01/05/2025

BIZ & FINANCE THURSDAY | MAY 1, 2025

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BRICS blasts ‘resurgence of trade protectionism’

Mercedes pulls 2025 earnings guidance BERLIN: Mercedes-Benz yesterday pulled its earnings guidance for 2025 amid uncertainty over the impact of US President Donald Trump’s tariffs on car imports, as the German automaker posted sharply lower first-quarter profit. “Clearly Mercedes-Benz is a global player ... we don’t fear competition in any direction,” CEO Ola Källenius told analysts. “But that’s not the environment we’re operating in.” He said “constructive” talks with the Trump administration over boosting Mercedes’ US manufacturing presence were ongoing, but declined to provide details. Chief financial officer Harald Wilhelm told analysts that, given the uncertainty over tariffs, full-year guidance “cannot be provided today with a reliable degree of certainty”. But he said that if tariffs remained in place all year, it would reduce profit margins by 300 basis points on cars and 100 basis points on vans. Mercedes faces challenges in all its major markets, from Trump’s tariffs, to competition from fast-moving rivals in China and new CO2 emissions targets in the European Union. Stellantis also said yesterday it was suspending its guidance. On Tuesday, Volvo Cars withdrew its earnings forecast for the next two years, citing uncertainty over the tariffs. Meanwhile, German rival Volkswagen yesterday posted a steep drop in first-quarter profit and said it expected its annual operating profit margin at the lower end of guidance. Mercedes told analysts at the end of March it had been stockpiling inventory in the US to mitigate the impact of tariffs. The premium automaker’s car and van sales dropped 7% in the first quarter, led by 10% declines in both Europe and China, though sales were up 1% in the US market. The company’s sales fell 3% last year, led by a 7% drop in China. Mercedes reported a first-quarter profit margin for its car business of 7.3%, down from 9% in the same period last year. – Reuters UK govt to regulate cryptocurrencies LONDON: The UK government published on Tuesday draft legislation aimed at regulating cryptocurrencies like bitcoin and ethereum, after the European Union introduced its own framework. “Crypto exchanges, dealers and agents will be brought into the regulatory perimeter – cracking down on bad actors while supporting legitimate innovation,”the Finance Ministry said in a statement. “Crypto firms with UK customers will also have to meet clear standards on transparency, consumer protection, and operational resilience – just like firms in traditional finance.” The new regime comes after the introduction of the European Union’s Markets in Crypto-Assets Regulation, which came into force in December. But Finance Minister Rachel Reeves stressed that the UK was in talks with the United States on the issue, adding that “regulation must support business, not hold it back”. Speaking at a fintech summit in London, Reeves said international cooperation on the sector was vital. She said she had discussed“continued US and UK engagement” with American Treasury Secretary Scott Bessent last week. This would include further dialogue at the UK-US financial regulatory working group in June “to support the use and responsible growth of digital assets”. Around 12% of UK adults own or have owned cryptocurrencies, compared to just 4% in 2021. – AFP

RIO DE JANEIRO: China, Brazil and other members of BRICS on Tuesday slammed the “resurgence of trade protectionism” at a meeting in Rio de Janeiro dominated by US President Donald Trump’s tariffs blitz. Chinese Foreign Minister Wang Yi and his Russian counterpart Sergei Lavrov were among the top diplomats of the 11-country grouping attending two days of talks on issues ranging from Trump’s trade war to the push for peace in Ukraine. Mauro Vieira, foreign minister of Brazil which holds the rotating BRICS presidency, said the bloc underscored its “firm rejection” of protectionism, without explicitly referring to Trump. Since returning to the White House in January, Trump has hit dozens of countries with a blanket 10% tariff, but China faces levies of up to 145% on many products. Beijing has responded with duties of 125% on US goods. o Growing group shows internal rifts as ministers fall short of joint statement

negotiate with Washington instead. Brazil has, however, made no secret of its frustration with European Union regulations on some of its agricultural exports, imposed over Amazon deforestation. Vieira hit out on Tuesday at the use of “non-tariff” trade barriers, deployed under “environmental pretexts”. The group trod more carefully on the issue of non-dollar transactions among BRICS members. At a summit last year in Russia, BRICS leaders discussed boosting such transactions, eliciting a swift rebuke from Trump who threatened them with 100% tariffs if they undercut the US currency. Brazil said the ministers this week had “underlined the importance of greater use of local currencies”. “Multilateralism” and “cooperation” were the watchwords of the meeting, which also discussed the wars in Ukraine and Gaza. The BRICS ministers called for a “complete withdrawal” of Israeli forces from Gaza, terming Israel’s more than 50-day aid blockade of the territory “unacceptable.” As in the past, Russia’s BRICS partners stopped short of condemning Moscow’s invasion of its neighbour, while calling for a “lasting peace deal”. – AFP

BRICS, which was founded by Brazil, Russia, India and China in 2009 and now also includes Egypt, Ethiopia, Indonesia, Iran, Saudi Arabia, South Africa and the United Arab Emirates, has become a major counterweight to Western-led groups such as the G7. It now makes up nearly half of the world’s population, and 39% of global GDP. The meeting in Rio came at a critical moment for the world economy after the International Monetary Fund slashed growth forecasts over the impact of Trump’s sweeping levies on imports. The ministers did not issue a joint statement. Brazil instead settled for a declaration summarising the discussions. Vieira said there was “absolute consensus” on the subject of “trade conflicts and tariffs”. Some BRICS members have avoided Trump’s trade fury. Brazilian exports to the United States are subject to 10% tariffs, a fraction of those imposed on China. And while Latin America’s biggest economy has been hit by Trump’s tariffs on steel imports – Brazil is the second-biggest supplier of steel to the United States – President Luiz Inacio Lula’s government has declined to retaliate and sought to

A woman working on a bicycle assembly line in the MFC (Manufacture Francaise du Cycle) factory in Machecoul, France. – AFPPIC

French economy returns to thin growth in Q1 PARIS: France’s economy returned to growth in the first three months of the year but the expansion was modest, held back by sluggish household consumption and stagnant investment, official data showed yesterday. Gross domestic product (GDP) expanded by 0.1% between January and March in the eurozone’s second biggest economy after a 0.1% contraction in the fourth quarter. their pockets, with household consumption unchanged after growing by 0.2% in the previous three months. Investment for businesses, households, and government, meanwhile, continued to trend in negative territory, contracting 0.2% following a 0.1% contraction the previous quarter.

The political context in the country remains unstable almost eight years into President Emmanuel Macron’s tenure and casts a shadow over the economy. Prime Minister Francois Bayrou’s minority government is regularly threatened by the risk of a no-confidence vote that could bring it down. Russia’s war against Ukraine and President Donald Trump’s imposition of tariffs have added to the uncertainty. – AFP

This growth update from France is the first to be published yesterday ahead of those from Germany, Italy and the eurozone itself.

In the first quarter, growth was restrained by the reluctance of consumers to reach deep into