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The two sides are having to rely on one another in trying to make the best out of a tough situation brought about by US tariffs. France did stir the pot a little with some controversial headlines below but as a reminder, that isn’t the official stance by the French government but mere advice for the most part. China did respond but surely France and the EU are not going to pursue something so dramatic, at least not at this point in time.France lands in hot water with China’s media after strategy report floats blanket tariffsChina hits back at France, says might launch investigations into French wineAs that blows over social media, China’s commerce ministry is out with some notable rulings with regards to ties with the EU today.For one, they are now welcoming the idea of Chinese EV makers negotiating agreements with the EU individually. That marks a softening of their previous stance in being critical of firms trying to negotiate deals with the EU on their own terms.The change in stance comes as the EU approved a request by Volkswagen in exempting its China-made Tavascan SUV coupe from import tariffs. That in exchange for an agreed minimum sales price and quota for the vehicle.For some context, that marks the first exemption of its kind since the EU introduced tariffs against China-based EV makers since 2024.Besides that, China has also finalised a ruling on its anti-subsidy probe into EU dairy products. That sees Beijing to impose 11.7% tariffs on EU dairy products starting from 13 February.Tariffs sound like a negative thing but this needs to be put into context.The provisional rates for these tariffs were between 21.9% to 42.7% back in December. And this is in part one of the measures that China is taking up in response to EU tariffs on China-based EV makers.But as both sides negotiate to work out some compromises, China is at least agreeing with European dairy industry associations to reduce the proposed tariffs. And that is reflected above, as they bring it down to just 11.7%.
This article was written by Justin Low at investinglive.com.
💡 DMK Insight
The ongoing tension between the U.S. and France regarding tariffs is more than just a political spat; it’s a potential flashpoint for market volatility. Traders should be aware that any escalation could impact not only bilateral trade but also broader market sentiment, particularly in sectors heavily reliant on exports. If tariffs increase, we could see a ripple effect on commodities and currencies tied to these economies, especially the euro and U.S. dollar. Look at the correlation between trade tensions and market movements—historically, heightened tariffs have led to increased volatility in equities and commodities. For instance, if the euro weakens against the dollar due to these tensions, it could make European exports cheaper, but it also raises costs for U.S. companies relying on imported goods. Keep an eye on key economic indicators from both sides, particularly any shifts in manufacturing data or trade balances. These will be critical in gauging market reactions. As we move forward, watch for any official statements from the French government that could either escalate or de-escalate tensions. A sudden shift in rhetoric could lead to significant market movements, so stay alert for news updates.
📮 Takeaway
Monitor the euro and U.S. dollar closely; any escalation in U.S.-France tariff tensions could lead to increased volatility in these currencies.
