Britain in Talks to Try to Avoid U.S. Tariffs, Finance Minister Says

Economic

Forex

Summary:

LONDON (Reuters) - Britain does not want to escalate a trade war with the United States and is working intensely with Washington to secure an exemption from tariffs, the country's finance minister Rachel Reeves said on Thursday.

U.S. President Donald Trump expanded his global trade war late on Wednesday when he unveiled a 25% tariff on imported vehicles, prompting criticism and threats of retaliation from affected U.S. allies.

"We are not at the moment in a position where we want to do anything to escalate these trade wars," Reeves told Sky News when asked if Britain would impose retaliatory tariffs against the U.S.. "Trade wars are no good for anyone."

She said an escalation of tariffs would be bad for Britain: "but it would be bad for the U.S. as well, and that's why we are working intensely these next few days to try and secure a good deal for Britain," Reeves said in an interview with the BBC.

"I recognise how important this is," Reeves added.

U.S. new levies on cars and light trucks will take effect on April 3, the day after Trump plans to announce reciprocal tariffs aimed at the countries responsible for the bulk of the U.S. trade deficit.

They come on top of duties already introduced on steel and aluminium, and on goods from Mexico, Canada and China.

Britain has hoped to avoid tariffs with the U.S., arguing that both countries report trade surpluses with each other - including goods and services - owing to measurement differences.

London is also trying to agree a tech-led deal with Washington that it hopes will potentially spare it the direct hit of tariffs on its own exports.

Source: Yahoo Finance

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GBPUSD: Sell

GBPUSD reversed from resistance area
Likely to fall to support level 1.2800

GBPUSD recently reversed down from the resistance area between the resistance level 1.3035 (which has been reversing the price from October), resistance trendline of the daily up channel from January and the upper daily Bollinger Band.

The downward reversal from this resistance area created the daily Japanese candlesticks reversal pattern Evening Star which started the active wave 3.

GBPUSD can be expected to fall to the next support level 1.2800, the former monthly high from December.

Source: ACTIONFOREX

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Warren Takunda

Stocks

London stocks fell in early trade on Thursday, taking their cue from a downbeat session on Wall Street after Donald Trump announced a new 25% tariff on all imported cars and car parts.

At 0830 GMT, the FTSE 100 was down 0.6% at 8,635.01.

Speaking at the White House on Wednesday, Trump said: "Frankly, friend has been oftentimes much worse than foe. And what we’re going to be doing is a 25% tariff on all cars that are not made in the United States.

"If they’re made in the United States, it’s absolutely no tariff."

Trump also warned the European Union and Canada not to work together "to do economic harm to the US", threatening them with "large-scale tariffs, far larger than currently planned".

On his Truth Social platform, the US President said such tariffs "will be placed on them both in order to protect the best friend that each of those two countries has ever had".

In equity markets, M&G, Schroders, Segro, Taylor Wimpey, Melrose Industries, Aberdeen and OSB Group all fell as they traded without entitlement to the dividend.

Luxury car maker Aston Martin was under the cosh on news of Trump’s latest tariffs.

AJ Bell lost ground after saying it has agreed to sell its Platinum SIPP and SSAS business - AJ Bell Platinum - to InvestAcc for up to £25m.

On the upside, Next surged to the top of the FTSE 100 as the retail giant boosted its sales outlook following a strong start to the year, but warned that consumer confidence was set to deteriorate as the year progressed.

The fashion and home retailer said full-price sales in the first eight weeks of the year had been ahead of expectations.

As a result, it has hiked its first-half forecast to 6.5%, having previously guided for sales growth of 3.5%.

However, the retailer - which is known for its cautious outlook - did not upgrade its second-half guidance. Instead it was kept at 3.5%, with Next citing strong comparatives and potentially weakening conditions.

Chris Beauchamp, chief market analyst at IG, said: "In uncertain times, you can usually rely on Next to deliver good news. The retail giant duly came up with the goods, engaging in the traditional upgrade to its profit forecast for the year and providing a very healthy 10% rise in pre-tax profit.

"Its growth in new platforms outside the UK and expansion into new products provides investors with hope that this steady performer can continue to deliver in a similar vein."

Marks & Spencer and Primark owner AB Foods also gained.

Source: Sharecast

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Christopher Hayes

U.S. President Donald Trump has announced a 25% tariff on all non-U.S. manufactured cars. This is a move to boost American manufacturing with cars built in the U.S. being exempt. This is part of his larger plan to adjust trade relations, with more tariffs set to roll out on April 2, dubbed "liberation day."

notably, the tariff will be applied on top of the existing 2.5% car tariff. Additionally, if parts are produced in the U.S. but the vehicle is not, those parts will be exempt from the tariff. On Wednesday, the White House confirmed that the tariffs will take effect on April 2, with collection beginning on April 3.

"What we're going to be doing is a 25 per cent tariff on all cars that are not made in the United States. This will be permanent," Trump said from the Oval Office. "We start off with a 2.5 per cent base, which is what we're at, and go to 25 per cent."

The White House announced that the tariff would apply to fully assembled cars and essential auto components, such as engines, transmissions, powertrain parts, and electrical components. The list may grow over time to include more items.

“We’re going to charge countries for doing business in our country and taking our jobs, taking our wealth, taking a lot of things that they’ve been taking over the years,” he added.

Tariff Exempts USMCA Compliant Auto Parts

The tariff currently exempts automotive parts that comply with the U.S.-Mexico-Canada Agreement (USMCA), which allows mostly duty-free trade between the U.S. and its two largest trading partners.

Trump argues the tariffs will boost U.S. manufacturing and eliminate the "ridiculous" supply chain involving the U.S., Canada, and Mexico." Trump emphasized that the 25% tariff would simplify the process and help reduce U.S. debt significantly. He described the tariff as both a tax reduction and a way to improve the country's financial balance sheet in the near future.

In February, Trump hinted at upcoming auto tariffs, and by Monday, he confirmed they would be implemented soon. He also suggested that some reciprocal tariffs might be less severe than expected, saying they could even be lower than those other countries have imposed for years.

Howver, the decision has sparked concerns about market volatility. Interestingly, he clarified that Elon Musk did not have a role in advising on this auto tariff policy, despite earlier comments suggesting that tariffs could be "net neutral or maybe good for Tesla."

Foreign Leaders Criticise The Tariffs

Foreign leaders quickly criticized the tariffs, signaling that Trump may be escalating a global trade war that could harm worldwide growth.

European Commission President Ursula von der Leyen described the move as "bad for businesses, worse for consumers, Canada's new Prime Minister, Mark Carney, criticized the U.S. trade move, vowing to defend Canadian workers and companies. Last year, Canada exported nearly C$50 billion in vehicles to the U.S., making autos a major export.

Tariffs May Drive Up Car Prices, Impact Sales and Jobs

Ahead of Trump's announcement, shares of U.S.-listed automakers dropped due to concerns that tariffs could disrupt the global auto industry. The new levies are expected to raise car prices for consumers, potentially reducing sales and causing job losses. The U.S. auto industry depends on imported parts, and experts warn that these tariffs could make cars more expensive, limit choices for consumers, and result in fewer manufacturing jobs.

If the full cost of the new 25% auto tariff is passed onto consumers, the price of an imported vehicle could rise by $12,500, potentially contributing to overall inflation. Trump was voted back into the White House last year because voters believed he could bring down prices.

The auto tariffs are part of Trump’s broader plan to reshape global trade, with “reciprocal” taxes set to be imposed on April 2, matching tariffs and sales taxes charged by other countries.

Source: CryptoSlate

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Daniel Foster

Commodity

(March 27): Gold prices rose on Thursday as US auto tariffs ratcheted up global trade tensions ahead of an April 2 deadline for reciprocal tariffs from the world's largest economy.

Spot gold was up 0.5% at US$3,033.20 an ounce, as of 0535 GMT. US gold futures gained 0.6% to US$3,039.

US President Donald Trump on Wednesday unveiled a 25% tariff on imported cars and light trucks starting next week, widening the global trade war.

Investors feared that Trump's reciprocal tariffs, expected to take effect on April 2, might fuel inflation, slow economic growth and heighten trade tensions.

Concerns over Trump's tariff policies catapulted gold to a record high of US$3,057.21 on March 20.

Aakash Doshi, global head of gold at SPDR ETF Strategy, expects gold will breach US$3,100 in the second quarter and "the market could potentially push another 8%-10% higher by end-2025 if the current macro and physical market tailwinds sustain for the yellow metal."

Goldman Sachs on Wednesday raised its end-2025 gold price forecast to US$3,300 per ounce from US$3,100, citing stronger-than-expected ETF inflows and sustained central bank demand.

Investors await the US personal consumption expenditures data, due on Friday, which could shed more light on the US interest rate path.

"The March high near US$3,057 is immediate resistance for gold prices. The US$3,100 figure follows next," said Ilya Spivak, head of global macro at Tastylive.

Last week, the US central bank held benchmark interest rate steady, but indicated it could cut rates later this year. Non-yielding bullion tends to thrive in a low interest-rate environment.

Minneapolis Federal Reserve Bank president Neel Kashkari said that while the US central bank has made a lot of progress bringing inflation down, "we have more work to do" to get inflation to the Fed's 2% target.

Source: Theedgemarkets

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Alexander

In a decisive move, the U.S. Senate has rolled back a contentious tax regulation that threatened the cryptocurrency market. During a late-night vote on Wednesday, 70 senators supported the repeal, while 28 were opposed. This regulation, which was imposed by the IRS, required decentralized finance (DeFi) platforms to operate under traditional securities broker rules, significantly affecting their operations.

What Fueled the Backlash Against the Regulation?

The IRS regulation was introduced in December 2024, near the end of the Biden administration. It mandated that certain DeFi entities must gather and report transaction data, including issuing traditional income tax forms known as “Form 1099” to their users. The Treasury Department stated that this rule specifically targeted organizations interacting with decentralized protocols directly.

The backlash against this regulation was swift and fierce, with numerous stakeholders in the cryptocurrency sector expressing concern that it would stifle innovation and drive U.S.-based companies to seek opportunities abroad. Following the rule’s implementation, the DeFi Education Foundation, alongside several other organizations, initiated a lawsuit against the IRS, warning of severe market repercussions.

How Did Political Figures Respond?

Senator Ted Cruz, alongside Representative Mike Carey, was instrumental in pushing for the repeal. The voting saw a coalition of Republicans and supportive Democratic figures, including Senate Minority Leader Chuck Schumer, unite for the cause. However, some Democrats took issue with the Republicans, claiming their actions aimed to weaken the IRS by not allocating sufficient budget.

The Senate repeal reflects a significant bipartisan effort to protect the cryptocurrency sector.
Concerns surrounding the IRS regulation had potential implications for U.S. technological innovation.
Critics of the repeal argue that it may weaken the IRS’s enforcement capabilities.

The Senate’s actions highlight the growing recognition of the need to balance regulation with innovation in the cryptocurrency landscape. The support from both sides of the aisle suggests a collective acknowledgment of the importance of maintaining a robust and competitive market for digital currencies.

Source: CryptoSlate

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Daily News

[Quick Facts]

1. Musalem: Tariff impact on inflation may not be transitory.

2. UK Chancellor chooses fiscal austerity despite downgraded growth forecast.

3. Carney: Retaliation measures to counter Trump's auto tariffs.

4. US February durable goods orders rise near historical highs.

[News Details]

Musalem: Tariff impact on inflation may not be transitory

-St. Louis Fed President Alberto Musalem said in his speech on Wednesday that due to changes in tariffs and other factors, there is a greater risk that inflation will remain above the Fed's 2% target or even rise further. Under this circumstance, managing consumers' expectations for future price increases has become more important. If inflation expectations get out of control, the Fed may need to prioritize the price stability target instead of balancing the employment target.

It is still unclear whether the impact of tariffs on inflation will be entirely transitory. If the labor market remains strong and the second-round tariff effects emerge, the Fed may need to keep interest rates at a higher level for a longer period or consider a more restrictive policy.

Last week, Fed Chairman Jerome Powell said that President Trump's trade policies could have a transitory impact on inflation, although he emphasized that many issues were still unclear. Powell also downplayed the soaring inflation expectations shown in the University of Michigan's consumer survey.

It is evident that Musalem does not share this view. And he is not the first official recently to be skeptical of Powell's "transitory inflation" stance. Chicago Fed President Austan Goolsbee holds the same view.

UK Chancellor chooses fiscal austerity despite downgraded growth forecast

On March 26, the UK government unveiled its spring budget, downgrading the country's 2025 economic growth forecast to 1%. This represents a significant reduction from the previous forecast of 2% in October. The Office for Budget Responsibility (OBR) cited rising global economic uncertainty, higher energy prices, increased government debt costs, and sluggish domestic productivity growth as the main factors behind the sharp downgrade. The OBR expects the UK's economic growth rate to rebound to 1.9% in 2026, and then remain between 1.7% and 1.8% from 2027 to 2029.

Despite the halving of this year's growth forecast, UK Chancellor Jeremy Hunt announced a £14 billion package of welfare and government spending cuts to plug the fiscal gap. Overall, to safeguard the fiscal target of "balanced budget by 2030," Hunt implemented a three-pronged austerity approach: 1) reducing the increase in day-to-day public service spending from 1.3% to 1.2%; 2) slashing £4.8 billion in welfare expenditure (which sparked intense protests in Parliament); 3) increasing defence spending, creating a "scissors gap."

Although these measures have led to a lower-than-expected bond issuance scale for next year and a rally in UK government bonds, they are seen by the market as a "fiscal painkiller" rather than a "cure-all solution".

Hunt also stated that the transformation plan has already shown results. The OBR has downgraded this year's growth forecast but upgraded expectations for next year and the following years. By the end of the forecast period, the economy is expected to be larger than previously anticipated. Through the planning reforms, it is projected that by 2029-2030, the economy will grow by £6.8 billion, with an average increase of £500 in real disposable income per person per year. However, due to welfare changes, up to 250,000 people may fall into poverty, a point emphasized by the OBR.

Confidence is expressed in the personalized assistance provided through a £1 billion investment to help people return to work. Unless there is a change in the fiscal rules, there may be a need to raise taxes or further cut spending in the upcoming October budget.

Despite much speculation about the Conservative Party's emergency budget, there will be no change in tax policy today. The planning reforms, assessed by the OBR, are expected to boost economic growth by £680 million and provide £340 million for restoring discretionary spending space.

Carney: Retaliation measures to counter Trump's auto tariffs

Canadian Prime Minister Mark Carney indicated on Wednesday that Canada will soon respond to the new tariffs on imported cars announced by U.S. President Trump and may take retaliatory measures against the United States.

Previously, Canada had already announced a package of retaliatory tariffs totaling CAD 155 billion, stating that they would be implemented in phases depending on Trump's actions.

Carney has been considering non-tariff measures such as export tariffs on goods exported to the United States. In another campaign event this week, Carney also stated that if the White House escalates the trade conflict between the two countries, one of Canada's retaliatory options would be to impose export taxes on major Canadian export commodities such as energy and agricultural products.

US February durable goods orders rise near historical highs

Despite market expectations of an impending US economic recession, durable goods orders in the US unexpectedly rose by 0.9% in February, significantly higher than the anticipated decline of -1%. The January data was also revised upward to a 3.3% increase, up from the previously reported 3.2%. Core durable goods orders (excluding defense and aircraft orders) increased by 0.7% on a monthly basis, marking a near two-year high.

The data indicates that the gap between actual economic data (hard data) and survey-based economic indicators (soft data) continues to widen. Various business confidence surveys and consumer sentiment indicators have remained sluggish, while actual economic activity data such as durable goods orders have shown strength.

[Today's Focus]

UTC+8 16:30 BOE MPC Member Dingel talks

UTC+8 17:45 ECB Vice President De Guindos speaks

UTC+8 21:00 ECB Vice President De Guindos speaks

UTC+8 22:00 US February Existing Home Sales Index MoM

UTC+8 00:15 ECB Governing Council Member Wunsch speaks

UTC+8 00:45 ECB Governing Council Member Escrivá speaks

UTC+8 01:45 ECB Executive Board Member Schnabel speaks

UTC+8 04:30 Richmond Fed President Barkin speaks

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Britain in Talks to Try to Avoid U.S. Tariffs, Finance Minister Says

Source: Yahoo Finance

Gbpusd Wave Analysis

Source: ACTIONFOREX

London Open: Stocks Fall on Trump Auto Tariffs; Next Bucks Trend

Source: Sharecast

Trump Announces 25% Auto Tariffs On Imported Cars To Boost Us Manufacturing

Tariff Exempts USMCA Compliant Auto Parts

Foreign Leaders Criticise The Tariffs

Tariffs May Drive Up Car Prices, Impact Sales and Jobs

Source: CryptoSlate

Gold Rises As Fears Mount Over Trump's Reciprocal Tariff Plans

Source: Theedgemarkets

Senate Blocks Tax Rules Harming Crypto Market

What Fueled the Backlash Against the Regulation?

How Did Political Figures Respond?

Source: CryptoSlate

March 27th Financial News

[Quick Facts]

[News Details]

[Today's Focus]

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