MNI EUROPEAN OPEN: US Places 25% Tariff On Auto Imports
EXECUTIVE SUMMARY
- TRUMP AUTO TARIFFS: PRESIDENT SLAPS 25% DUTIES ON CAR IMPORTS TO US - RTRS
- TRUMP SAYS HE COULD CUT CHINA TARIFFS TO SECURE TIKTOK DEAL - BBG
- FED’S MUSALEM SEES RISKS TO INFLATION, GROWTH BALANCED - MNI
- US WOULD REACH DEBT LIKELY IN LATE SUMMER - CBO - MNI
- CANADA WILL REACT TO TRUMP’S ‘ATTACK’ SOON, COULD IMPOSE TARIFFS, SAYS CARNEY - RTRS
Fig 1: US imports of personal vehicles & light trucks by country % total 2024
Source: MNI - Market News/Bloomberg/Refinitiv.
EU
TRADE (POLITICO): ““I deeply regret the US decision to impose tariffs on European automotive exports,” von der Leyen said in a statement released late Wednesday evening. “Tariffs are taxes — bad for businesses [and] worse for consumers equally in the US and the European Union.””
TRADE (POLITICO): “Countries in the European Union are likely to face a flat, double-digit tariff on all goods as part of the “reciprocal” tariffs President Donald Trump has promised to unveil on April 2. The final tariff rate is still fluid, according to three diplomats, who were briefed on European trade chief Maroš Šefčovič’s Tuesday meeting with Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer.”
UKRAINE (POLITICO): “When European leaders meet on Thursday, they do so knowing they must find a way to retain their best bargaining chips over Russia. Leaders will try to agree a collective response to signals coming from Washington that the administration of Donald Trump wants to ease sanctions on Moscow as an incentive to stop fighting Ukraine.”
UKRAINE (BBC): “Ukrainian President Volodymyr Zelensky has said he hopes the US will "stand strong" in the face of Russian demands to lift sanctions as a condition for a ceasefire in the Black Sea.”
UKRAINE (BBG): “Treasury Secretary Scott Bessent said the Ukrainian government is reviewing a new economic partnership proposal from the US and hopes the agreement could be signed by the two parties as soon as next week.”
TURKEY (BBC): “The head of Turkey's main opposition party has told the BBC that protests will continue "in every city" until either early presidential elections are called, or the jailed mayor of Istanbul, Ekrem Imamoglu, is released from prison.”
US
TARIFFS (RTRS): “U.S. President Donald Trump on Wednesday unveiled a 25% tariff on imported cars and light trucks starting next week, widening the global trade war he kicked off upon regaining the White House this year in a move auto industry experts expect will drive up prices and stymie production.”
US/CHINA (BBG): “President Donald Trump said he would consider lowering tariff rates imposed on China to secure Beijing’s support for a sale of the US operations of ByteDance Ltd.’s social video platform TikTok to an American company.”
FED (MNI): The Federal Reserve ought to consider creating a standing facility or conducting auctions that would cap the Treasury-futures basis in periods of extreme illiquidity in Treasury markets such as that of March 2020, according to a paper co-authored by former Fed Governor Jeremy Stein to be presented at the Brookings Institution on Friday.
ECONOMY (MNI INTERVIEW): CFOs Gloomier, Still Hopeful -- Fed-Linked Poll
FED (MNI): Federal Reserve Bank of St. Louis President Alberto Musalem said Wednesday he sees the risks of higher inflation and weaker growth as balanced at this time but expects the Fed to achieve price stability later than he had anticipated in December.
FED (MNI BRIEF): Minneapolis Federal Reserve Bank President Neel Kashkari said Wednesday he's still keenly focused on bringing inflation all the way back to 2% despite recent progress.
DEBT (MNI BRIEF): Congress has until August or September to broker a debt ceiling agreement if lawmakers want to avoid a first-ever default, according to the Congressional Budget Office Wednesday.
OTHER
JAPAN (XINHUA): “Japanese Prime Minister Shigeru Ishiba said Thursday that Japan will consider an appropriate response against U.S. tariffs on imported automobiles, vowing that all options are on the table.”
JAPAN (BBG): "Bank of Japan should normalize its monetary policy, which is too expansionary, says Takehiko Nakao, Japan’s former vice minister for international affairs at the finance ministry, at Boao Forum."
CANADA (MNI): Bank of Canada officials expressed caution about further interest-rate moves when they decided to lower them for a seventh consecutive meeting on March 12, according to minutes published Wednesday, saying it could take time to figure out whether U.S. tariffs will slow economic growth more than they boost inflation.
CANADA (RTRS): “Canada will soon respond to new tariffs on imported vehicles announced by U.S. President Donald Trump and could impose retaliatory measures against the United States, Prime Minister Mark Carney said on Wednesday.”
MIDDLE EAST (BBG): “Thousands of Palestinians demonstrated across the Gaza Strip Wednesday in rare protests against militant group Hamas, the rulers of the embattled territory that triggered a devastating war with Israel.”
CHINA
LAND (SECURITIES DAILY): “Hangzhou’s sixth land sale auction of the year sold for an average premium of 52%, with one plot in Binjiang District reaching a transaction floor price of CNY72,915 per square meter, a record high for 2025, Securities Daily reported.”
CHINA/US (XINHUA): “China’s Vice Premier He Lifeng and U.S. Trade Representative Greer held candid and in-depth talks during a phone call on Wednesday regarding bilateral economic and trade issues, Xinhua news agency reported.”
CHINA MARKETS
MNI: PBOC Net Drains CNY50 Bln via OMO Thursday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY218.5 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY50 billion after offsetting the maturity of CNY268.5 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.7144% at 09:39 am local time from the close of 1.9819% on Wednesday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 45 on Wednesday, compared with the close of 46 on Tuesday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Higher At 7.1763 Thurs; -0.47% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 7.1763 on Thursday, compared with 7.1754 set on Wednesday. The fixing was estimated at 7.2729 by Bloomberg survey today.
MARKET DATA
CHINA JAN.-FEB. INDUSTRIAL COMPANIES' PROFIT -0.3% Y/Y
MARKETS
US TSYS: Cash Bonds Dealing Slightly Richer Post-Auto Tariff EO
In today's Asia-Pac session, TYM5 is 110-17, -0-01 from closing levels.
- Cash US tsys are flat to 2bps richer, with a steepening bias, in today's Asia-Pac session after yesterday's modest bear steeper.
- Aftermarket, US President Trump signed an executive order to place 25% tariffs on US auto imports. The tariffs will start on April 2, with revenue starting to be collected from April 3. It covers all auto imports, as well as light trucks. It wasn't clear if there are any exemptions around auto parts, with Trump stating if the car is made in the US it will not be subject to tariffs (in response to a question about the matter).
- US initial jobless claims and GDP data due on Thursday are likely to provide more clues to investors on the Federal Reserve's interest-rate path. Fed Speak from Barkin and Collins is also due.
- "A panel of financial experts suggests the Federal Reserve should set up an emergency program to close out highly leveraged hedge-fund trades in the event of a crisis in the $29 trillion US Treasuries market." See BBG link
JGBS: Long End Rally Strongly After 40Y Auction
JGB futures are holding an uptick, +2 compared to the settlement levels, after reversing strength seen in the aftermath of today’s strong 40-year auction.
- Today's supply was met with strong demand, with the actual high yield coming in at 2.71%, notably below dealer expectations (Bloomberg poll) of 2.79%.
- The auction’s cover ratio also improved to 2.9203x from 2.7518x at the previous outing. Notably, the current 40-year auction yield was ~40bps higher than the previous auction, just shy of the cyclical high of 3.01%.
- Cash US tsys are flat to 2bps richer, with a steepening bias, in today's Asia-Pac session. Aftermarket, US President Trump signed an executive order to place 25% tariffs on US auto imports. US initial jobless claims and GDP data due on Thursday are likely to provide more clues to investors on the Federal Reserve's interest-rate path. Fed Speak from Barkin and Collins is also due.
- Cash JGBs are little changed across benchmarks out to the 10-year but 2-8bps richer beyond, with the 40-year leading.
- Swaps have bull-flattened, with rates 1-4bps lower. Swap spreads are mixed.
- Tomorrow, the local calendar will see Tokyo CPI alongside BoJ Rinban Operations covering 3-25-year JGBs.
AUSSIE BONDS: Cheaper, Data Light Local, RBA Policy Decision
ACGBs (YM -2.0 & XM -3.5) are cheaper on a data-light session.
- (AFR) “The [tax] cuts are as fleeting as they are meaningless. They are worth just $10.30 a week to average earners and will be rendered worthless by the end of 2028, thanks to the inevitability of bracket creep. The tax cuts are, of course, a political distraction from the substantive problems Chalmers’ fourth budget fails to address.” (See BBG link)
- Cash US tsys are 1-2bps richer, with a steepening bias, in today's Asia-Pac session after yesterday's modest bear steeper. US initial jobless claims and GDP data due on Thursday are likely to provide more clues to investors on the Federal Reserve's interest-rate path. Fed Speak from Barkin and Collins is also due.
- Cash ACGBs are 2-3bps cheaper with the AU-US 10-year yield differential at +16bps.
- Swap rates are 1bp higher, with lower dated EFPs tighter.
- The bills strip are little changed.
- RBA-dated OIS pricing is little changed across meetings today. A 25bp rate cut in April is given a 4% probability, with a cumulative 60bps of easing priced by year-end.
- The local calendar will be empty for the remainder of the week. RBA Policy Decision is on Tuesday.
BONDS: NZGBS: Cheaper But Off Worst Levels On A Data-Light Session
NZGBs closed cheaper, but off the session’s worst levels, with benchmarks yields 3-4bps higher.
- Today, the local calendar was empty and remain so until Friday's ANZ Consumer Confidence and Filled Jobs data releases.
- NZ-US 10-year yield differential finished 3bps wider at +24bps, reversing yesterday’s narrowing. As a result, the differential hovers just below the widest level for the year and back at November 2024 levels.
- Cash US tsys are flat to 1bps richer, with a steepening bias, in today's Asia-Pac session after yesterday's modest bear-steepener. After the US closed yesterday, US President Trump signed an order for 25% tariffs on imports of all non-US-made automotives including light trucks to come into effect on April 2. Parts have been delayed until May 3 at the latest. US initial jobless claims and GDP data due on Thursday are likely to provide more clues to investors on the Federal Reserve's interest-rate path. Fed Speak from Barkin and Collins is also due.
- Swap rates closed 4-5bps higher.
- RBNZ dated OIS pricing closed flat for 2025 meetings but 3bps firmer for February 2026. 24bps of easing is priced for April, with a cumulative 67bps by November 2025.
FOREX: USD Index Off Post Auto Tariff Highs, CAD & MXN Lag Though
The USD has been unable to sustain earlier gains. Post Trump headlines that he was imposing 25% tariffs on US auto imports the BDBXY index got to 1275.48. However, we have retraced since, last near 1271.95, off around 0.15% versus end NY levels from Wednesday.
- The initial reaction saw safe havens outperform, led by Yen. USD/JPY was last near 150.10/15, up around 0.30% in yen terms and near session lows. Cross asset trends have been less supportive of the yen as the session progressed, with US equity futures back in the green, while HK and China markets have also recovered. US yields are also up from earlier lows.
- Takehiko Nakao, Japan's former FX Chief stated the yen was too cheap on the sidelines of the Boao Forum (per BBG). This echoes comments from a senior lawmaker around yen being too cheap recently. This has likely helped yen sentiment at the margins.
- EUR/USD got close to its simple 200-day MA earlier (1.0727) but we sit higher at 1.0780/85 in latest dealings. This leaves EUR 0.25% higher.
- AUD/USD is firmer back to 0.6315, from earlier lows of 0.6279. NZD/USD got to 0.5712, but is now back in the 0.5740/45 region. Benefiting both currencies is the recovery in China and Hong Kong equities, the HSI up over 1%. Renewed tariff concerns may be driving flows into these markets, as the auto tariffs may be seen as inflationary in the near term for the US, whilst not benefiting growth just yet. Trump also stated in his earlier remarks that China may see tariff relief as part of a deal that sells TikTok.
- China Vice Premier Ding Xuexiang stated at the Boao forum China's economy had started 2025 well and that further policy support will be provided. The Vice Premier also stated China will continue to oppose protectionism and open up to offshore investment.
- USD/CAD is little changed, last near 1.4265, earlier highs were at 1.4317. USD/MXN is near 20.21, off around 0.50%, so both currencies have lagged the softer USD trends elsewhere.
- Later the Fed’s Barkin and Collins speak and final Q4 US GDP, February goods trade, inventories, March Kansas Fed manufacturing and jobless claims print. The ECB’s Lagarde, de Guindos, Villeroy, Schnabel and Buch appear and BoE’s Dhingra talks. The Norges Bank decision is announced.
ASIA STOCKS: Tariff News Hits Autos Whilst China Rallies.
As the US slapped 25% tariffs on auto imports, some regional markets were dragged lower today with Korean auto manufacturers hit hard.
The new unsurprisingly saw Hyundai down 4%, HL Mando (auto parts) down 6% and Kia down 3.6% as the trade war expanded with Trump adding “ we are going to charge countries for doing business in our country and taking our jobs and wealth.”
In early trading in India, TATA Motors has not escaped the pessimism down over 5% from the open.
As China’s key bourses rally, the Vice Premier called for increased global co-operation and opposition to protectionist measures in a keynote speech to the Boau Forum today.
- The Hang Seng lead the way today, rising +1.05%, dragging the others higher. The CSI 300 is up +0.40%, the Shanghai Comp +0.30% and Shenzhen up +0.20%.
- The tariff news however dragged the KOSPI down given the impact on its auto sector, falling -1.12%, giving back all of yesterday's gains.
- Malaysia’s FTSE Bursa KLCI has delivered a good week of returns, up today a further +0.84% and on track for one of the best weeks of the year
- The Jakarta Composite held onto gains to rise just +0.20% to mark three successive days of gains.
- Singapore’s FTSE Straits Times defied the negativity around tariffs to rise +0.45% whilst the Philippines went in the opposite direction, down -0.55%.
- India’s NIFTY 50 is opening up again by +0.45% following yesterday’s loss of -0.77%, being the first down day in in seven trading days.
OIL: Crude Holds Onto Wednesday’s Gains But Has Range Traded Today
Crude has been trading in a narrow range during today’s APAC session after making solid gains on Wednesday. It was supported by US inventory drawdowns and an expected reduction in supply from tighter restrictions against Iran & Venezuela, but further US tariff announcements today brought global growth worries back to the fore limiting further upside.
- WTI is up 0.2% to $69.76/bbl after trading between $69.62 and $69.96. Brent is 0.1% higher at $73.88/bbl and has moved between $73.81 and $73.97. Both have been unable to break round-number resistance after doing so briefly on Wednesday. The USD index is down 0.2% which should also be providing support to dollar-denominated crude.
- EIA data showed a large US crude inventory drawdown last week but also products gasoline and distillate fell signalling robust demand.
- Later the Fed’s Barkin and Collins speak and final Q4 US GDP, February goods trade, inventories, March Kansas Fed manufacturing and jobless claims print. The ECB’s Lagarde, de Guindos, Villeroy, Schnabel and Buch appear and BoE’s Dhingra talks. The Norges Bank decision is announced.
- Gold’s fortunes today were likely to hinge on the market reaction to tariff headlines and announcements and that seemingly was the case.
- Opening up at US$3,018.81 gold rallied throughout the Asian session as equities struggled, reaching $3,034.80; a +0.50% gain.
- An upcoming pilot program in China will allow insurers to invest in gold. This week four insurers secured the membership to the Shanghai Gold Exchange and an allocation of up to 1% could add $25bn to gold demand, likely via ETFs in China.
- Australian miner Gold Resources CEO has stated that the primary sticking point in talks with South Africa’s Gold Field and them acquiring the company was around price.
- The merger between Fury Gold Mines Limited and Quebec Precious Metals Corporation is proceeding as planned with a planned completion date of April 30.
- Goldman Sachs has increased its forecast for gold by year end to $3,300 on ETF flows and Central Bank buying. An increase to $3,300 would represent almost a 9% increase from today’s level.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 27/03/2025 | 0830/0830 |  GB | BOE's Dhingra on inflation targeting in the UK post pandemic period | |
| 27/03/2025 | 0900/1000 | *** |  NO | Norges Bank Rate Decision |
| 27/03/2025 | 0900/1000 | ** |  EU | M3 |
| 27/03/2025 | 1000/1000 | ** | GB | Gilt Outright Auction Result |
| 27/03/2025 | - |  FR | Insee publishes General Govt balance | |
| 27/03/2025 | 1230/0830 | * |  CA | Payroll employment |
| 27/03/2025 | 1230/0830 | *** |  US | Jobless Claims |
| 27/03/2025 | 1230/0830 | ** | US | WASDE Weekly Import/Export |
| 27/03/2025 | 1230/0830 | *** | US | GDP |
| 27/03/2025 | 1230/0830 | ** | US | Advance Trade, Advance Business Inventories |
| 27/03/2025 | 1300/1400 | EU | ECB's De Guindos at 2025 IIF European Summit | |
| 27/03/2025 | 1400/1000 | ** | US | NAR Pending Home Sales |
| 27/03/2025 | 1430/1030 | ** | US | Natural Gas Stocks |
| 27/03/2025 | 1500/1100 | ** | US | Kansas City Fed Manufacturing Index |
| 27/03/2025 | 1530/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 27/03/2025 | 1530/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 27/03/2025 | 1700/1300 | ** | US | US Treasury Auction Result for 7 Year Note |
| 27/03/2025 | 1740/1840 | EU | ECB's Schnabel lecture on MonPol Transmission | |
| 27/03/2025 | 1805/1905 | EU | ECB's Lagarde prerecorded message for Women in Finance conference | |
| 27/03/2025 | 1900/1500 | *** |  MX | Mexico Interest Rate |
| 27/03/2025 | 2030/1630 | US | Richmond Fed's Tom Barkin | |
| 27/03/2025 | 2030/1630 | US | Boston Fed's Susan Collins | |
| 28/03/2025 | 2330/0830 | ** |  JP | Tokyo CPI |
| 28/03/2025 | 0700/0800 | * |  DE | GFK Consumer Climate |
| 28/03/2025 | 0700/0800 | ** |  SE | Retail Sales |
| 28/03/2025 | 0700/0700 | *** | GB | Retail Sales |
| 28/03/2025 | 0700/0700 | * | GB | Quarterly current account balance |
| 28/03/2025 | 0700/0700 | *** | GB | GDP Second Estimate |
| 28/03/2025 | 0700/0700 | ** | GB | Trade Balance |
| 28/03/2025 | 0745/0845 | ** | FR | PPI |
| 28/03/2025 | 0745/0845 | ** | FR | Consumer Spending |
| 28/03/2025 | 0745/0845 | *** | FR | HICP (p) |
| 28/03/2025 | 0800/0900 | *** |  ES | HICP (p) |
| 28/03/2025 | 0800/0900 | ** |  CH | KOF Economic Barometer |
| 28/03/2025 | 0830/0930 | EU | ECB de Guindos At Fed. of Female Professionals Conf | |
| 28/03/2025 | 0855/0955 | ** | DE | Unemployment |
| 28/03/2025 | 0900/1000 |  IT | Business and Consumer confidence | |
| 28/03/2025 | 0900/1000 | ** | EU | ECB Consumer Expectations Survey |
| 28/03/2025 | 1000/1100 | * | EU | Consumer Confidence, Industrial Sentiment |
| 28/03/2025 | 1100/1200 | ** | IT | PPI |
| 28/03/2025 | 1230/0830 | *** | US | Personal Income and Consumption |
| 28/03/2025 | 1230/0830 | *** | CA | Gross Domestic Product by Industry |
