Today’s (18 February) trade news includes the EU’s new investigation into Chinese online retailer Shein, one of the first uses of its Digital Services Act in relation to a non-US firm.
There’s also the first round of Japan-US industrial projects following the countries’ trade deal last year and welcome news on UK inflation.
Fresh EU DMA flex
The European Commission (EC) is extending the scope of its application of the Digital Services Act (DSA), opening an investigation into Chinese e-commerce giant Shein for selling illegal products and for its potentially addictive design.
Launched yesterday (17 February), the investigation will address whether Shein is successfully limiting the sale of illegal products including child-like sex dolls, the risks associated with addictive elements of Shein’s design including rewards systems, and the procedures in place to mitigate those risks.
The “transparency” of its “recommender systems” will also be considered. Online retailers collect data about user preferences in order to provide tailored recommendations. Under the DSA firms “must disclose the parameters used” in these recommender systems, as well as provide one option not based on user profiling.
The EU’s executive vice-president for tech sovereignty, security and democracy, Henna Virkkunen, said that the DSA “keeps shoppers safe, protects their wellbeing and empowers them with information about the algorithms they are interacting with”.
Shein told Euronews that it takes its DSA obligations “seriously” and has “continued to invest significantly in measures to strengthen our compliance with the DSA” in recent months.
The investigation has no fixed deadline, with the EC set to continue collecting evidence.
The DSA is designed to regulate online services, including app stores, online marketplaces and social media sites.
Its implementation frayed relations with the US amid heightened geopolitical tensions over trade and Greenland’s sovereignty. Last year, US Vice President JD Vance claimed the EU was “attacking American companies” over a €120m fine levied on X. The social media site transitioned ‘blue-tick’ status from user verification to a paid-for feature, which the EC said violated DSA transparency requirements.
Japan-US industrial cooperation
Japan and the US are set to collaborate on oil, gas and critical mineral projects as part of the trade deal agreed last year.
The plans, worth a combined US$36bn, mark the first wave of projects confirmed since the $550bn tariff-reduction deal was announced in July.
They include Japanese investment worth US$33bn in a natural gas plant in Ohio, a crude oil export oil facility in Texas and an synthetic diamond factory in Georgia.
Japanese prime minister Sanae Takaichi, who secured re-election and a resounding supermajority in the country’s lower house earlier this month, said that she expects the deal will “bring increased sales and business expansion for Japanese companies through the supply of related equipment”.
US President Donald Trump celebrated the projects on his social media site, attributing them to his trade policy:
“The scale of these projects are so large, and could not be done without one very special word, TARIFFS.”
Japan was among the 54 countries that attended the US’ Critical Mineral Ministerial Meeting earlier this month, aimed at ensuring access to rare earths and other critical minerals in the face of China’s dominance over the sector.
In its bid to diversify partnerships and ensure supply, the US also agreed to cooperate with Australia on a series of mining projects last year, with both countries set to invest US$8.5bn in the coming months.
Inflation reprieve?
Good news for UK consumers, as inflation on a host of key goods like food and petrol fell from 3.4% in December to 3% in January.
The Office for National Statistics notes that for household staples including cereal and meat, as well as motor fuel, the pace of price rises slowed.
Experts are anticipating that the Bank of England will use this data to support a cut to the UK interest rate – last held at 3.75% – in March.
The government attributed the fall to decisions made in November’s Budget, with chancellor Rachel Reeves reiterating the key economic message that “cutting the cost of living is my number one priority”.
Reeves attributed freezes in rail fares and prescription fees, along with the £150 off energy bills, as contributing to the fall in inflations.
Shadow chancellor Sir Mel Stride noted that inflation remains above its 2% target and said that “families are still feeling the pinch because of Labour’s economic mismanagement”, calling attention to yesterday’s climbing unemployment figures.
Reflecting on the picture for businesses, the Food and Drink Federation warned that it’s not all good news. After successive years of high inflation, it said “businesses across the supply chain have had their margins eroded, leaving manufacturers particularly susceptible to the supply chain shocks caused by geopolitics or climate change”.
Other news in the headlines
- European Central Bank chief Christine Lagarde is stepping down ahead of the end of her term, in a move widely interpreted as allowing centrist leaders to appoint allies to key positions ahead of next year’s French presidential election
- Prospective cooperation between Canada and UK on defence, as Canadian PM Mark Carney encourages the UK to get on board with plans for a multilateral defence bank
- Reform UK appointed Richard Tice as its business and trade spokesperson yesterday, with Robert Jenrick also appointed economic spokesperson
Yesterday in Trade
- Government halts current project designed to create a UK Single Trade Window
- Trade minister Sir Chris Bryant lined up to lobby for UK inclusion in nascent EU ‘Made in Europe’ programme
- EU plans to boost Euro and mulls its own payments systems in response to US’ increasing unreliability as a trading partner
You can read those stories and more here.
