The Daily Update - Trumps Targets Airbus

Yesterday the US government announced that it would be moving forward with plans on tariffs against the EU over what it believes are illegal subsidies the Union give Airbus. Trump has repeatedly complained about the subsidies he believes Airbus gets, plus the trade imbalance with the EU, which reportedly reached USD622bn last year. The U.S. Trade Representative's Office (USTR) said yesterday ‘The WTO has found repeatedly that EU subsidies to Airbus have caused adverse effects to the United States, adding ‘USTR estimates the EU subsidies cause approximately $11 billion of harm in trade to the United States per year. The amount of countermeasures the United States is authorized to impose is currently subject to arbitration at the WTO, the result of which is expected to be issued this summer’.

The tit for tat accusations that have been going on for a number of years now were not helped when the WTO ruled last month in favour of the European claims against Boeing. The move will not help talks between the US and the EU over a new trade deal that has already hit the buffers practically before they started. The US demanded that amongst other things, the EU’s farm subsidies that block market access be up for negotiations, to which the EU flatly refused.

Also overnight we saw that some of China's April macroeconomic figures came in much lower than expected. Retail sales growth was 7.2% year on year, missing the 8.6% forecast by the market and decelerating from 8.7% in March. This was a 16-year low. Also, Industrial output growth fell sharply to 5.4% year-on-in April from March's 8.5%, posting the second-lowest level this year after 5.3% in the first two months. The result was below the 6.5% the market was looking for.

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