Economy

EU tariffs on Chinese-made electric vehicles stifle free trade

Published

5 months ago

June 17, 2024

The European Commission on June 12 announced additional tariffs of up to 38.1 percent on China-made electric vehicles (EVs) for what it claims to be an action to safeguard industries and jobs inside the European bloc.

Expected to take effect by July, three leading Chinese EV manufacturers BYD, Geely and SAIC face tariffs of 17.4 percent, 20 percent and 38.1 percent, respectively – the Commission says other companies that cooperate with the investigation would face a tariff of 21 percent while 38.1 percent import duties will be apportioned to non-cooperating companies.

With the EU currently charging a 10 percent levy on all car imports, the new tariffs, a blot on the already tense China-EU trade relationship further threatens economic activity, especially for the bloc considered to be one of the most outward-oriented economies and the world’s single-largest market area.

Considering China’s status as the world’s largest automobile market, the EU’s latest move not only exacerbates the plight of the bloc’s EV sector which is grappling with declining domestic demand but also impedes China-EU trade. A recent study by the Kiel Institute for the World Economy shows a 20 percent tariff on Chinese EVs could lead to a whopping $3.8 billion drop in the bloc’s EV imports, representing almost 25 percent of the current value of its trade.

With trade and investment serving as the cornerstone of China-EU relations, cooperation in this area has widened and deepened since China joined the World Trade Organization (WTO) in 2001 – providing enormous benefits. In fact, bilateral trade has supported growth in various industries and fostered job creation across China, Europe and beyond.

Recent data shows China and the EU, which account for over a third of global GDP, are two of the biggest trading partners in the world. With China-EU exports accounting for more than a third of world trade, the two economic powerhouses trade goods over $800 billion annually with each other.

While telecom equipment is China’s leading export to the EU, the bloc’s number one exports to China are cars. For EU enterprises, particularly those in the automobile sector, access to China, the world’s most competitive and largest EV market, is increasingly important – not only because the market is lucrative but also healthy competition fosters innovation and improves product quality.

However, the EU’s latest move, which follows in the footsteps of the recent hefty tariff hikes imposed on Chinese EVs by the U.S., threatens the interest of EU enterprises. While the EU justifies these protectionist measures as an attempt to safeguard industries and jobs inside the bloc, it’s likely the move may yield the desired outcome especially in the short term, but, in the long run, the tariff hikes will ultimately erode EU enterprises’ competitiveness in the EV sector on the global market.

Home to by far the world’s top filer of patent applications – including patents relating to EV charging and battery swapping, China’s rapid growth in recent years coupled with its strong supply chain has not only fostered innovation and high-end manufacturing in the country’s EV sector but also increasingly attracts foreign enterprises including European companies – and some have established industry collaborations in China.

By establishing and strengthening cooperation with domestic players in the Chinese EV sector, European companies are able to spur innovation, continuously improve product quality at reduced cost and meet constantly changing consumer demands at home and abroad – highlighting the benefits of free trade.

In a recent example, leaders of Spotlight Automotive, German auto giant BMW’s 50-50 EV venture with Great Wall Motor – China’s largest sport-utility vehicle maker, announced in April this year that the venture is designing and building new models it hopes to sell to customers worldwide including Europe and Southeast Asia.

However, the company has indicated it will not operate in markets that impose hefty tariffs on made-in-China cars. Jason Zhang, director of governance and public relations at Spotlight said “except for markets that levy unreasonably high tariffs (on Chinese-made EVs), Spotlight is designing and building cars for customers all over the world.”

Apparently, just like in the case of Spotlight, several other industry collaborations between Chinese EV enterprises and their European counterparts could face daunting challenges as a result of the EU’s latest move to impose tariffs on Chinese-made EVs.

In Europe, the tariffs hike on Chinese-made EVs presents another blow to the bloc’s struggling EV sector. According to Ernst & Young (EY) Mobility Lens Forecaster published in June this year, Europe’s EV sales are slowing as a result of reductions in EV incentives, lack of affordable EV models and consumer concerns about insufficient chargers. Conversely, China remains on course for growth with EVs expected to account for more than 50 percent of all sales by 2030 – two years faster than previously suggested by forecasts.

Clearly, both parties could have benefited enormously if the EU had opted for win-win cooperation rather than impose new tariffs on Chinese-made EVs.

Economy

SEE Black Market Dollar To Naira Exchange Rate Today 27th November 2024

Published

13 hours ago

November 27, 2024

Naijablitznews

Black Market Dollar To Naira Exchange Rate Today 27th November 2024 Can Be Accessed Below.

The official naira black market exchange rate in Nigeria today including the Black Market rates, Bureau De Change (BDC), and CBN rates.

Please note that the exchange rate is subject to hourly fluctuations influenced by the supply and demand of dollars in the market.

You can purchase 1 dollar at a certain rate now; however, it’s important to remember that the rate can shift (either upwards or downwards) within hours.

How much is a dollar to naira today in the black market?

Dollar to naira exchange rate today black market (Aboki dollar rate):

The exchange rate for a dollar to naira at Lagos Parallel Market (Black Market) players buy a dollar for N1740 and sell at N1750 on Tuesday 26th November 2024, according to sources at Bureau De Change (BDC).

Please note that the Central Bank of Nigeria (CBN) does not recognize the parallel market (black market), as it has directed individuals who want to engage in Forex to approach their respective banks.

Dollar to Naira Black Market Rate Today
Dollar to Naira (USD to NGN) Black Market Exchange Rate Today
Buying Rate N1740
Selling Rate N1750
Dollar to Naira CBN Rate Today
Dollar to Naira (USD to NGN) CBN Rate Today
Buying Rate N1687
Selling Rate N1688
Please note that the rates you buy or sell forex may be different from what is captured in this article because prices vary.

Economy

FX platform: CBN sets $100,000 minimum trade for banks

Published

18 hours ago

November 27, 2024

Kayode Sanni-Arewa

The Central Bank of Nigeria has issued fresh guidelines for interbank foreign exchange trading via the Electronic Foreign Exchange Matching System, mandating a minimum trade value of $100,000.

The directive, dated 25 November 2024 and signed by Dr Omolara Duke, CBN’s Director of the Financial Markets Department, is part of efforts to ensure transparency, efficiency, and compliance within Nigeria’s FX market.

According to a new set of guidelines released by the CBN on Tuesday, the EFEMS is designed to streamline interbank FX trading, reduce counterparty risks, and ensure adherence to CBN regulations.

The apex bank has designated Bloomberg’s BMatch as the official order-matching platform for interbank transactions, with trading hours set between 9:00 am and 4:00 pm West Africa Time on business days.

One notable provision in the guidelines is the enforcement of a $100,000 minimum tradable amount, with incremental clip sizes of $50,000.

The EFEMS is also limited to spot FX transactions involving the Nigerian naira and the United States dollar.

The CBN, however, retains the discretion to introduce other currency pairs when deemed necessary.

The guidelines document read, “All trades consummated on EFEMS are binding unless canceled by mutual agreement of both parties with written approval from the CBN.

“The minimum tradable amount is US$100,000.00, with incremental clip sizes of US$50,000.00.

“Participants must set credit and settlement limits for other counterparties in the system. Transactions exceeding these limits will not be executed.

“Participants must have adequate credit and settlement limits set for the CBN as its counterparty bank.

“Participants are required to comply with the Nigerian Foreign Exchange Code and other CBN regulations.”

Participation in the EFEMS is limited to authorised dealer banks licensed by the CBN, while other institutions wishing to join the platform must first obtain prior approval.

Participants are also required to execute agreements with the CBN-approved platform provider, maintain accurate profiles, and operate within prescribed credit and settlement limits.

Withdrawal from the platform must be preceded by a 30-day notice, along with the resolution of any outstanding obligations.

Also, trades conducted via the platform will remain anonymous until matched. Counterparty details will only be revealed once transactions are concluded, in line with settlement protocols.

Transactions exceeding set limits or conducted outside EFEMS parameters must be reported promptly and logged onto the FX blotter within 10 minutes.

The CBN emphasised that it will closely monitor all transactions on EFEMS to ensure market integrity and transparency.

Participants are required to submit daily reports detailing trade volumes, settlement statuses, and counterparties.

The central bank also reserves the right to publish aggregated or disaggregated trade data for market analysis, subject to confidentiality agreements.

Any violations of the EFEMS guidelines or related regulations will attract strict penalties, including the suspension or revocation of access rights.

The CBN further stated that it will periodically review the platform’s operations to ensure efficiency and compliance with its directives.

In a separate document on Tuesday, the CBN announced that the Bloomberg BMatch system will officially go live as the EFEMS for foreign exchange trading on December 2, 2024.

The CBN outlined that all authorised dealers and banks in the interbank FX market are required to deploy the Bloomberg BMatch system for their trading activities.

The system aims to ensure uniformity and seamless trading among market participants while enabling the CBN to effectively monitor market performance and data management.

The central bank urged banks to liaise with Bloomberg representatives to expedite the onboarding process and address any technical or operational issues promptly.

Economy

Stop Interest Hiking, Experts Tell CBN As Apex Bank Raises Rate Again

Published

18 hours ago

November 27, 2024

Kayode Sanni-Arewa

Experts have called on the Central Bank of Nigeria (CBN) to halt its consistent interest rate hikes, citing the adverse effects on small businesses and household finances. The call follows the apex bank’s decision to increase the Monetary Policy Rate (MPR) by 25 basis points, raising it from 27.25% to 27.50%.

The decision, announced by CBN Governor Yemi Cardoso after the Monetary Policy Committee (MPC) meeting in Abuja, was aimed at tackling rising inflation. The MPC unanimously agreed to the hike, emphasizing its necessity to curb inflationary pressures.

Governor Cardoso also highlighted concerns over inflation driven by surging food and energy costs, stating that price stability remains a top priority. “The full deregulation of the downstream petroleum sector is expected to stabilize price levels in the medium term,” he added.

Financial analysts expressed mixed reactions to the move. Professor Uche Uwaleke, Nigeria’s first Professor of Capital Market, suggested the marginal increase could indicate a pause in aggressive rate hikes by early next year. “A halt is necessary to alleviate the rising cost of funds and improve credit access for small businesses,” Uwaleke explained.

On the other hand, Olatunde Amolegbe, Managing Director of Arthur Steven Asset Management, acknowledged the hike as expected but warned it could further strain businesses and households. “Higher financing costs will be passed to consumers, escalating prices of goods and services,” he noted.

David Adonri, Managing Director of Highcap Securities Limited, underscored the importance of monetary policy in managing inflation but stressed its limitations without complementary fiscal measures. He attributed rising inflation to expansionary fiscal policies, insecurity, and currency depreciation.

Despite the CBN’s measures, inflation remains stubbornly high, exacerbating economic instability. Analysts linked poor Q3 2024 GDP performance in agriculture and manufacturing to rising interest and exchange rates.

Adonri emphasized that unchecked inflation would harm both consumers and producers, urging fiscal and monetary authorities to collaborate on structural reforms. “Interest rate hikes offer short-term benefits, such as exchange rate stability, but addressing structural issues is vital for long-term growth,” he said.

Cardoso expressed satisfaction with the banking sector’s stability amid external and internal challenges. He noted that key financial indicators, including the Capital Adequacy Ratio (CAR) and Non-Performing Loan (NPL) ratio, remained robust.

Experts and the CBN alike stressed the need for coordination between monetary and fiscal policies to address the structural causes of inflation and stabilize the economy. Governor Cardoso reaffirmed the importance of collaboration, especially in managing exchange rate pressures and inflation fueled by high demand and energy costs.