Latest news with #EuropeEarlyEdition
CNBC
10-06-2025
- Business
- CNBC
China's rare-earth mineral squeeze puts defense giants in the crosshairs
The automotive and robotics industries have been hit particularly hard by China's rare earth export restrictions in recent weeks, but analysts warn Western defense giants will also feel the heat. Top U.S. and Chinese officials are resuming trade talks in London for a second consecutive day on Tuesday, pushing to de-escalate tensions over rare-earth minerals and advanced technology. The White House has signaled a willingness to ease chip export controls if Beijing accelerates rare earth exports, boosting investor hopes of a breakthrough. Both sides have accused each other of reneging on a preliminary trade deal struck in Geneva last month. China's Ministry of Commerce in early April imposed export restrictions on several rare earth elements and magnets widely used in the automotive and defense sectors. The curbs were part of a response to U.S. President Donald Trump's tariff increase on Beijing's exported products. National Economic Council Director Kevin Hassett on Monday told CNBC's "Squawk Box" that he expected a deal on rare earths to be struck quickly. "So, our expectation is that ... immediately after the handshake any export controls from the U.S. will be eased, and the rare earths will be released in volume, and then we can go back to negotiating smaller matters," Hassett said. China is the undisputed leader of the critical minerals supply chain, producing roughly 60% of the world's supply of rare earths and processing almost 90%, which means it is importing these materials from other countries and processing them. U.S. officials have previously warned that this dominance poses a strategic challenge amid the pivot to more sustainable energy sources. William Bain, head of trade policy at the British Chambers of Commerce, said it appeared some progress had been made on the first day of U.S.-China trade talks, but it remains "absolutely vital" to achieve a further breakthrough on rare earth policy. "We've seen some relaxation over the weekend with licenses granted in sectors connected with robotics and electric vehicles, but if you take, for example, a critical mineral like samarium, within magnets, that's absolutely essential for F-35 fighter jet construction in the U.S," Bain told CNBC's "Europe Early Edition" on Tuesday. "They can't make them without that. And not having access to that is severely affecting both U.S. construction in that area, but also perhaps its national security if that remains in place," he added. Shares of some European defense giants were trading lower on Tuesday morning ahead of the fresh U.S.-China negotiations. German tank gearbox manufacturer Renk tumbled nearly 8% to lead losses on the pan-European Stoxx 600 index. Sweden's Saab and Germany's Rheinmetall, meanwhile, both fell more than 3.5%. CNBC has contacted the U.S. Department of Defense and the European Commission, the European Union's executive arm, for comment. The restrictions imposed by China's Ministry of Commerce in early April require firms to apply for a license for the export of rare earths and magnets. Rare earth elements play an integral role in modern defense technologies, according to the SFA-Oxford consultancy, enabling advanced radar and sonar systems, laser guidance and propulsion technologies in combat environments. Automotive industry groups have complained about the cumbersome process of trying to get necessary approvals, warning of increasing production threats as inventories deplete. China nevertheless appeared to offer U.S. and European auto giants something of a reprieve over the weekend. China's Ministry of Commerce on Saturday said it was willing to establish a so-called "green channel" for eligible export license applications to expedite the approval process to European Union firms. Beijing also granted rare earth licenses to suppliers of U.S. auto giants General Motors, Ford and Jeep-maker Stellantis, Reuters reported on Friday, citing unnamed sources. Gracelin Baskaran, director of the critical minerals security program at the Center for Strategic and International Studies (CSIS), a Washington-based think tank, said it was just a matter of time before the defense industry sounds the alarm over a rare earth shortage — noting that many of them have already done so behind closed doors. "Defense companies are in the front line of impact, given we need thousands of pounds of rare earths in each submarine and fighter jet," Baskaran told CNBC by email. The U.S., European Union and Australia must coordinate supply- and demand-side interventions to boost rare earths production, CSIS' Baskaran said, adding that this need arises primarily because of prevailing price dynamics. "If the price of praseodymium-neodymium (PrNd) oxide—a critical input for rare earth permanent magnets—remains below $60 per kilogram by 2030, nearly half of the projected non-Chinese supply would become financially unviable. On the supply side, this will necessitate measures such as production tax credits and subsidies," Baskaran said. "On the demand side, implementing incentives to procure minerals from allied nations—similar to the provisions in the Inflation Reduction Act—will be essential," she added. Last month, China temporarily paused export restrictions targeting 28 American companies following a trade truce reached between Washington and Beijing in Switzerland. China continued to block exports from that country of seven rare earth metals to the U.S., however. Many of the 28 American companies given a reprieve on dual-use export restrictions are common targets of Beijing's sanctions because of their activity in the defense sector. Henry Sanderson, associate fellow at the Royal United Services Institute (RUSI), a London-based defense and security think tank, said the defense industry hasn't been nearly as vocal as the automotive sector when it comes to concerns over the impact of a rare earth shortage. "Defense is hard because its less transparent, but they definitely use rare earths and rare earth magnets and especially what's called samarium cobalt magnets, but it's a much smaller demand than EVs or robots or anything like that," Sanderson told CNBC by phone. "I'm less clear whether defense is as worried as the civilian industries, but saying that, looking at the level of magnet production in the West, it is very small," he added.
CNBC
09-06-2025
- Automotive
- CNBC
China extends an olive branch to Western auto giants over rare earth shortage
China appears to have offered U.S. and European auto giants something of a reprieve after industry groups warned of increasing production threats over a rare earth shortage. China's Ministry of Commerce on Saturday said it was willing to establish a so-called "green channel" for eligible export license applications to expedite the approval process to European Union firms. A Ministry of Commerce spokesperson said Wang expressed hope that the EU would take "reciprocal steps" and adopt measures to promote compliant trade of high-tech products with China. The breakthrough comes after trade talks between Chinese Commerce Minister Wang Wentao and EU Trade Commissioner Maros Sefcovic met in Paris, France last week. Beijing also granted rare earth licenses to suppliers of U.S. auto giants General Motors, Ford and Jeep-maker Stellantis, Reuters reported on Friday, citing unnamed sources. The report said China's Ministry of Commerce did not respond to a faxed request for comment. CNBC has contacted GM, Ford and Stellantis. China's Ministry of Commerce in early April imposed export restrictions on several rare earth elements and magnets widely used in the automotive, defense and energy sectors. The curbs were part of a response to U.S. President Donald Trump's tariff increase on Beijing's products. Some of the affected rare earth elements were critical components to the production of both combustion engines and electric vehicles. Maximilian Butek, an executive director and board member of the German Chamber of Commerce in China, said the weekend announcement was certainly good news for European businesses, but noted that it remains unclear whether the fast-track channel applies to large-scale firms or to sectors more broadly. "It is a huge bureaucratic monster that they've created and I'm not sure if they really can now speed up the process and give the licenses to those who need them," Butek told CNBC's "Europe Early Edition" on Monday. Europe's top automakers will welcome the diplomatic breakthrough, Butek said, while stressing the European bloc's need to improve supply chain diversification. "It all hit us quite by surprise that China is even willing to draw this card because this is a retaliation measurement towards the tariffs the U.S. implemented, right? And we, as European companies, we are now in the crossfire of this trade escalation, and this is really not where we want to be," Butek said. "It is not enough just to announce it but they have to show it," he added. China is the undisputed leader of the critical minerals supply chain, accounting for roughly 60% of the world's production of rare earth minerals and materials. U.S. officials have previously warned that this dominance poses a strategic challenge amid the pivot to more sustainable energy sources. Some analysts have compared the industry-wide squeeze on supplies of rare earth magnets to the global semiconductor crisis that disrupted automotive production during the coronavirus pandemic. Speaking to CNBC before China announced plans to expedite the approval process of rare earth exports to the EU, the European Automobile Manufacturers' Association (ACEA) said some of its members were at risk of production outages starting as soon as next month. The car lobby group, which represents the likes of Stellantis, Renault, Ferrari, Volkswagen and Volvo, said rare earth export licenses by China's Ministry of Commerce had been taking a "significant" amount of time to process since the April restrictions came into force. "Generally, global stocks of these magnets are quite low. And, given that China is the bulk global supplier, it has meant that, in the absence of these export licenses, those stocks have been depleting progressively since the start of April," Jonathan O'Riordan, international trade director at ACEA, told CNBC by phone. "We're gradually coming into a very, very critical moment whereby those stocks are now being exhausted, and we are potentially going to see production stoppages," he added. ACEA's warning followed a separate ominous update from the European Association of Automotive Suppliers. Last week, the group said that several auto supplier plants and production lines had already been shut down due to Beijing's recent export restrictions, with further outages expected as rare earth inventories deplete over the coming weeks. Japanese automaker Suzuki Motor, however, suspended production of its Swift car due to China's rare earth curbs, Reuters reported Thursday, citing two unnamed sources. A Suzuki Motor spokesperson did not respond to a request for comment when contacted by CNBC. Demand for rare earths and critical minerals is expected to grow exponentially in the coming years as the clean energy transition picks up pace.
CNBC
30-05-2025
- Business
- CNBC
Could the euro pose a threat to King Dollar?
U.S. President Donald Trump's tariffs regime has sparked volatility in American assets — and European officials are making no secret of wanting the euro to seize upon wavering confidence in the U.S. dollar. The dollar is the world's most commonly held reserve currency, accounting for almost 60% of global foreign exchange reserves and playing an important role in the trade of assets like oil and gold. It also acts as a peg for currencies including the Hong Kong dollar and the Saudi Riyal. In second place, trailing far behind the greenback, is the euro, which makes up around 20% of international FX reserves. The dollar index — which measures the greenback against a basket of major rivals — has fallen by more than 8% since the beginning of the year. This week, European Central Bank President Christine Lagarde said the shifting geopolitical landscape that was driving those moves gave European policymakers an opportunity to raise the euro's status. "Multilateral cooperation is being replaced by zero-sum thinking and bilateral power plays," she said on Monday in a speech at Hertie School in Berlin. "There is even uncertainty about the cornerstone of the system: the dominant role of the US dollar." This, she said, could "open the door for the euro to play a greater international role."Closing that gap was "far from guaranteed," Lagarde noted in her speech, while nevertheless suggesting that the European currency could "earn" greater global influence with the right policy mix. "First, Europe must ensure it has a solid and credible geopolitical foundation by maintaining a steadfast commitment to open trade and underpinning it with security capabilities," she said. "Second, we must reinforce our economic foundation to make Europe a top destination for global capital, enabled by deeper and more liquid capital markets. Third, we must bolster our legal foundation by defending the rule of law — and by uniting politically so that we can resist external pressures." A euro with a raised reserve currency status would bring a plethora of benefits to Europe, Lagarde added, including lower borrowing costs for regional governments, insulation from exchange rate volatility and protections for Europe from sanctions "or other coercive measures." "In short, it would allow Europe to better control its own destiny," Lagarde added. She isn't the only ECB official touting the possibilities for the euro, as confidence in the U.S. wavers. Last week, Isabel Schnabel, a member of the central bank's Executive Board, said the euro area could become a safe haven as Trump's tariffs policies take hold — giving the region "a historical opportunity to foster the international role of the euro." Market watchers who spoke to CNBC were divided on the euro's potential to seize some of the dollar's share of global FX holdings. Appearing on CNBC's "Europe Early Edition" on Friday, George Buckley, chief European economist at Nomura, said he could see upside ahead for the euro, as investors looked to diversify away from the greenback. Asked whether he agreed with Lagarde's assessment of the currency's potential, Buckley responded: "Certainly to some extent." "The dollar still is the biggest reserve currency in the world … the euro is still a distant second, but it's gaining in momentum quite significantly with all the things going on in the U.S.," he said. "I think, for sure there is going to be a lot more interest." Buckley said he was seeing suggestions that, in the current environment, investors might want to allocate their funds to assets other than the dollar. "If they're thinking of switching out of the dollar, the euro is an obvious choice," he told CNBC. "It's a huge trading bloc, and clearly the euro is benefiting from this. We think that the euro could be rising to around about $1.20 by the end of the year." The euro was trading at around $1.13 on Friday morning. Since the beginning of the year, the currency has gained more than 9% against the U.S. dollar — a move to $1.20 would mark an additional jump of around 6% from current Buckley was optimistic about the outlook for the euro, Aaron Hill, chief market analyst at FP Markets, told CNBC that the dollar's dominance "remains formidable." "The euro, while backed by the European Union's substantial economic weight, faces significant hurdles," he said. "Political fragmentation across member states and reliance on U.S. security frameworks limit its global influence." Hill added that the euro's limitations were unlikely to evaporate any time soon. "While rising U.S. debt and shifting global alliances warrant scrutiny, the euro lacks the cohesion and reach to challenge the dollar's supremacy in the near term," he told CNBC. "For now, the greenback's reign endures, unshaken." On Tuesday, John Plassard, senior investment specialist at Mirabaud Group, had told CNBC's "Europe Early Edition" that, with the U.S. dollar still accounting for almost 60% of global foreign exchange reserves, there was "no competition for the U.S. dollar" right now.
Time of India
28-05-2025
- Business
- Time of India
How and why one of the Europe's biggest technology company has lost $130 billion-plus from its value in less than a year
ASML, a key player in the semiconductor supply chain , has seen its market value plummet by over $130 billion in less than a year, dropping from a peak of $429.5 billion in July 2024 to $297 billion by Tuesday's close, per S&P Capital IQ data. The decline reportedly stems from U.S. export restrictions to China and uncertainty over potential U.S. tariffs under President Donald Trump. ASML is one of the biggest technology companies in Europe. The Dutch company, the sole producer of extreme ultraviolet lithography (EUV) machines used by chipmakers like TSMC to manufacture advanced chips, has faced significant headwinds. 'All the equipment manufacturers in the space have come down because they are concentrating all the fears around … the U.S. restrictions to China,' Stephane Houri, head of equity research at ODDO BHF, told CNBC's 'Europe Early Edition' on Wednesday. Houri also pointed to tariff concerns and questions about over-investment in AI, noting uncertainty over whether 'demand is not at the level that many people expect.' What's hurting ASML ASML's inability to ship its most advanced EUV machines to China has limited its sales potential. CEO Christophe Fouquet told CNBC in January that the company's China business is expected to shrink in 2025 compared to 2023 and 2024. Recently, ASML began shipping its next-generation High NA machines, but global chip stocks continue to face pressure from trade uncertainties. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Zumbido e perda de audição? Médico revela técnica caseira de 1 real para aliviar! Zumbido no ouvido Undo Despite these challenges, a potential U.S.-Europe trade deal could ease market concerns. 'If there is an agreement in the end with President Trump and ... Europe and many other countries, they probably will benefit from the relief in the market, and notably in the sector,' Houri said. Analysts remain optimistic, with LSEG data showing an average price target of 779 euros for ASML, suggesting a 17% upside from Tuesday's close. A recent Wells Fargo note, following discussions with ASML's management, highlighted the company's positive outlook for 2025 and 2026, driven by demand from firms like Samsung and Intel for next-generation chipmaking tools.
CNBC
26-05-2025
- Business
- CNBC
‘Buckle up, this ride's far from over': Trump's EU tariffs delay is no guarantee trade tensions won't escalate, market watchers say
Investors should "buckle up" for more volatility as the potential for a trade war has not completely dissipated despite U.S. President Donald Trump's delay of rolling out 50% tariffs on the European Union, analysts warn. Trump announced on Sunday that he had agreed to push the rollout of the punitive import duties back to July 9, following a call with EU Commission President Ursula von der Leyen. The president had initially called for a 50% tariff on EU goods to begin on June 1. He accused the bloc in a social media post of being "very difficult to deal with," and said trade negotiations with the EU were "going nowhere." European stocks rebounded Monday morning, moving into positive territory, after previously sinking on Friday in response to Trump's fresh tariffs threats. Von der Leyen said in a post on X over the weekend that the EU was "ready to advance talks swiftly and decisively." "The EU and US share the world's most consequential and close trade relationship," she said. "To reach a good deal, we would need the time until July 9." An EU official with knowledge of trade talks with the U.S. told CNBC that European Trade CommissionerMaros Sefcovic was due to speak with his U.S. counterparts on Monday. But while Trump's announcement of the delay has granted the two parties some more breathing space, market watchers warned Monday that a lot remains at stake. Berenberg Chief Economist Holger Schmieding told CNBC that the six-week window until tariffs kick in was probably not enough time to "settle all detailed questions" – but he argued it should be sufficient to put the framework of a trade agreement in place. "It should be enough to get an agreement like the one between the U.S. and the U.K.," he said on CNBC's "Europe Early Edition" on Monday. "[It] is basically a matter of political will, and that depends a bit on the U.S. side," he added. "If they do have the political will, we should really be able to have such an agreement with, probably in the end, a 10% tariff from the U.S. on all EU imports, hardly any EU retaliation, and [scaling back] a few sector-specific things … with some of the details to be finalized after July 9." However, Schmieding noted that if the end result were a 20% or 30% blanket tariff on EU goods, "the EU would have no choice" but to impose "significant countermeasures" against the United States. Labeling Trump "an interesting negotiator," Schmieding argued that the president often tries to shock those with whom he's negotiating into agreeing to concessions. But the EU, he said, was unlikely to capitulate to these tactics. "We just have to stay calm, and from the European side, we just have to negotiate – we have to remember from the European side that our market is big, that we do matter in economic terms to the U.S. quite a lot, not just vice versa," he added. "So these negotiations should be negotiations among equals. The European Union is not a region which can be scared into just throwing in the towel." Guntram Wolff, senior fellow at Bruegel, told CNBC that despite the extension of the tariffs deadline, "massive uncertainty" remained. "This uncertainty is bad for business, it's bad for consumers, and frankly it's an unnecessary step in the negotiations," he told CNBC's "Europe Early Edition." "It's very unclear what exactly the U.S. President wants," Wolff added. "That's the biggest obstacle at this stage, that in the negotiations the EU has made offers, has made proposals, but it doesn't really know what the president wants." According to Wolff, the EU is "playing it rather well." "The U.K. has given in on all kinds of demands, China is the other extreme, [it] has really escalated … to a point where the U.S. had to blink, had to give in," he explained. "Europe sort of tries to take a middle path." The EU does have capacity to retaliate should massive tariffs be levied on its exports by the Trump administration, Wolff added, pointing to the importance of its pharmaceutical products to the U.S., and the potential for retaliatory measures to be implemented in the services sector. "But the EU so far has decided not to do it, really to keep a climate of de-escalation," he said. "But at the end of the day, that might not be enough now." Naeem Aslam, chief investment officer at London's Zaye Capital Markets, told CNBC on Monday the tariffs delay had sparked a "tentative risk-on rally" – but like Wolff, he cautioned that much remained at stake. "Looking ahead, the EU-US trade dance is a high-stakes tango, with July 9 as the next flashpoint," he said in an email. "The EU's dangling phased tariff cuts and "mutual respect" talks, but Trump's America-first bravado could turn negotiations into a slugfest, rattling supply chains and fanning inflationary flames." Aslam added that sectors like tech and industrials were particularly "braced for whiplash." "Markets will hang on every tweet and trade talk whisper, with investors betting on whether this delay is a genuine olive branch or just Trump reloading for a bigger tariff showdown," he said. "Buckle up; this ride's far from over."
