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Trade trouble
06-11-2018, 07:03 AM (This post was last modified: 06-11-2018 07:05 AM by admin.)
Post: #1
Trade trouble
According to Lingling Wei and Bob Davis at The Wall Street Journal, Chinese officials in a meeting with Commerce Secretary Wilbur Ross over the weekend offered to purchase close to $70 billion worth of US goods if the US backs off proposed tariffs on Chinese imports. As part of the new purchases, China would import larger amounts of US soybeans, corn, natural gas, crude oil, coal, and more, according to The Journal.
Three manufacturing companies in Arkansas say they need an exemption from the Commerce Department from President Trump's new tariffs on steel and aluminum imports or they will be forced to close. Arkansas Online reports that three tire-cord manufacturers, Bekaert Corp., Kiswire America and Tokusen USA, have jointly requested an exemption from Trump's tariffs, specifically on "grade 1078 and above wire rod for tire cord." The three companies argue that U.S.-based steel producers are unable to manufacture the quality their company needs.

Three Arkansas companies say they'll close if Trump doesn't give them exemption from steel tariffs | TheHill

The U.S. Trade Representative said NAFTA negotiations are making progress and negotiators will continue to engage in talks, but the three countries are not close to a deal. The Mexican peso fell 1.8 percent amid concerns about a NAFTA deal and after Mexico announced tariffs on a list of U.S. imports. The calendar is now working against talks to revamp the North American Free Trade Agreement, as Congress appears to have run out of time to approve a new deal this year and the Mexico election is July 1.

As NAFTA deal appears more elusive, Mexico's peso, Canadian dollar slump

President Donald Trump's abrupt, erratic approach to trade, even when he does not follow through on the harshest protectionist threats, is already damaging faith in the global trading system. "The Trump administration's increased willingness to argue that conventional imports are a threat to national security could have an adverse impact on the global trading system over the long term," write Nomura economists in a research note. NAFTA talks in particular are under threat from increasingly extreme requests on auto imports from the US delegation.

Trump tariffs already damaging faith in the global trading system - Business Insider

President Donald Trump told U.S. officials not to endorse the Group of Seven’s final communique and accused Canadian Prime Minister Justin Trudeau of making "false statements" at the summit’s closing press conference. “Based on Justin’s false statements at his news conference, and the fact that Canada is charging massive Tariffs to our U.S. farmers, workers and companies, I have instructed our U.S. Reps not to endorse the Communique as we look at Tariffs on automobiles flooding the U.S. Market!,” Trump said on his Twitter account on Saturday evening.

Trump Orders Officials Not to Endorse G-7's Final Statement - Bloomberg

There was nothing particularly surprising about Trudeau’s move — Canada had already threatened to issue them, and retaliation over tariffs is common in the trade world — but it seemed to rub Trump the wrong way. Ultimately, Trump’s harshly worded tweets, personally insulting one of the US’s closest allies and overturning an apparent commitment that had been made just hours earlier, made his exit from the summit even more acrimonious than most analysts expected.

Trump insulted Justin Trudeau after leaving the G7 summit - Vox

President Donald Trump suggested to the G7 leaders that the world should eliminate all tariffs, trade barriers, and subsides in order to promote free trade. The idea comes weeks after Trump imposed huge tariffs of steel and aluminum imports from the European Union, Canada, and Mexico. The suggestion took the G7 leaders aback, reports said. While Trump seemed to reverse course, the president also kept up his complaints about trade deficits.

Trump suggests dropping all tariffs, trade barriers at G7 summit - Business Insider

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06-11-2018, 12:21 PM
Post: #2
RE: Trade trouble
Talks of a trade war with China have momentarily taken a backseat to increasingly acrimonious negotiations with Canada, Mexico and the European Union, as President Donald Trump spent much of the last week exchanging barbs with major economic partners. However, one veteran market watcher warned that investors should stay vigilant on the threat from China – because it could roar back to roil markets if the U.S.-North Korea summit goes awry.

US-North Korea summit may decide a China trade war: Jack Ablin

Europe will implement counter-measures against U.S. tariffs on steel and aluminum just like Canada, German Chancellor Angela Merkel said on Sunday, voicing regret about President Donald Trump’s abrupt decision to withdraw support for a G7 communique.

EU will act against U.S. tariffs on steel, aluminum: Merkel

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06-20-2018, 12:59 AM
Post: #3
RE: Trade trouble
But before evaluating the policy prescriptions for this problem, we must first consider the starting point, which is flawed. The current $370 billion deficit estimate does not account for value-added. When looking at the value-added content of Chinese exports, the U.S. deficit with China is actually only half of what it seems. And if we then add back the U.S. surplus in "invisibles" and how much money the United States brings back from investments in China, the U.S.–China deficit shrinks from 2 percent of U.S. GDP to 0.8 percenta report from Oxford Economics revealed.

In the case of the Apple iPhone, this means that China's exports balance accounts for the full $500 iPhone value, when China adds only approximately $15 to $30 of the value to the phone. Most of the iPhone value accretes to Samsung in Korea ($150) and to Apple — the brand owner and engineer. This highlights how the normal accounting of trade flows is inherently distorted under the current trade-deficit estimates. So maybe the deck has only 25 not 52 cards.

The iPhone example also points to an area of weakness in the president's policy prescription: If the United States introduces tariffs on China's high-tech goods, U.S. companies and consumers could indirectly end up footing part of the bill. This is because the high-tech industries that Trump's tariffs are focused on is where Chinese value-added has the lowest share. If Trump were really interested in impacting the true trade imbalance and not just the misleading headline estimate, he would introduce tariffs on those sectors where China's value-added is highest. This would include sectors like textiles, where 75 percent of value-added is really "made in China."

Why China “holds all the aces” in a full-blown US-China trade war

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06-22-2018, 03:04 AM
Post: #4
RE: Trade trouble
Edwards says a trade war is primed to break out as a result — and could dwarf the escalating trade conflict with China. "The key is that the ECB has, with its divergent monetary policy, pushed down the euro and is indirectly responsible for greatly exacerbating current trade tensions," he wrote in a client note. "The ECB's QE might have papered over the cracks in the eurozone for now, but it has also raised the likelihood of a full blown US/EU trade war." So how might a US-EU trade war look? Edwards says the focus will be squarely on European automakers. As he points out, Trump has long expressed disdain toward the dominance of German brands in the luxury auto market. And today, the US charges just 2.5% on car imports, compared with 10% for the EU and 25% for China. Edwards says expect that to change as Trump looks to implement "considerably higher" tariffs.

US-China tensions distracting from far bigger trade war: Edwards - Business Insider

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06-22-2018, 02:13 PM
Post: #5
RE: Trade trouble
In a conversation that foreshadowed the fractures that emerged at this weekend’s tense G-7 meeting, President Donald Trump reportedly told French President Emmanuel Macron in April that he viewed the EU as “worse than China” when it came to trade issues. According to a report by Axios on Sunday, the conversation took place at the White House on April 24, during Macron’s state visit. When Macron suggested working together on trade to resolve the “China problem,” Trump reportedly said the European Union was a worse problem, and “then went on a rant about Germany and cars.”

Trump reportedly told Macron that EU was ‘worse than China’ - MarketWatch

It is indeed true that the US has a deficit with the rest of the world - it imports more than it exports, to the tune of about half a trillion dollars. President Trump gave a larger figure of $800 billion, which is the deficit for goods only. It's partly offset by a surplus in services.

G7: Fact checking Trump's tweets about trade - BBC News

International Monetary Fund (IMF) chief Christine Lagarde issued a stark warning on global trade disputes on Monday, citing the fallout between the U.S. and its allies at last week's Group of Seven (G-7) summit.  “The clouds on the horizon that we have signaled about six months ago are getting darker by the day, and, I was going to say, by the weekend,” Lagarde told reporters in Berlin, according to Bloomberg News.

IMF chief warns issues warning on trade disputes amid fallout from G-7 | TheHill

The U.S. has a surplus of $20 billion with China and $1.4 trillion with the rest of the world. That’s not a normal trade balance, of course, where the U.S. registered an annual deficit of more than $330 billion with China and about $550 billion with the world last year, but an "aggregate sales surplus" which measures both direct trade and the sales of multinational companies, according to research by Deutsche Bank AG.

The $1.4 Trillion U.S. ‘Surplus’ That Trump’s Not Talking About - Bloomberg

The European Union fought back on Friday against the Trump administration’s tariffs, slapping penalties on an array of American products that target the president’s political base, like bourbon, motorcycles and orange juice. The European counterattack on $3.2 billion of goods, a response to the administration’s measures on steel and aluminum imports, adds another front to a trade war that has engulfed allies and adversaries around the world. China and Mexico have already retaliated with their own tariffs, and Canada, Japan and Turkey are readying similar offensives. The risk of escalation is high since Mr. Trump has promised even more tariffs.

Europe Strikes Back Against Trump Tariffs as Global Trade War Escalates - The New York Times

Ironically, the tariffs could have a small — if somewhat short-lived — upside for Europe. Local steel and aluminum may eventually fall in price because producers in countries like Russia or Japan will divert supplies that otherwise would have gone to the United States, creating a glut in the market. That would be bad for steel producers but good for machinery makers and other companies that use a lot of steel, potentially giving them an edge over their American competitors in overseas markets.

Europe Strikes Back Against Trump Tariffs as Global Trade War Escalates - The New York Times

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06-22-2018, 02:15 PM (This post was last modified: 06-23-2018 07:42 AM by admin.)
Post: #6
RE: Trade trouble
There have been 35 moves of 1 percent or more in the Dow Jones industrial average so far this year. CNBC found fully a third of these moves, or 12 days, were linked to news about trade. On seven of the 12 days, negative trade developments sent the Dow lower by an average of 1.7 percent and cost investors a cumulative $700 billion in market capitalization. On the same days that the Dow dropped 1 percent on trade news, the S&P 500 fell a cumulative $2.2 trillion.

Trump's trade fights have cost the stock market trillions and raised volatility

President Donald Trump on Friday threatened to slam huge tariffs on imported cars from the European Union, a massive threat in the escalating trade conflict between the allies. Trump had directed the Commerce Deparment to launch an investigation into imported autos in May, similar to the procedure that led to the steel and aluminum tariffs. While the results of that investigation are still weeks away, Trump raised the specter of tariffs on Twitter... "Based on the Tariffs and Trade Barriers long placed on the US and it great companies and workers by the European Union, if these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the US," Trump tweeted. "Build them here!" Trump has long been fixated on imported cars. Former Trump adviser Gary Cohn recounted a story during a recent panel in which Trump asked why all cars in the US weren't made domestically.

Trump threatens tariffs on cars, trucks, autos from EU, Europe - Business Insider

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06-23-2018, 07:40 AM (This post was last modified: 06-25-2018 12:52 PM by admin.)
Post: #7
RE: Trade trouble
More Chinese companies in the US are transferring their profits back home as tensions between Washington and Beijing escalate to the threshold of an all-out trade war, according to a recent survey by a non-profit organisation representing Chinese enterprises in America... The CGCC-USA results dovetail with new data released by Rhodium Group, a consultancy that tracks investment flows between China and the US. The value of Chinese investments in the US in the first five months of 2018 dropped by 92 per cent, year-on-year, to US$1.8 billion, according to a Rhodium report published on Wednesday.

Chinese companies in the US are repatriating profits as trade tensions rise, survey shows | South China Morning Post

Trump claims to care about the bilateral balance. Yet trade with Canada is basically balanced. Look at the U.S. data on trade in goods, or on trade in goods and services.  There are other, much more obvious targets** ... Share Trump claims to care about U.S. manufacturing. Yet, Canada is one the rare countries where the U.S. runs a substantial surplus in manufactures... In fact, the U.S. increasingly imports energy and other resources from Canada in exchange for manufactures. And since a lot of Canada’s oil is “trapped” by the Rocky mountains and has no signficant outlet to global markets without traversing the U.S. pipeline network, the U.S. gets that oil on really good terms too. (Check out exhibit 17b of the annual trade release. The average price of oil imports from Canada in 2017 was in the low 40s, well below global benchmarks — helping to keep the overall U.S. oil import price down).

O Canada | Council on Foreign Relations

The president of the Atlanta Fed said Monday that concerns about trade may have thwarted the benefits of tax reform in terms of getting businesses to invest Raphael Bostic, the president of the Atlanta Fed, said the trade concerns aren’t so high as to get businesses to scrap the projects they’re currently working on. But they are enough to get them to be hesitant about the future.

Trump’s tariffs are scaring companies away from making new investments, Atlanta Fed chief says - MarketWatch

That would force any country trying to go after Trump to get creative with their response. Scott Gilmore, a social entrepreneur and former Canadian diplomat, suggested in Maclean's that Canada should use anti-corruption laws to pressure Trump on trade. Trump-branded skyscrapers in Toronto and Vancouver represent the president's most prominent business ventures in the country. "I propose that instead of taxing the import of American serviettes, we tax Trump," Gilmore said. "In the spirit of the Magnitsky Act, Canada and the western allies come together to collectively pressure the only pain point that matters to this President: his family and their assets."

Can America's allies target Trump's businesses in response to tariffs? - Business Insider

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06-25-2018, 12:53 PM (This post was last modified: 06-25-2018 01:58 PM by admin.)
Post: #8
RE: Trade trouble
"The spread between the spot yuan and the fixing has widened sharply. So what it means to me is that the PBOC is fixing dollar/yuan low, just to instill some sense of stability and strength. Meanwhile, I think locals and investors are pulling their money out of China to the extent that dollar/yuan spot is rising," the strategist told CNBC's "Squawk Box." The spread as of Tuesday was at its widest since August 2015, he said, adding in a note that "[f]urther widening of the spot-fixing spread could sour sentiment, regardless of a lower than expected dollar/yuan fixing."

Yuan set to weaken more amid US-China trade tensions, policy divergence

"While the PBOC reiterated its neutral stance, we think that the move is one step further toward more accommodative monetary policy, which is only fitting given softening growth and mounting trade tensions," Wei Yao, China economist at Societe Generale SA in Paris, wrote in a note. She expects further cuts in the reserve rate ratios, lower rates on liquidity instruments and a lower interest rate corridor in the second half of the year.

China to Unleash $108 Billion in Reserve Cut for Some Banks - Bloomberg

The U.S.-China Business Council, which represents American companies that do business in China, said the market is actually much larger than just $130 billion in goods exports that the Trump administration appears to be most focused on. U.S. companies also exported about $60 billion in services to China last year and $40 billion worth of goods to Hong Kong, much of which finds its way into China. On top of that, American companies with operations in China sell hundreds of billions of dollars worth of goods and services to their Chinese customers. When all that is combined, China is about a $550 billion market for American firms, said Erin Ennis, senior vice president at the U.S.-China Business Council.

How China could hit the U.S. where it hurts - POLITICO

U.S. companies are well aware that tariffs are only one way that China can retaliate, said Rufus Yerxa, a former U.S. trade official who now serves as president of the National Foreign Trade Council. At a meeting Tuesday with NFTC’s board of directors — which includes companies like Walmart, Coca-Cola and Facebook — there was “significant concern” from a number of members that Beijing might lash out by “making life miserable for U.S. companies operating in China,” he said. “What are the Chinese going to do when they retaliate? They’re going to say, we can easily take this U.S. company out here because we’ve got a Japanese company, or a Korean company, or a European company ready to come in and do the same kind of business here,” he said. “I think that’s a very credible scenario of how all of this plays out."

How China could hit the U.S. where it hurts - POLITICO

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06-26-2018, 03:34 AM (This post was last modified: 07-01-2018 08:48 AM by admin.)
Post: #9
RE: Trade trouble
US motorcycle company Harley Davidson announced that the company would move some of its production to Europe in response to the trade spat between the European Union and President Donald Trump. Harley's move is an example of what economists say will likely be a growing trend: businesses leaving the US due to Trump's tariffs. Harley's departure is also particularly embarrassing for Trump, since the president has repeatedly praised the company.

Harley Davidson Europe move shows Trump trade war, tariffs worst fears - Business Insider

And then this, can this get any worse?

President Donald Trump threatened motorcycle maker Harley-Davidson with a big tax hit if it moved its manufacturing Thailand. He also accused them of using the tariffs as an excuse to leave the US. But Harley actually started its Thailand factory as a result of another Trump policy — his withdrawal from the Trans-Pacific Partnership.

Trump threatens Harley-Davidson with 'big tax' if it leaves US - Business Insider

Minnesota-based Polaris acknowledged on Friday that it is considering moving some production of its Indian Motorcycles overseas amid concerns over new tariffs from Europe.  A spokeswoman for the company told The Associated Press that it could move some of its production to Poland from Iowa, but noted that "nothing is definitive." "We're looking at a range of mitigation plans," the spokeswoman, Jess Rogers, told the AP. Polaris did not immediately respond to The Hill's request for comment. The acknowledgement from Polaris comes days after Wisconsin-based Harley-Davidson announced that it would shift some of its production abroad due to the European tariffs.

Another US motorcycle company considering moving production overseas | TheHill

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06-30-2018, 12:12 AM
Post: #10
RE: Trade trouble
There’s no question that China is preparing for a trade war,” Edward Alden, a trade scholar at the Council on Foreign Relations, told me. China is currently planning on placing tariffs on $34 billion worth of US goods in response to Trump’s plan to hit $34 billion in Chinese goods with tariffs next week. Beijing is attempting to dissuade Trump from considering additional tariffs in the future by matching the scale of the US’s first batch of them. While China and its Asian trading partners began to work on an agreement before the recent escalations in trade tensions between the US and China, analysts say the timing of the announcement is politically charged. China’s plan to impose tariffs on soybeans is going to hit the US hard. China buys about a third of the US’s soybean exports, making it far and away the largest importer in the world for the American crop. The biggest soybean producers in the US include Ohio, Iowa, Missouri, and Indiana — states in the heart of Trump country where neither the president nor his party wants to see economic instability or job losses in the run-up to the 2018 midterm elections, or the 2020 elections.

It sure looks like China’s preparing for a trade war with the US - Vox

And Harley is one of the companies feeling an immediate squeeze: It’s paying more for its raw materials even as it faces the prospect of tariffs on the cycles it exports. Given that squeeze, it’s perfectly natural for the company to move some of its production overseas, to locations where steel is still cheap and sales to Europe won’t face tariffs. So Harley’s move is exactly what you’d expect to see given Trump policies and the foreign response. But while it’s what you’d expect to see, and what I’d expect to see, it’s apparently not what Trump expected to see. Think about it. Imagine that you’re Xi Jinping, the Chinese president, who has already been telling leaders of multinational corporations that he plans to “punch back” against Trump’s tariffs. How do you feel seeing Trump squealing over a few hundred jobs possibly lost in the face of European retaliation? Surely the spectacle inclines you to take a hard line: If such a small pinprick upsets Trump so much, the odds are pretty good that he’ll blink in the face of real confrontation.

Opinion | Trump Versus the Hog-Maker - The New York Times

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