Business

EU May Target US Tech in Response to Trump’s Tariff Plans, Report Warns

Published

2 weeks ago

February 10, 2025

RTX

Former US President Donald Trump’s plan to impose new tariffs on European imports could spark an unconventional response from the European Union—one that targets American digital services rather than traditional goods, according to a recent report from Goldman Sachs.

Rather than engaging in a tit-for-tat tariff battle on physical products, the EU may leverage its growing trade deficit in services to push back against Washington’s trade measures. With US tech giants generating billions in revenue from European markets, Brussels could consider new digital restrictions to counterbalance the economic impact of Trump’s proposed tariffs.

A Renewed Transatlantic Trade War?

Trump’s announcement last week that he intends to introduce “reciprocal tariffs” has heightened fears of escalating trade tensions between the US and Europe. The Goldman Sachs report, authored by economists Giovanni Pierdomenico and Filippo Taddei, predicts that Washington could increase duties on European car exports by 25 percentage points and impose a 10% tariff on a range of key imports, including metals, minerals, and pharmaceuticals.

These tariffs, if implemented, would affect €190 billion worth of EU exports, accounting for nearly 40% of the bloc’s total shipments to the US.

Historically, the EU has responded to similar trade pressures with countermeasures of its own. When Trump imposed tariffs on European steel and aluminum in 2018, Brussels retaliated by levying duties on iconic American products such as bourbon whiskey and motorcycles. A second round of tariffs was planned but ultimately put on hold, awaiting a World Trade Organization ruling.

This time, however, EU policymakers are expected to proceed with caution.

“We expect the EU to favor a de-escalation of trade tensions as much as possible and resort to strong retaliation only as a last resort,” the Goldman Sachs report noted.

A New Battlefield: The Digital Economy

Unlike in 2018, the EU now has an additional tool at its disposal—the Anti-Coercion Instrument (ACI), a recently introduced mechanism designed to counteract economic pressure from third countries. The ACI allows Brussels to impose tariffs and restrict access to European markets in response to coercive trade actions.

One area that could be targeted is the digital economy, where the EU runs an annual trade deficit of nearly €150 billion with the US. This imbalance is largely due to the dominance of American tech companies, which generate substantial revenues from European consumers while repatriating their earnings through low-tax jurisdictions like Ireland.

According to Goldman Sachs, the EU may look at restricting digital transactions, such as IT service royalties flowing back to the US, as an alternative to directly imposing tariffs on American goods.

“Services imported by the EU from the US span different sectors, including the financial sector, but the lion’s share are IT services that are then invoiced as royalties channelled to the US from Ireland,” the report stated. “Any restrictions on these transactions could have a meaningful impact on the services trade balance.”

The Challenges of Retaliation

While targeting US tech firms could be an effective countermeasure, any action under the ACI would require approval from at least 15 of the EU’s 27 member states—a process that could delay or complicate Europe’s response.

For now, European leaders are closely monitoring Trump’s next steps. If his administration moves forward with its planned tariffs, Brussels will have to decide whether to retaliate with direct duties on American products or take a more strategic approach—one that could see Silicon Valley caught in the crossfire of a transatlantic trade war.

Business

World’s Largest EV Manufacturer Recalls Over 375,000 Vehicles for Power Steering Issue

Published

2 days ago

February 21, 2025

RTX

The world’s largest electric vehicle manufacturer is recalling more than 375,000 vehicles due to a power steering issue that could impact driver control, according to the US National Highway Traffic Safety Administration (NHTSA).

The recall affects certain 2023 Model 3 and Model Y vehicles, with the NHTSA reporting that the printed circuit board responsible for electronic power steering assist may become overstressed. This could result in a loss of power steering assistance when the vehicle stops and then accelerates again.

A loss of power steering assistance requires drivers to exert greater effort to steer the vehicle, particularly at low speeds, increasing the risk of accidents.

The EV manufacturer has not disclosed the number of incidents linked to the issue but stated that it is working to address the problem promptly. Owners of affected vehicles will be notified and offered free repairs, including replacement of the faulty circuit board if necessary.

The NHTSA advises vehicle owners to monitor their dashboard warning lights and seek service immediately if they notice any changes in steering performance. The agency is continuing to monitor the situation to ensure compliance and safety.

This recall comes as the electric vehicle industry faces heightened scrutiny over software and hardware reliability. Despite the setback, industry analysts believe the company’s proactive recall could help maintain customer trust and highlight its commitment to safety and product quality.

Business

Alibaba Reports Fastest Revenue Growth in Over a Year Amid AI Boom

Published

2 days ago

February 21, 2025

RTX

Chinese e-commerce giant Alibaba Group Holding has reported its fastest revenue growth in more than a year, driven by advancements in artificial intelligence and cloud computing. The company’s revenue for the quarter ending in December rose 8% to 280.2 billion yuan (€36.65 billion) compared to the previous year, surpassing analysts’ expectations. Net income surged to 48.9 billion yuan (€6.41 billion), boosting its New York-traded stock by over 12% following the earnings announcement.

Alibaba CEO Eddie Wu highlighted the company’s commitment to AI, stating during an earnings call that Alibaba plans to “aggressively invest” in AI and cloud infrastructure over the next three years, with planned spending expected to exceed its total investments of the past decade. Wu emphasized that artificial general intelligence (AGI), which aims to match or surpass human intelligence, is Alibaba’s primary focus, describing the opportunity as a “once-in-several-decades” transformation for the industry.

The company has already integrated AI into its cloud products, resulting in a 13% revenue growth for its cloud division—the fastest pace in two years. Alibaba’s international commerce unit, including platforms like AliExpress and Lazada, saw a 32% increase in revenue, driven by robust cross-border business performance.

Alibaba’s AI strategy comes amid growing competition between the U.S. and China in the AI sector. In January, Alibaba introduced its latest Qwen AI models, which performed well in industry benchmark tests, positioning the company among China’s leading AI innovators. Additionally, Alibaba is collaborating with Apple to integrate its AI technology into Chinese iPhones.

The company’s resurgence follows a challenging period marked by regulatory crackdowns in China’s technology sector. In 2020, authorities halted the IPO of Alibaba’s financial affiliate, Ant Group, and imposed a record $2.8 billion (€2.67 billion) fine for anti-monopoly violations. However, recent signs suggest a more supportive stance from Beijing. Chinese President Xi Jinping recently met with prominent entrepreneurs, including Alibaba cofounder Jack Ma, signaling renewed government backing for the tech industry.

Amid these developments, Alibaba’s stock has surged by over 60% this year, with U.S.-listed shares rising 8.5% to $136.58 (€130.41) during morning trading. With its focus on AI and cloud computing, Alibaba is well-positioned to capitalize on the growing demand for advanced technology in China and beyond.

Business

Airbus Reports Strong Orders and Steady Growth Despite Supply Chain Challenges

Published

3 days ago

February 20, 2025

RTX

European aircraft manufacturer Airbus has reported solid financial results for 2024, with strong order intake and increased deliveries, further extending its lead over struggling competitor Boeing.

In its annual earnings update on Thursday, Airbus revealed that revenues rose to €69.23 billion, up from €65.45 billion in the previous year. However, adjusted earnings before interest and tax (EBIT) dropped 8% to €5.35 billion, compared to €5.84 billion in 2023. The decline was attributed to restructuring costs in the company’s space division.

Aviation and tourism expert Anita Mendiratta praised Airbus’ performance, stating that the results highlight the company’s focus on fundamentals. “The strong order intake across all divisions signifies sustained market confidence—critical in 2024, the first full year since the pandemic when trade not only recovered but surged,” she said.

Aircraft Deliveries and Orders

Airbus delivered 766 commercial aircraft in 2024, an increase from 735 in 2023, thanks to a strong year-end push. Gross commercial aircraft orders reached 878, with net orders totaling 826 after cancellations.

Looking ahead, Airbus has set a delivery target of 820 commercial aircraft for 2025—a figure lower than its record 863 deliveries in 2019. While some analysts view this target as conservative, Matt Dorset, equity analyst at Quilter Cheviot, noted that it reflects ongoing supply chain issues. “The company will want to avoid another cut to guidance, as occurred in 2024,” Dorset explained.

Airbus lowered its delivery targets in June 2023 due to supply chain disruptions involving engines, aerostructures, and cabin equipment, as well as additional costs in its space systems division. The company continues to face challenges, particularly with Spirit AeroSystems, which is affecting the production of the A350 and A220 models.

Financial Outlook and Dividends

For 2025, Airbus forecasts adjusted EBIT of approximately €7 billion and free cash flow before customer financing of around €4.5 billion. These projections do not account for potential tariffs that could be imposed by a future Donald Trump administration in the United States.

Despite ongoing challenges, Airbus announced an increased dividend of €2 per share for 2024, up from €1.80 the previous year. Additionally, the company proposed a special dividend of €1 per share, with a payment date set for April 24, 2025.

Airbus Extends Lead Over Boeing

Airbus’ stable financial performance contrasts sharply with the difficulties faced by Boeing, which reported a loss of $11.8 billion (€11.3 billion) in 2024—its worst result since 2020. Boeing’s setbacks include a series of safety incidents, strikes, and challenges within its defense programs, further solidifying Airbus’ position as the world’s leading aircraft manufacturer.