The theory behind US tariffs One doesn’t have to go too far to understand the logic behind the duties imposed by US president Donald Trump in China, Mexico and Canada. Apart from the punitive reasons, since he considers that they are not doing enough to stop the trafficking of fentanyl, there is a whole theory that they have announced in books Trump’s associates such as Foreign Minister Marco Rubio and conservative think tanks such as the Heritage Foundation. According to their reasoning, the rules of the World Trade Organisation function as a brake “both on GDP growth and on the increase of real wages in the American economy, at the same time as they burden it with very large external debt.” Overturning WTO rules, through the imposition of duties, is considered a “life and death issue” to address China. In their analyses they argue that, until recently, tariffs on imported cars were only 2.5% in the US, 10% in the European Union and 15% in China. The last in a series of policies in which D. Trump include “the piracy and imitations of known products”, he has managed to seriously hurt “the US industrial and defence base”. Especially in the field of defence do they believe that the US will not be able, as they did in the First and Second World War, to provide the weapons and other materials needed to eliminate opponents, in the event of a “new world war”. Yesterday afternoon it became known that the imposition of duties from the US to Mexico would be delayed after the talks of the presidents of the two countries. The red in A.A. and Europe Customs, political instability, what is happening in Santorini yesterday left a heavy footprint on the Greek stock exchange – the General Index yielded nearly 3% – but also on European markets. Suppose the markets are still somehow linked to the real economy. Why else can it be explained that the German Stock Exchange’s DAX index is almost 26% up last year when everyone is talking about the serious problems of the largest European economy? Even on the French stock exchange the CAC 40 index is marginally higher than in early February 2024 when we have all watched the political thriller in Paris. The climate, however, is not pleasant in Athens as foreign portfolios had invested in political stability and government promises for major changes. How will tariffs affect energy prices? Clouds thicken without taking into account the effects Donald Trump’s tariffs may have on the European economy. It is generally accepted that when customs duties are applied and against the EU, they will bring new price pressures to a number of branches. However, there are also those analysts who think that the pressure from tariffs especially in energy will gradually retreat. People in the industry, according to CNBC, expect that oil prices are likely to decrease in the long term after the initial jump that followed heavy duties in Canada, Mexico and China. They appreciate that while the initial move on crude oil is rising, a cycle of tariffs and retaliation from Canada, Mexico, China and perhaps the EU or others in the future could lead to a global slowdown, causing the vertical fall in oil prices as a result of demand decline. Similarly, Goldman Sachs analysts stress that the new duties imposed by US President Donald Trump are likely to have a limited short-term impact on global oil and gas prices. Attica’s placement and London presentation In this unpleasant climate for markets there was yesterday a detailed presentation of the prospects of the ferry industry and Attica Group, at a London event. Everything shows that Piraeus Bank opens the way for the distribution of shares to proceed in the year. At the same time Christos Megalos has opened other fronts such as discussions about the acquisition of National Insurance by CVC Capital Partners, etc. But Attica Group also expects to have better visibility for the support it can receive to proceed with the greening of the fleet. The climate in Brussels is not the same as there was before Donald Trump’s election to the US presidency. So it is quite likely that the scenario of the extension, after 2030, which the Greek side is also trying to reduce the financial burden that Greek shipping must bear. The presentation contained elements of 2023 showing, however, that passenger and truck traffic in the Aegean has exceeded the levels of 2019, while in Adriatic is almost at the levels that were before the pandemic broke out. In 2024 it was definitely a better year and we await the details. An interesting element of the presentation is the group’s plans for new hotel acquisitions, except for the three currently operating in Tinos and Naxos. Interesting and the reference to the competitive advantages brought by the two ships under construction to be routed to the Adriatic lines. Deals continue From yesterday’s meeting of the head of Piraeus Bank with the journalists, however, it appears that the administrations of Greek banks have taken the deals very hot. Mainly because they are looking for new ways to boost revenue and profitability due to the downturn in interest rates, the compression of supplies (by government finger) and the willingness to expand on the neighbouring markets from which they had withdrawn aron – aron due to Greek bankruptcy. So we see Alpha Bank strengthening the position in factoring, Piraeus discussing with CVC about National Insurance, Eurobank has now won the first place in the banking market in Cyprus. As the column has written, in the next few months we may see reordering movements and banking scene in our country as there are various fermentations that are not mentioned. Sense caused, for example, the hymns of Optima Bank C. Taniskidis at a recent Economist event. Mr. Taniskidis made the government’s praise in almost all areas. As one of the guests said, all he didn’t do was finish his speech with “and they lived happily ever after”! The Commission has drawn our attention to VAT. One after another domestic and international institutions (OECD, IOBE, IMF) may point out the need for Greece to phase out the reduced VAT rates, as they are considered to lead to loss of revenue and financial risks, but the Commission reprimanded us for the very opposite. At this stage, the reprimand is at the stage of the letters of warning, initiating infringement proceedings, as Greece between other Member States did not transpose into national law a European directive on the special VAT arrangements for small enterprises, and did not notify the measures for the full transposition into national law of the VAT rates Directive which they had to do until 31 December 2024. The regulations, which did not go through Greek legislation, allow small businesses to sell goods and services without imposing VAT while “relaxing” their compliance obligations. In addition, they provide for VAT exemption for small enterprises established in a Member State other than that to which VAT is due, as regards their deliveries. The second European Directive allows the wider use of reduced rates by Member States, including the use of zero rates for basic products such as foodstuffs, pharmaceuticals and medical products. Finally, under the relevant Directive, country-specific VAT rates, so-called ‘deficits’, are activated in all Member States. As Greece has not yet done the right thing, it now has two months to respond and complete the transposition and notify the Commission of the measures. This means that in order to comply with the EU’s suggestions, Greece must move on to new tax legislation, even in the opposite direction to what would be expected of the operators, who are pushing towards tightening up the VAT regime. Inflation in the euro area persists, and the rate of inflation in the Eurozone rose in January. The first measurement of the new year shows that the hopes of those who thought we had left the phenomenon behind were frenzy. From 2.4% in January it increased to 2.5%, with pressures primarily due to the service sector and energy. Especially the latter, although far from the invisible heights it touched with the outbreak of the war in Ukraine, shows signs of recovery again after a period of severe de-escalation. Specifically, the energy price index from 0.1% increased to… 1.8% last month. As winter in Europe is in full progress, analysts now refer to as the number one reason for a possible bad turn in terms of inflation and growth, the reappearance of the energy crisis, as a result of a geopolitical incident, for example. And the truth is that the international situation is so fluid that no one can prejudge if “tomorrow” a deterioration in the Middle East, or the Ukrainian front, pushes energy prices up overnight again.
The theory behind the U.S. tariffs is the heavy climate in the markets the interesting Attica Group for new hotels. The Commission has ‘streaked’ Greece for high VAT rates.
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