Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘Tariffs’

The Siren Song of Strategic Autonomy

Posted by hkarner - 9. November 2019

Daniel Gros is Director of the Centre for European Policy Studies.

A recent report by the European Commission’s in-house think tank has called for Europe to aim for more “strategic autonomy.” But what may seem like an innocuous goal could easily take an economic-nationalist turn, with serious implications for world trade and the global economy.

BRUSSELS – For over a year, US President Donald Trump’s protectionist war against China – and his broader use of import tariffs to advance geopolitical objectives – has been fueling anxiety about the future of world trade. But tariffs are only the tip of the iceberg of economic nationalism. If the world doesn’t navigate carefully, hidden hazards could sink the global trading system.

The United States has not found any followers in its aggressive use of tariffs. In developing countries, there is little pressure to implement similar measures, because so many firms manufacture globally, and even those that do not depend on global supply chains. And in developed economies, major sectors that struggled to cope with import competition in the past – such as the clothing and steel industries – have by now mostly adjusted, and no longer play an important role. This explains why US business leaders largely opposed Trump’s tariffs. Den Rest des Beitrags lesen »

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The Trade Uncertainty Principle

Posted by hkarner - 9. September 2019

Date: 07-09-2019
Source: The Wall Street Journal By The Editorial Board

New evidence that tariff shocks have put economic gains at risk.

President Trump tweeted Friday that “The Economy is great. The only thing adding to ‘uncertainty’ is the Fake News!” Sorry, sir. The economy is fair to good, but it’s no longer as great as it was last year, and a major reason is the uncertainty caused by Mr. Trump’s trade policy.

The President is right that many in the media are cheerleading bad economic news for political reasons. They want him to lose. Certainly it’s amusing to see liberal economists who denied any damage from the uncertainty of Barack Obama ’s hyper-regulation now fret about the uncertainty from trade policy.

But these columns have been consistent in pointing out the harm from both, and our goal has been to prevent economic damage and maintain the faster GDP and wage growth in 2017 and 2018 that were sparked by Mr. Trump’s tax reform and deregulation policies. Our goal is to prevent a recession, not to talk the country into one, and it does no one any good to ignore reality. Den Rest des Beitrags lesen »

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Taming the Currency Hype

Posted by hkarner - 22. August 2019

By Gustavo Adler, Luis Cubeddu, and Gita Gopinath

Escalating trade tensions are taking a toll on the global economy and are partly responsible for the recent downward revisions to our growth forecasts for 2019-20.

Facing sluggish growth and below-target inflation, many advanced and emerging market economies have appropriately eased monetary policy, yet this has prompted concerns over so-called beggar-thy-neighbor policies and fears of a currency war. In this blog post, we discuss the implications of recent policy actions and proposals and offer alternative ways to address concerns over trade imbalances that are much more supportive of global growth.

Higher bilateral tariffs are unlikely to reduce aggregate trade imbalances.

Exchange rates can’t do it all

Monetary easing can help stimulate domestic demand, which in turn benefits other countries by increasing demand for their goods. The concern, however, is that monetary easing also weakens a country’s exchange rate, making exports more competitive and reducing demand for other countries’ imports as they become more expensive—a phenomenon known as expenditure switching. With conventional monetary space limited for some advanced economies, this currency channel of monetary easing has received considerable attention. But one should not put too much stock in the view that easing monetary policy can weaken a country’s currency enough to bring a lasting improvement in its trade balance through expenditure switching. Monetary policy alone is unlikely to induce the large and persistent devaluations that are needed to bring that result. Den Rest des Beitrags lesen »

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Amerikanische Macht ohne Klugheit

Posted by hkarner - 24. Juni 2019

Ana Palacio is former Minister of Foreign Affairs of Spain and former Senior Vice President and General Counsel of the World Bank Group. She is a visiting lecturer at Georgetown University.

MADRID – In der griechischen Mythologie gab es die Prophezeiung, dass Zeus‘ erste Frau Metis, die Göttin der Weisheit, einen Sohn gebären würde, der, ausgestattet mit der listigen Klugheit seiner Mutter und der Macht seines Vaters, den Göttervater letztlich stürzen würde. Um seine Position zu schützen, verschlang Zeus die schwangere Metis. Der vorausgesagte Usurpator in Person seines Sohnes wurde nie geboren, allerdings entsprang eine Tochter, Athene, der Stirn des Zeus.

Die alten Griechen waren fasziniert von den Eigenschaften Metis (listige Klugheit) und Bia (rohe Gewalt). In manchen Fällen huldigten sie Ersterer, verkörpert durch Odysseus, dem sagenhaften Helden in Homers epischem Gedicht Odyssee. In anderen Fällen feierten sie Letztere, wie etwa in Person großer Krieger wie Achilles. Das Ideal allerdings bestand in einer Kombination beider Qualitäten. Das gilt bis heute.In den letzten sieben Jahrzehnten haben die Vereinigten Staaten offenbar erkannt, wie sie das lange Zeit schwer fassbare Gleichgewicht zwischen Metis und Bia herstellen können. Ausgestattet mit reichlich vorhandenen natürlichen Ressourcen, ohne regionale Konkurrenten und größtenteils von Ozeanen umgeben, waren die USA prädestiniert für die Rolle als Weltmacht. Die Behauptung der Position als vorherrschende globale Supermacht wurde jedoch erst durch die facettenreiche, flexible Art des amerikanischen Führungsstils ermöglicht, der militärische, demografische und wirtschaftliche Vorteile mit einer überzeugenden kulturellen Botschaft und kluger Diplomatie verband. Den Rest des Beitrags lesen »

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Apple Explores Moving Some Production Out of China

Posted by hkarner - 21. Juni 2019

Date: 20-06-2019
Source: The Wall Street Journal

Trade tensions prompt iPhone maker to consider diversifying supply chain

Apple has a longstanding dependency on China for manufacturing and as a market.

Apple Inc. is asking suppliers to study shifting final assembly of some products out of China, people familiar with the matter said, as trade tensions prompt the company to consider diversifying its supply chain.

While any major changes would be difficult and could take months to years to implement, Apple is looking into the feasibility of shifting up to around a third of the production for some devices, some of the people said. Destinations under consideration include Southeast Asia, the people said.

No decision has been made on such a move, some of the people said. Any such transition, they said, is unlikely to significantly affect the iPhone in the near term because the company relies on hundreds of thousands of workers available in China to manufacture the high-volume product, which depends heavily on human hands for assembling, as well as a deep network of suppliers there. Den Rest des Beitrags lesen »

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The Lost Spirit of the G20

Posted by hkarner - 20. Juni 2019

Javier Solana, a former EU High Representative for Foreign and Security Policy, Secretary-General of NATO, and Foreign Minister of Spain, is currently President of the ESADE Center for Global Economy and Geopolitics, Distinguished Fellow at the Brookings Institution, and a member of the World Economic Forum’s Global Agenda Council on Europe.

As Japan prepares to host its first G20 leaders’ summit later this month, little remains of the open and cooperative spirit that marked the first such gathering in 2008. But although the United States will most likely continue its protectionist drift, other G20 countries should use the occasion to make a clear case for free trade.

MADRID – On June 28-29, Japan will host its first G20 summit. The initial gathering of G20 leaders, back in November 2008, took place amid the turmoil that wracked global financial markets following the collapse of Lehman Brothers. It produced a clear statement: “We underscore the critical importance of rejecting protectionism and not turning inward in times of financial uncertainty.” In other words, the leaders of the world’s largest economies agreed not to repeat the policy mistakes that aggravated the Great Depression in the 1930s.

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President Donald Trump is trashing deals in favour of tariffs

Posted by hkarner - 8. Juni 2019

Date: 07-06-2019
Source: The Economist

That may backfire on America

New fronts in President Donald Trump’s assault on the global trading system are opening up by the day. On May 30th he dropped a bombshell on Mexico, threatening a 5% tariff on all its exports to America, rising to 25% by October if immigration flows do not fall. On May 31st he turned to India, announcing the end of longstanding trade preferences on around $6bn-worth of its exports to America. A proposal is being considered to enable the administration to increase tariffs on imports from countries deemed to be manipulating their currencies. The appointment of judges to the court of appeals of the World Trade Organisation (wto) is being blocked. Japan and the European Union are on notice that America may impose tariffs on their cars. Meanwhile the biggest trade fight of all, with China, is getting bloodier.

The trade element of Trumponomics is a striking departure from previous administrations’ policies, and a stiff challenge to the multilateral trading system. But critics must face some uncomfortable truths. The first is that some of America’s frustrations with its trading partners are justified. China’s system of subsidies and state-directed capitalism harms competing firms elsewhere, and raises questions about surveillance and security. India’s protectionism has long been an obstacle to trade liberalisation. And the wto’s dispute-settlement system has serious weaknesses. Den Rest des Beitrags lesen »

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The Cost of China Tariffs

Posted by hkarner - 15. Mai 2019

Date: 14-05-2019
Source: The Wall Street Journal By The Editorial Board

Border taxes are an economic loss, as markets are saying.

President Trump often cites the stock market as proof of his economic-policy success, so let’s hope he was watching the Dow Jones Industrial Average on Monday. The Dow fell 2.38%, and the Nasdaq and Russell 2000 fell even more, on the escalating tariff dispute between the U.S. and China.

Stocks are volatile, but there’s no denying that markets are rising or falling these days in substantial part on the prospects of a U.S.-China trade deal. They fell Friday morning after Mr. Trump raised tariffs to 25% on $200 billion in Chinese exports to the U.S., then rose later that day on word that bilateral talks had been “constructive.” Equities fell again Monday when China retaliated with tariffs up to 25% on $60 billion of U.S. goods.

The Dow is now nearly 1300 points lower than it was in January 2018 when Mr. Trump began his tariff offensive—despite the best 12 months for economic growth since 2005 and healthy corporate profits. The stock market isn’t the only measure of economic health, and it can send false signals, but in this case the clear market message is that tariffs will subtract from economic growth. Den Rest des Beitrags lesen »

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Why the US and China See Negotiations Differently

Posted by hkarner - 14. Mai 2019

Shang-Jin Wei, former Chief Economist of the Asian Development Bank, is Professor of Finance and Economics at Columbia University and a visiting professor at the Australian National University.

The recent breakdown in trade talks between the United States and China may in part reflect the two countries’ different approaches to negotiation. Hopefully, this contrast in styles will not cause the talks to fail unnecessarily, given the importance to the global economy of a US-China agreement.

CANBERRA – Trade negotiations between the United States and China have broken down because the US government says the Chinese were walking back their agreement on matters that had previously been addressed. US negotiators and President Donald Trump were furious, and on May 10, Trump more than doubled US tariffs on $200 billion worth of imports from China. The lead Chinese negotiator, Liu He, told reporters that, because a final agreement was not reached, revisions were not “walked back,” a line that the US side does not seem to buy. The Chinese government has now retaliated, announcing that it will raise tariffs on $60 billion worth of US goods.

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The US-China trading relationship will be fraught for years to come

Posted by hkarner - 11. Mai 2019

Date: 09-05-2019
Source: The Economist

That matters more than trade deals today

Over the past two years investors and executives watching the trade tensions between America and China have veered between panic and nonchalance. Hopes for a cathartic deal that would settle the countries’ differences have helped global stockmarkets rise by a bumper 13% this year. But on May 5th that confidence was detonated by a renewed threat by President Donald Trump to impose more tariffs on Chinese imports. As The Economist went to press negotiations rumbled on, but no one should be under any illusions. Even if a provisional agreement is eventually struck, the deep differences in the two countries’ economic models mean their trading relations will be unstable for years to come.

Some trade spats are settled by landmark agreements. In the 1980s tensions between Japan and America were resolved by the Plaza Accord. In September Mr Trump agreed to replace nafta, which governs America’s trade with Canada and Mexico, with a renamed but otherwise rather similar accord (although the new treaty has yet to be ratified by Congress). Even by those standards the China talks have been an epic undertaking involving armies of negotiators shuttling between Beijing and Washington, dc, for months on end. Yet they have never looked capable of producing the decisive change in China’s economic model that many in Washington crave. Den Rest des Beitrags lesen »

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