Today’s (13 January) trade news includes some troubling numbers for EU nations trading with one another, while the ongoing situation in Iran has drawn a new tariff announcement from the US.
EU trade shift
There has been a drop in trade between EU member nations for the first time since the Covid-19 pandemic, according to data seen by the FT.
The proportion of EU GDP growth generated by intra-bloc trade fell from 23.5% in 2023 to 22% in 2024, a draft report of Brussels’ annual single market report suggests. The report argues that there has been a “clear deterioration” in areas of single market cooperation, though the single market remains the continent’s “best asset”.
Also notable is a drop in foreign direct investment (FDI) into the EU, which the report shows has fallen by almost one quarter (22%) within the last five years. It has become “complex and costly to establish and operate companies across the EU” as a result of “fragmented” legal requirements at the national level, its authors add.
The secretary-general of the European packaging industry body EUROPEN, Francesca Stevens, told the FT:
“The problem is not only complex and burdensome regulation, but a false ideological divide between competitiveness and sustainability, the misguided belief that one can exist without the other.”
Fresh US tariffs
US president Donald Trump has taken to his Truth Social platform to announce that, “effective immediately”, the US will be placing an additional 25% tariff on countries which trade with Iran. Iran exported to 147 countries in 2022, according to World Bank data noted by the Guardian.
The president wrote:
“Any Country doing business with the Islamic Republic of Iran will pay a Tariff of 25% on any and all business being done with the United States of America. This Order is final and conclusive.”
The announcement has driven a spike in the price of oil, while China has responded to voice its disapproval. Liu Pengyu, spokesperson for the Chinese embassy in the US, said:
“China firmly opposes any illicit unilateral sanctions and long-arm jurisdiction, and will take all necessary measures to safeguard its legitimate rights and interests.”
Trump has also warned over the potential ramifications of a looming US Supreme Court decision on the legality of his tariff programme. A date for the judgment is not set but could come as soon as tomorrow (14 January). The Republican president argued that, if his tariffs were deemed unconstitutional, “it would be a complete mess, and almost impossible for our Country to pay”.
UK could seize Russian tankers
The UK could use special forces units to seize Russian ‘shadow fleet’ vessels carrying oil in contravention of international law after the government found a legal basis for the action, according to the Times.
A defence source speaking to the newspaper said that “operators fast-roping on to illegal oil tankers” could be an option to “dial up the economic pressure on Russia”. Analysis by The Times suggests that 107 vessels sanctioned by the UK are using falsified flags, making them potential targets for the action.
It follows coordination last week between the UK and US in the seizure of the Marinera, a ship that had been carrying oil for Venezuela, Russia and Iran.
In other news
- A report by the Institute of Economic Affairs suggests that achieving net zero carbon emissions could cost the UK much more than previously thought, beating even a recent estimate of £9trn in the long term
- An offshore wind project in the US by Danish developer Orsted has been permitted to resume work, after a judge ruled against its suspension by the Trump administration
- Opponents of the planned EU trade deal with the Mercosur grouping of Latin American nations are working to cancel or delay the deal ahead of plans to sign it off on Saturday
Yesterday in trade
- The EU is reportedly seeking a ‘Farage clause’ in any agreement on a UK ‘reset’ deal, which would make the UK liable for compensation should a future government withdraw
- The upcoming Digital Networks Act from the EU appears likely to spare the largest US tech firms from stringent new rules, with voluntary guidelines planned
- US inflation was lower than expected in the year to November, hitting 2.7% compared with expectations of 3.1%
