Bedugul Coffee: May 2019

Trade Wars

President Donald Trump, responding to a surge of illegal immigrants across the southern border, vowed to impose a tariff on all goods coming from Mexico, starting at 5% and ratcheting much higher until the flow of people ceases. "America First is a fallacy,” Mexican President Andres Manuel Lopez Obrador told Trump in a letter responding to the announcement it was imposing a blanket tariff on all goods from Mexico from June 10. Such a move would likely hit a number of global firms with those in the auto industry looking particularly vulnerable. Here are Mexican production and export figures for automakers in 2018 and for companies in other industries which have a manufacturing presence in the country.

Shares of major Asian automakers and suppliers tumbled after Trump threatened to slap tariffs on imports from Mexico from next month, potentially upending a decades-old business model of global manufacturers. On both sides of the Pacific, importers and exporters are scrambling as further tariffs of 15% come into effect, on top of the 10% duties imposed last September. The new tariffs will force them to raise prices, take a further hit on margins, or, if they can, find alternatives. China’s consumers are fretting over soaring fruit prices as poor domestic harvests and higher tariffs on U.S. imports take a bite out of supplies.

The suspension of a U.S. trade preference program with India is a “done deal,” a senior State Department official said as Prime Minister Narendra Modi began his second term. President Trump announced in March he would end India’s access to the decades-old Generalized System of Preferences trade program over what the U.S. said was lack of access to India’s market. The program allows emerging countries to export goods to the United States without paying duties. India is the world’s largest beneficiary of the program, which dates from the 1970s, and ending its participation would not only be the strongest punitive action against the country since Trump took office, but would also open a new front in the global trade war.

United States

Secretary of State Mike Pompeo began a five-day European trip with a delayed visit to Berlin, where he was expected to press Germany to boost its military spending, avoid dealings with China’s Huawei and reconsider a pipeline project with Russia. “The president is not satisfied,” Pompeo said of President Donald Trump, who has repeatedly complained that Germany and other NATO allies are not pulling their weight in the alliance.

Exclusive: Amazon is interested in buying prepaid cellphone wireless service Boost Mobile from U.S. carriers T-Mobile US and Sprint, two sources familiar with the matter said. New T-Mobile is the name used by T-Mobile and Sprint to refer to the new entity that will result from their potential merger. Amazon is considering buying Boost - one of Sprint’s prepaid brands - mainly because the deal would allow it to use the new T-Mobile’s wireless network for at least six years, one of the sources said.

The Toronto Raptors, with the support of an entire nation behind them, won the first NBA Finals game played outside the United States with a thrilling 118-109 victory over the two-time defending champion Golden State Warriors. The countdown for Golden State Warriors forward Kevin Durant’s possible return to the lineup from injury ticks even louder after the two-time defending champions dropped the first game of the NBA Finals.

World

When local investigators scoured a riverbed in southern Malaysia for clues in a chemical dumping case that hospitalized over one thousand people earlier this year, they found a cocktail of toxins, including a colorless liquid commonly secreted when tires are recycled. That led environment officials and police to a small firm called P Tech Resources involved in pyrolysis - a business of burning old tires to make low-grade oil that industry sources say is also common elsewhere in Southeast Asia, China and India.

Earlier this month Dipankar Ghosh, a 52-year-old Indian photographer, scaled the world’s fifth-highest peak, the snow-capped Mount Makalu. He didn’t make it back down alive. After being separated from the rest of his team in bad weather, he collapsed and died, according to his tour operator. Nine people have died on the Nepalese side of Mount Everest so far this year, the most during a climbing season on the peak since a deadly earthquake in 2015. However, climbers and guides are blaming a host of other factors for the spike in deaths - what's behind the spike in deaths on Mount Everest?

WikiLeaks founder Julian Assange has suffered “psychological torture” from a defamation campaign against him by the media, judges and senior political figures, a United Nations human rights investigator said. Nils Melzer, the U.N. special rapporteur on torture who visited Assange in a high-security London prison, voiced concern at fresh U.S. criminal charges laid against Assange and reiterated a call for him not to be extradited.

Autos

Tesla promotes lower priced China-made Model 3 in sales push

Electric vehicle maker Tesla said it would price its China-made Model 3 vehicles from 328,000 yuan ($47,529), 13% cheaper than those it currently imports as it pushes sales in the fast growing market.

3 min read

German car stocks fall on Trump's Mexico tariff threat

Shares in German car makers extended losses in Frankfurt after Trump threatened to slap tariffs from next month on imports from Mexico, where the big three manufacturers have plants. BMW, Daimler and Volkswagen, which have plants in Mexico to take advantage of lower labor costs and U.S. trade deals with its southern neighbor, were down by as much as 2.9 percent in early hours.

2 min read

Breakingviews: Merger of equals is French expletive

When two lovers announce plans to marry, to have and to hold and share their lives in equality and mutual respect, it’s normally cause for festive celebration. In business, where a so-called merger of equals binds two parties to communal goals and interests, it’s much the same, writes Rob Cox of Breakingviews. Listen is to the latest Viewsroom podcast on how the Fiat Chrysler and Renault tie-up could play out and what it means for the automotive sector?

7 min read