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    As Trump eyes more tariffs, South Korea remains safe haven for GM and Hyundai

    As President Donald Trump threatens to further increase tariffs on U.S. trading partners, the greatest impact for the auto industry outside of North America would be additional levies to South Korea and Japan.
    The East Asia countries produced a combined 16.8% of vehicles sold last year in the U.S., including a record 8.6% from South Korea and 8.2% from Japan.
    Cars imported from South Korea currently have no tariffs, while those imported from Japan are subject to 2.5% duties. Truck imports for the countries are 25%.

    President Donald Trump welcomes South Korea’s President Moon Jae-In at the White House in Washington, U.S., May 22, 2018.
    Carlos Barria | Reuters

    DETROIT — As President Donald Trump threatens to further increase tariffs on U.S. trading partners, the greatest impact for the auto industry outside of North America would be additional levies on South Korea and Japan.
    The East Asian countries produced a combined 16.8% of vehicles sold last year in the U.S., including a record 8.6% from South Korea and 8.2% from Japan, according to data provided to CNBC by GlobalData.

    They were the largest vehicle importers to the U.S. outside of Mexico — and they have little to no duties compared with the 25% tariff Trump has threatened imposing on Canada and Mexico.
    Automakers such as General Motors and South Korea-based Hyundai Motor export vehicles tariff-free from South Korea. The country overtook Japan and Canada last year to become the second-largest exporter of new cars to the U.S., based on sales.
    It trails only Mexico, which represented 16.2% of U.S. auto sales in 2024, GlobalData reports.
    “Obviously Hyundai has a massive amount of exposure. Behind it is GM … with relatively large volume models,” said Jeff Schuster, global vice president of automotive research at GlobalData. “There’s a lot of risk potentially here, but it’s limited, really limited, to those two players.”

    Imports from Japan are currently subject to a 2.5% tariff for automakers such as Toyota Motor, Nissan Motor and Honda Motor. Vehicles from Japan represented about 1.31 million autos sold last year in the U.S.

    Japan’s percentage of sales has actually decreased in recent years, while South Korea’s exports and sales have continued to rise from less than 845,000 in 2019 to more than 1.37 million in 2024.
    South Korea has 0% tariffs on cars despite Trump renegotiating a trade deal with the country during his first term in 2018. That accord was touted for improving vehicle imports to South Korea, but it did little to address vehicle exports to the U.S.
    The deal also has done little for increasing automotive exports to South Korea, according to data from the International Trade Commission. U.S. passenger vehicle exports to South Korea have actually decreased by roughly 16%.
    Separate from cars, tariffs on trucks exported from South Korea and Japan to the U.S, as well as elsewhere, are 25%.
    A tariff is a tax on imports, or foreign goods, brought into the United States. The companies importing the goods pay the tariffs, and some experts fear the companies would simply pass any additional costs on to consumers — raising the cost of vehicles and potentially reducing demand.

    GM, Hyundai

    South Korea-based Hyundai is the largest exporter of vehicles to the U.S., followed by GM and then Kia Corp., a part of Hyundai that largely operates separately in the U.S.

    GM has notably increased its imports from South Korea in recent years. Its U.S. sales of South Korean-produced vehicles — largely entry-level models — have risen from 173,000 in 2019 to more than 407,000 last year, according to GlobalData.
    GM is the largest foreign direct investor in Korea’s manufacturing industry, according to the automaker’s website. It has invested 9 trillion South Korean won (roughly $6.2 billion) since establishing the operations in 2002.
    GM produces its Buick Encore GX and Buick Envista crossovers, as well as the Chevrolet Trailblazer and Chevrolet Trax crossovers, at plants in South Korea. The company has touted the vehicles as being a pinnacle for the automaker’s profitable growth in lower-margin, entry-level vehicles.

    2024 Chevrolet Trax (left) and 2024 Buick Envista
    Michael Wayland / CNBC

    “We’re taking out costs of programs, improving profitability and creating vehicles that customers love, like the new Chevy Trax and the Buick Envista,” GM President Mark Reuss said during the company’s investor day in October. “Trax and Envista have helped raise our share of the U.S. small SUV market to its highest level since 2007.”
    Hyundai did not immediately respond when asked about potential tariffs on South Korea. GM and Kia declined to comment.
    Terence Lau, dean of the College of Law at Syracuse University who previously worked as a trade expert for Ford Motor, said the automotive industry is built on free trade. If tariffs are implemented, the industry can adjust, but it takes time.
    “The car industry can adjust to anything. Really, it can. It’s always going to make product that customers want to buy, because personal mobility and transportation is a human need all around the world,” he said. “What the car industry cannot do well is pivot on a dime.”
    Lau argued that a single-digit tariff can be a “nuisance,” but once they hit 10% or more, that’s when additional costs can really began eating into the margin or products.

    Tariff cherry-picking

    Ford Motor CEO Jim Farley last week argued that if Trump is going to implement tariffs affecting the automotive industry, it should take a “comprehensive” look at all countries to even the playing field in North America.
    Farley singled out Toyota and Hyundai for importing hundreds of thousands of vehicles annually from Japan and South Korea, respectively.

    Ford CEO Jim Farley poses for a photo at the launch of the all-new electric Ford F-150 Lightning pickup truck at the Ford Rouge Electric Vehicle Center on April 26, 2022 in Dearborn, Michigan.
    Bill Pugliano | Getty Images

    “There are millions of vehicles coming into our country that are not being applied to these [incremental tariffs],” Farley said during the company’s fourth-quarter earnings call with investors. “So if we’re going to have a tariff policy … it better be comprehensive for our industry.
    “We can’t just cherry-pick one place or the other because this is a bonanza for our import competitors.”
    The White House did not respond for comment on potential tariffs on South Korea.
    Trump on Thursday signed a presidential memorandum laying out his plan to impose “reciprocal tariffs” on foreign nations, but did not go into detail regarding what countries could be targeted.
    As a presidential candidate, Trump floated the possibility of imposing across-the-board tariffs on all U.S. imports. But he also advocated for Congress to pass what he called the “Trump Reciprocal Trade Act,” which would empower him to slap tariffs on the goods of any country that has higher tariffs on U.S.-made goods.
    — CNBC’s Kevin Breuninger contributed to this report.

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    U.S. investors, Big Pharma race to find new medicines in China

    U.S. investors like Bain Capital Life Sciences and large pharmaceutical companies like Merck are increasingly looking for new medicines in China.
    Almost 30% of Big Pharma deals with at least $50 million up front came from China last year, up from 20% the year before and 0% only five years before, according to data from DealForma.
    The increase in China deals comes as President Donald Trump and U.S. policymakers pursue protectionist policies in technology like artificial intelligence and semiconductors.

    A worker is working on a drug production line at the production workshop of a pharmaceutical company in Meishan, China, on January 30, 2024.
    Nurphoto | Nurphoto | Getty Images

    A little-known biotech company stunned the biopharmaceutical industry last spring when it declared an “unprecedented” achievement: its experimental cancer drug looked more effective than Merck’s Keytruda in a clinical trial. The company, Summit Therapeutics, licensed the drug from Chinese company Akeso Inc. 
    In October, a group of life science investors announced they were putting $400 million into creating a company called Kailera Therapeutics that would develop experimental obesity drugs it bought from Chinese company Jiangsu Hengrui Pharmaceuticals.

    Then in a matter of days in December, Merck disclosed it would license a potential competitor to Summit’s drug and a separate experimental obesity pill – both from Chinese companies. 
    Suddenly, U.S. companies are racing to find medicines in China. Almost 30% of Big Pharma deals with at least $50 million up front involved Chinese companies last year, up from 20% the year before and none only five years before, according to data from DealForma. 
    “That’s stunning to me,” said Chen Yu, founder and managing partner at crossover fund TCGX. “That’s stunning.” 

    Yu said 20 years ago, few biopharma companies were interested in China because they considered it a small market. His former firm, Vivo Capital, pioneered the concept of bringing U.S. medicines to the Chinese market.
    Today, the movement is going in the opposite direction. He never imagined the proliferation that’s taking place now. 

    Investors and industry insiders offer a few reasons for the trend: Chinese companies are creating better molecules than ever before – and more of them. They can start testing those compounds in humans sooner and at a lower price than in the U.S. Buyers have figured out a business model to essentially import the drugs through licensing deals. Venture funding in China has also dried up, forcing biotech companies to do deals. 
    One thing all of those people in the industry agree on? This trend isn’t going away.
    What’s less clear is what the development means for the U.S. biotech sector. 
    Some people contend it’s terrible for American startups if large pharmaceutical companies can find a promising drug in China for a fraction of the price. Others argue competition makes everyone better, and American companies will ultimately reap the rewards of bringing medicines to the market. Either way, the influx could reshape the landscape of the U.S. biopharma industry. 
    “It’s kind of a watershed moment where the pharma industry is like, ‘We don’t really need to buy U.S. biotechs necessarily,'” said Tim Opler, a managing director in Stifel’s global health-care group. “We will if it makes sense, but we can buy perfectly good biotech assets through licensing deals with Chinese companies.” 
    Bain Capital Life Sciences started making China a priority around 2018, said Adam Koppel, a partner at the fund. The private equity firm saw the Chinese government and the life sciences industry making a deliberate effort to evolve from its historical focus on copycat and fast-follower drugs that mimicked leading drugs to creating new chemical matter that China could export to the rest of the world. 
    Since then, Bain has struck six biopharma deals in China. It bought an experimental asthma drug from Hengrui in 2023 and co-launched a company called Aiolos with a $245 million series A funding round. GSK acquired the company three months later for up to $1.4 billion. 
    Koppel sees more large pharmaceutical companies growing comfortable with drugs coming out of China as they work with more of them and see their outcomes, he said. Buyers had held back in part because they worried data from China wasn’t representative of a global population and U.S. regulators wouldn’t accept it. 
    “As they’re seeing assets then come out, they’re seeing things that are having success, and eventually, as things get approved and used on the market, I think that that concern will become lessened,” he said. 

    Piotr Swat | Lightrocket | Getty Images

    That narrative was on display when Summit Therapeutics last year said its experimental cancer drug beat Merck’s mega-blockbuster Keytruda in a head-to-head study, a feat no other drug has accomplished. Summit’s trial was conducted exclusively in China, making people question if the results would hold up elsewhere. 
    When Summit’s leaders were shopping for a drug they could develop, they made it a point to look in China because co-CEO Bob Duggan had read more new medicines were coming from the country. But it was late 2022, and the U.S. Food and Drug Administration had just rejected a few applications for drugs that were studied only in China, including one from Eli Lilly.
    When Summit announced it was licensing the cancer drug ivonescimab from Akeso, people questioned how Summit could do the deal knowing that the FDA would never accept it, said Summit’s co-CEO and president, Maky Zanganeh.
    “And suddenly after us, a lot of people opened their eyes,” she said.

    More CNBC health coverage

    Ivonescimab had already undergone early studies and was in late-stage trials in China when Summit struck the licensing deal. Summit is now running three global phase 3 trials to satisfy the FDA’s desire for drugs to be studied in diverse groups of people. 
    Summit’s strategy could become more common. Investors and other industry insiders said one of the draws about doing deals with Chinese biotech companies is they can find molecules that have already undergone early studies at a lower price than in the U.S. So the U.S. businesses know what they’re getting, and they can probably get it for less.  
    Gilead spends a lot of time in China looking for assets like it does in the U.S. and Europe, the company’s chief financial officer, Andrew Dickinson, told CNBC. Gilead has seen a “substantial shift” in the quality and quantity of assets being developed in China and being offered to U.S. biopharma companies.
    “The transformation over the last five years is real and impressive,” Dickinson said. 

    It helps that more Chinese companies need to do deals now. The amount of venture funds raised by the Chinese biotech industry cratered to just $1 billion last year from a peak of $6.3 billion in 2021, according to data provided by TCGX’s Yu. 
    “Why would we do any early-stage development in the U.S. anymore?” Yu said. “Why wouldn’t we just get clinical proof of concept in China and then bring it over to the U.S. for the expensive clinical development when we actually know the drug works? And I think that could be a very revolutionary new way for our industry to become more efficient.”
    That’s an opportunity – or risk – for the U.S. biopharma industry, depending on who you ask. Some, like Yu, see it as a way to bring down the price of prescription drugs. Others worry it could hobble U.S. companies if Merck and other large pharmaceutical companies pass on acquiring American startups in favor of licensing assets from China.

    A worker is working on a drug production line at the production workshop of a pharmaceutical company in Meishan, China, on January 30, 2024. 
    Nurphoto | Nurphoto | Getty Images

    The day in December that Merck announced it was licensing an experimental obesity pill from China’s Hansoh for up to $2 billion, shares of U.S. company Viking Therapeutics plunged 18%. Viking is seen as an acquisition target since it’s developing drugs in the red-hot obesity space, and suddenly it looked like one possible suitor had chosen to spend its money elsewhere. 
    People see parallels to what happened in the artificial intelligence space when China’s DeepSeek declared it had created a model that was just as good as U.S. models for much less than American companies are spending. 
    President Donald Trump or U.S. policymakers could see the similar trend in biotech as a threat and intervene to stop these deals, what Yu calls the “stroke of a pen” risk. Lawmakers last year floated the Biosecure Act that would have restricted U.S. companies from working with Chinese contract manufacturers. 
    Washington has already embraced protectionist policies in other competitive areas like artificial intelligence and semiconductors. It’s possible that could extend to life sciences. 
    “The deeper message from DeepSeek is that we have competition in the high sciences in general, and moreover that China is making major investments to develop scientific assets,” said Stifel’s Opler.
    Put another way: the race in biopharma is on.

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    Barclays shares sink 6% despite fourth-quarter profit hike as 2025 guidance fails to impress

    British bank Barclays posted a rise in full-year pre-tax profit that came in just ahead of analyst expectations, while also launching a £1 billion share buyback.
    Pretax profit rose by 24% to £8.108 billion in 2024, just above analyst expectations of £8.081 billion, according to LSEG. 

    Chris Ratcliffe | Bloomberg | Getty Images

    Shares of British bank Barclays sank in early Thursday trade, after the lender’s forward guidance failed to impress despite its full-year pre-tax profit beat.
    Pretax profit rose by 24% to £8.108 billion in 2024, just above an analyst forecast of £8.081 billion, according to LSEG. 

    Net profit attributable to shareholders also picked up by 24% to £5.316 billion in 2024, but fell short of the £5.449 billion expected by analysts. Fourth-quarter attributable profit came in at £965 million, below the £994 million analyst outlook for the period.
    The lender’s total income picked up to £6.96 billion in the three months to the end of December, versus £5.6 billion in the fourth quarter of 2023, with the core Barclays investment and retail units logging 28% and 46% year-on-year hikes to £2.61 and £2.62 billion, respectively.
    The group’s return on tangible equity, a measure of profitability, averaged 10.5% in 2024, up from 9% in the previous year — as the bank set out targets for an increase to around 11% in 2025 and to more than 12% in 2026.
    The bank also sets out to achieve a net interest income (NII) — a key profitability metric that indicates the money a bank made from loans after deducting the interest paid on deposits — of  £7.4 billion across its retail unit this year, in line with expectations cited by Citi analysts.
    “New 2025 guidance for NII, cost-income and RoTE are all broadly in-line with consensus, while 2026 targets are unchanged. Overall a solid set of results, but little new to get excited about either. This, plus the strong run up in the share price over the past year, may temper any initial reaction, but the stock still appears inexpensive in our view,” they said.

    RBC’s Benjamin Toms told CNBC that, coming into the results, anticipation had built that Barclays could improve its outlook compared with the bank’s 2024 strategic plan — yet, instead, “the messaging today was very much a reiteration of existing guidance.”
    “There was a slight disappointment around NII guidance. But our takeaway from the presentation is that management are probably being a bit conservative here,” he added.
    “The results themselves look satisfactory but the outlook is disappointing. In particular there is no change to FY26 targets (we expected increased capital return) and FY25 targets look in-line with consensus except for a slight downgrade to Banking NII – surprising given the Q4 beat,” KBW analysts said in a note.
    Barclays shares were down 5.51% by 12:08 p.m. London time.

    Restructuring

    Since last year, Barclays has been implementing a strategic overhaul to whittle down costs by £2 billion by 2026, lift shareholder returns and stabilize financial returns, sharpening its focus on the profitable consumer and lending operations — and leading to the absorption of the retail banking business of British grocer Tesco’s.
    Yet Barclays’ traditionally strong banking unit could now stand to benefit from more open market share in the domestic space, as HSBC last month announced it is preparing to exit its M&A and equity capital markets businesses in Europe, the U.K. and the U.S. amid a larger restructure of its investment banking operations.
    The bank has also been recovering from a sweeping three-day tech outage that disrupted payments and transactions at the end of last month, which has since been resolved.
    More broadly, lenders have been battling lethargy in the U.K. economy and a pullback in IPO activity in the London Stock Exchange. The Bank of England executed its first rate cut of the year last week and signaled further trims in 2025 amid a downgrade in the U.K.’s economic forecast — with monetary easing typically eating away at bank profits, as it tightens the spread between lenders’ return in loans and their payout on deposits. British and European banks are also struggling to keep pace with counterparts in the U.S., which could benefit from an additional competitive edge if newly inaugurated U.S. President Donald Trump takes a lighter approach to local regulation.
    In parallel, U.K. Finance Minister Rachel Reeves is prodding Britain’s Financial Conduct Authority toward promoting competitiveness in tandem with consumer protection, with markets eyeing the government’s Financial Services Growth and Competitiveness Strategy due out in spring. More

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    Germany’s second-largest lender Commerzbank to cut 3,900 jobs as it unveils new targets

    Commerzbank on Thursday announced it will eliminate 3,900 full-time positions by 2028, largely in its native Germany, as it unveiled a spate of new strategic targets.
    Commerzbank CEO Bettina Orlopp told CNBC’s Annette Weisbach after the news that it was important the job cuts were done in a “very social, responsible way.”
    Germany’s second-largest lender anticipates around 700 million euros ($730.7 million) of before-tax restructuring costs in 2025, targeting a net result of 2.4 billion euros after these charges for the year.

    Germany’s second-largest lender Commerzbank on Thursday announced it will eliminate 3,900 full-time positions by 2028, largely in its native Germany, as it unveiled a spate of new strategic targets.
    The job cuts will be accompanied by increases in staffing in “selected areas” such as in international locations, resulting in a broadly constant global headcount of 36,700, the bank said in its strategic update.

    Commerzbank CEO Bettina Orlopp told CNBC’s Annette Weisbach after the news that it was important the job cuts were done in a “very social, responsible way.” She added that she believes the reductions can take place “without weakening the morale, which is actually really, really good.”
    The lender anticipates around 700 million euros ($730.7 million) of before-tax restructuring costs in 2025, targeting a net result of 2.4 billion euros after these charges for the year. It plans a payout ratio of more than 100% over the 2025-2028 period, after the deduction of restructuring costs and Additional Tier 1 (AT 1) bond coupons.
    The bank also raised its longer-term revenue goals to 3.8 billion euros in 2027, up from a previous forecast of 3.6 billion euros, and said it is now targeting a higher return of tangible equity rate — a profitability metric — of 13.6% in the year, from 12.3% previously.
    Commerzbank had disclosed its “record” annual performance two weeks before the scheduled release of its financial results, in a bid to fall in step with German legal requirements when a company’s capital return significantly exceeds the expectations of capital markets.
    At the time, it said net profit hiked by 20% to a forecast-beating 2.68 billion euros ($2.78 billion) in 2024, outlining plans to repurchase 400 million euros of shares and boost its dividend payout to 0.65 euros per share, compared with 0.35 euros per share in the previous year. Full-year revenue in 2024 came in at 11.1 billion euros, compared with 10.461 billion euros in 2023, the bank said Thursday.

    “We have delivered, consequently, over the past four years, what we have promised, and we intend to do that also in the coming years,” Orlopp said Thursday.
    Deutsche Bank analysts said the “relatively linear” planned progress to Commerzbank’s new mid-term target is a “positive,” noting the spate of “bullish new targets.”
    Commerzbank shares are up 21.8% year to date and were 0.68% higher at 11:34 a.m. London time on Thursday.

    ‘Activist investor’

    Commerzbank has been advocating its case to stand alone since last year’s surprise build of a stake by UniCredit fueled market talk that Italy’s second-largest lender could be on the hunt for a cross-border takeover. UniCredit currently holds a direct 9.5% stake and a 18.5% stake via derivatives in Commerzbank.
    The German government has opposed the prospect of such a cross-border consolidation, with Finance Minister Jörg Kukies slamming UniCredit’s “very aggressive, very opaque” bid in a CNBC interview in January.
    Split between the German overture and a takeover offer for Italian lender Banco BPM, UniCredit CEO Andrea Orcel has kept his cards close to his chest over his company’s ultimate intentions regarding Commerzbank.
    Speaking to CNBC on Thursday, Orlopp said that Commerzbank has a dialogue with UniCredit, which it views as a shareholder.
    “At the moment, we can only treat them as investors, and that we do, and we are very open to answer their questions,” she noted. “Beside that, we said, if we want to talk about anything else, like a combination, given that we have a situation where we have one side who has secured nearly 30% of the shares in our company, we expect kind of an outline draft of what they think they would like … to achieve with respect to the structure, with respect to the financials, and then we are also open to talks.”
    UniCredit “feels a little bit like an activist investor, yeah, that’s true. It’s all about style,” Orlopp added.
    Speaking to CNBC this week after UniCredit reported a fourth-quarter profit beat and guided a slowdown in 2025 revenues, Orcel stressed that Commerzbank remains an investment — but also that he is “quite optimistic of being able to convince everybody, not only on the premises of how we got to this investment, but also that a combination between the two banks has massive value to be created, not only for the two banks and the stakeholders, but also for Germany and for Europe.” More

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    Cheap solar power is sending electrical grids into a death spiral

    In 1812 Frederick Winsor, a madcap entrepreneur, invented the public utility. The idea behind his Gas Light and Coke company, which would supply residents of London, was that instead of each household buying its own energy—bags of coal, bits of firewood—the stuff would be piped directly to them from a central location. More customers, with differing patterns of demand, would allow power plants to be used more efficiently. It was a natural monopoly: scale would spread the cost of the gasworks, the pipes and so on across large numbers of customers, each spending less than they would individually to consume just as much. The idea of “energy as a service” spread across the world. More

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    Russian inflation is too high. Does that matter?

    While inflation has cooled almost everywhere, in Russia it is hotting up. Consumer prices rose by 9.5% year on year in December, up from 8.9% the previous month and uncomfortably above the central bank’s target of 4% (see chart). The prices of fruit and vegetables have risen by more than 20% on average in the past year. In a normal country, this sort of high inflation would be unsustainable. But Russia is not a normal country. More

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    Why you should repay your mortgage early

    The holiday from reality, for the happy few enjoying it, has been delightful. Three years ago it was still possible to fix a mortgage rate in Britain and much of the euro area at somewhere near 1%. American housing loans were dearer by just a percentage point or two. Even as interest rates have risen and borrowing costs for new mortgages have doubled or tripled, homeowners who locked in the enviable rates of the early 2020s have been living blissfully in the past. Moreover, the inflation that prompted rates to rise has bitten chunks out of the real value of their debt. More

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    How AI will divide the best from the rest

    At a summit in Paris on February 10th and 11th, tech bosses vied to issue the most grandiose claim about artificial intelligence. “AI will be the most profound shift of our lifetimes,” is how Sundar Pichai, Alphabet’s boss, put it. Dario Amodei, chief executive of Anthropic, said that it would lead to the “largest change to the global labour market in human history”. In a blog post, Sam Altman of OpenAI wrote that “In a decade perhaps everyone on earth will be capable of accomplishing more than the most impactful person can today.” More