As the U.S. turns the screws on China with its recent announcement to levy a 10 percent tariff on $300 billion more of Chinese exports, the European Union is clueless about the damage this could cause to its economy. Latest among the U.S. accusations is that China is a currency manipulator – an allegation that is not completely unfounded, as the Chinese yuan fell below the virtual glass ceiling exchange rate of seven yen per U.S. dollar. The yuan currently trades at 7.04 per USD.
This deflationary situation will reverberate across the European markets, which are already slipping into recession. The German manufacturing market is in its worst shape since 2012, when the eurozone crisis played out. Major German automakers like Daimler and BMW manufacture many of their exports to China from U.S. plants, and the tariffs war has caused a steep decline in their Chinese sales.
This apart, the U.S. has been pressuring the EU to buy its agricultural products, a push that will only grow stronger as China starts looking the other way. With Brexit looming on the corner, the EU’s economy is in a state of shock and it might take a miracle to stop it from sinking to its knees.
Did you know?
U.S. crude futures fell 4.7 percent to $51.09 a barrel on the New York Mercantile Exchange – their lowest close since mid-January. They have dropped 13 percent so far in August, their worst start to a month in four years, according to Dow Jones Market Data.
“We should prepare for contraction in the German economy in the second quarter, unless exports bring an unexpected surprise on Friday.”
– Carsten Brzeski, ING’s chief economist for Germany, while talking of Germany’s slump in industrial production.
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Though lithium-ion batteries are considered to be unsustainable for a fully electric future of transport, they are still being used, as the alternatives have either not reached economies of scale or simply cannot perform to the level that a lithium-ion battery can. However, a team of researchers from Dalhousie University in Canada have designed lithium-ion battery cells with higher energy density without using the solid-state electrolyte that is widely considered to be necessary for enhancing energy density. In essence, if this technology is made mainstream, lithium-ion batteries will have a longer life and thus, be of a lot more value to the auto industry.
Hammer down everyone!