: Inflation easing
France’s inflation rate dropped to lowest levels since 2020 driven mainly by a decline in energy costs
- CPI for the month of May rose by 0.6% year-on-year, below expectations of 0.9% and below the level published for April
- Price growth was restrained by 8.1% drop in energy costs and 0.2% decline in manufactured goods – service sector inflation slowed from 2.4% to 2.1%
- The subdued data reflects a wider pullback in Eurozone inflation – May readings from biggest economies are expected to come in below ECB’s goal for first time in eight months
- Italy, Germany and Spain numbers are due on Friday whilst the bloc as a whole will publish inflation next week
Italy’s credit – from stable to positive
Moody’s has confirmed Italy’s Baa3 rating but improved its outlook from stable to positive
- Moody’s has aligned itself with recent moves from its peers – S&P upgraded Italy in April from BBB to BBB+ whilst Fitch improved outlook to positive last October
- The decision reflects the improved fiscal outlook against the backdrop of a better-than-expected fiscal performance in 2024 and a stable political environment
- Investors have also appreciated these improvements with the spread against the 10 year German bond trading around 100bp, half the level when Meloni took power in 2022
- Nevertheless, Moody’s concluded that Italy’s high debt burden and structural challenges remain a constraint on the credit profile
Disclaimer
The information, products, data, services and instruments contained or described in this publication are for information purposes only and constitute neither an advertisement or recommendation nor an offer or solicitation to buy or sell any product.
The financial products described in this publication are not suitable for all investors. The information contained in this publication does not represent any financial, legal, tax and/or other recommendations. Any investment or other decision should not be made solely on the basis of this document. Before making any investment decision, it is recommended that you seek a thorough examination of your situation and the advice of a qualified specialist.
Although the information contained in this document has been compiled by PKB on the basis of or with reference to sources, materials and systems believed to be reliable and accurate, PKB does not guarantee its currency, accuracy or completeness.
PKB accepts no liability, to the fullest extent permitted by applicable laws and/or regulations, for loss or damage of any kind arising directly or indirectly from the content, accuracy, completeness or otherwise of the content or any third party content referred to in this publication.
The analyses and forecasts contained in this publication are based on assumptions, estimates and hypothetical models which may prove to be incorrect and therefore lead to substantially different results.