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Posts Tagged ‘Trade’

Trump-Backed U.S.-British Free-Trade Deal Faces Hurdles

Posted by hkarner - 28. August 2019

Date: 27-08-2019
Source: The Wall Street Journal

Resistance rises on both sides of the Atlantic to a pact, and no deal can be made if the U.K. remains in the EU customs zone

British Prime Minister Boris Johnson and President Trump arrived on Sunday for a bilateral meeting during the G-7 summit in Biarritz, France.

President Trump and U.K. Prime Minister Boris Johnson want to quickly strike a free-trade pact after Britain leaves the European Union. Resistance is already rising on both sides of the Atlantic.

The two leaders touted bilateral ties after Brexit, particularly on trade, at the Group of Seven major economies’ summit in France this past weekend. Once the U.K. isn’t bound by EU membership, Mr. Trump said Sunday, there won’t be an obstacle for an agreement.

“We’re working on a very big trade deal and I think it’s going to work out very well,” Mr. Trump said, without providing any details but adding that he expected to move forward “pretty quickly.” Den Rest des Beitrags lesen »

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Trump’s Assault on the Global Trading System

Posted by hkarner - 17. August 2019

Date: 16-08-2019
Source: Foreign Affairs By Chad P. Bown And Douglas A. Irwin

And Why Decoupling From China Will Change Everything 

Donald Trump has been true to his word. After excoriating free trade while campaigning for the U.S. presidency, he has made economic nationalism a centerpiece of his agenda in office. His administration has pulled out of some trade deals, including the Trans-Pacific Partnership (TPP), and renegotiated others, including the North American Free Trade Agreement (NAFTA) and the U.S.-Korea Free Trade Agreement. Many of Trump’s actions, such as the tariffs he has imposed on steel and aluminum, amount to overt protectionism and have hurt the U.S. economy. Others have had less obvious, but no less damaging, effects. By flouting international trade rules, the administration has diminished the country’s standing in the world and led other governments to consider using the same tools to limit trade arbitrarily. It has taken deliberate steps to weaken the World Trade Organization (WTO)—some of which will permanently damage the multilateral trading system. And in its boldest move, it is trying to use trade policy to decouple the U.S. and Chinese economies. Den Rest des Beitrags lesen »

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The Impact of US-China Trade Tensions

Posted by hkarner - 24. Mai 2019

By Eugenio Cerutti, Gita Gopinath, and Adil Mohommad

US-China trade tensions have negatively affected consumers as well as many producers in both countries. The tariffs have reduced trade between the US and China, but the bilateral trade deficit remains broadly unchanged. While the impact on global growth is relatively modest at this time, the latest escalation could significantly dent business and financial market sentiment, disrupt global supply chains, and jeopardize the projected recovery in global growth in 2019.

Evolution of trade in the US and China

The raising of US tariffs to 25 percent on $200 billion of annual Chinese imports on May 10, together with the announced Chinese retaliation, marks the latest escalation in the US–China trade tensions.

The impact of previously imposed tariffs by the US and subsequent retaliation by China is already evident in trade data. Both the countries directly involved and their trading partners have been affected by rising tariffs.

In 2018, the US imposed tariffs sequentially on three “lists” of goods from China, targeting first $34 billion of annual imports, then $16 billion more, and finally an additional $200 billion. As a result, US imports from China have declined quite sharply in all three groups of the goods on which tariffs were imposed.

In cases where there was a delay between announcement and implementation of tariffs, as in the case of the $16 billion and $200 billion lists, or plans to phase in the tariff increase, as in the case of the $200 billion list, we observed an increase in import growth in advance of the effective dates. This suggests that importers stocked up ahead of the tariffs, accounting for the sharper decline in imports thereafter.

As China imposed retaliatory tariffs, US exports to China also declined. While the front-loading dynamic is not evident in this case, US export growth to China has been generally weaker since the trade tensions began.

Effects on consumers

Consumers in the US and China are unequivocally the losers from trade tensions.  Research by Cavallo, Gopinath, Neiman and Tang, using price data from the Bureau of Labor Statistics on imports from China, finds that tariff revenue collected has been borne almost entirely by US importers. There was almost no change in the (ex-tariff) border prices of imports from China, and a sharp jump in the post-tariff import prices matching the magnitude of the tariff. Den Rest des Beitrags lesen »

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Xi’s Trip to Rare Earths Plant Stokes Talk of Trade Retaliation

Posted by hkarner - 21. Mai 2019

Date: 20-05-2019
Source: Bloomberg News

President Xi Jinping’s visit to a rare earths facility fueled speculation that the strategic materials could be weaponized in China’s tit-for-tat with the U.S. on trade.

Shares in JL MAG Rare-Earth Co. surged by their daily limit Monday after state news agency Xinhua said the Chinese president had stopped by the company in Jiangxi. Official news outlets give regular updates on the whereabouts of top leaders, sometimes leading to share spikes on the belief that companies have been handed official backing.

Shares in JL MAG Rare-Earth jumped after President Xi visited the company
But the visits may also flag policy priorities, and rare earths have featured in the escalating trade spat between the U.S. and China. The Asian country raised tariffs to 25% from 10% on American imports, while the U.S. excluded rare earths from its own list of prospective tariffs on roughly $300 billion worth of Chinese goods to be targeted in the next wave of measures. Den Rest des Beitrags lesen »

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A Trade Love Triangle

Posted by hkarner - 17. Mai 2019

Date: 16-05-2019
Source: YaleGlobal

Networks of trade contribute to peaceful relations among nations, but Europe, China and the United States are finding themselves in a challenging love triangle. Increasing US antagonism on trade may move other economies closer together, explains Xueying Zhang, a 2018-2019 Fox Fellow at Yale University. For example, the European Union and China reached joint agreement in April to deepen their partnership on trade. “The EU is China’s biggest trade partner and China is the EU’s second biggest trading partner behind the United States,” she notes. Europe remains divided over whether China is a valuable partner and major market or ruthless competitor, especially after Chinese foreign direct investment in Europe reached record highs. Trade negotiators in Brussels aim for a tough stance on business practices, and Zhang suggests that momentum requires specific goals, rules-based order and guidance. Half of EU member states have signed memoranda of understanding on China’s Belt and Road Initiative. EU members devise foreign-investment screening measures to ensure order, and a new investment access deal with China could unfold in 2020. As the Rhodium Group notes, reciprocity is a guiding principle for economic globalization. – YaleGlobal

Economies reexamine their partnerships for a changing world order; increasing US antagonism on trade moves the EU closer to China Den Rest des Beitrags lesen »

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China Could Lose Face, Get Rich From a Trade Deal

Posted by hkarner - 16. Mai 2019

Date: 15-05-2019
Source: The Wall Street Journal

China is a manufacturing juggernaut, an enormous force in global markets and, according to many in the Trump administration, a threat to U.S. technological and military supremacy.

It is also, however, no longer as cheap as it once was. The country is beginning to bump up against income levels where some scholars believe nations are at higher risk of rapid growth slowdowns, as their cost advantage in cheap exports erodes but they fail to innovate rapidly enough in high-tech. China has legions of engineers and a rising weight in scientific publications, but it has still only produced a handful of global technology champions. Beijing’s answer is so-called “industrial upgrading” with the help of massive government capital. But state-led innovation has a checkered history in China, and the plan is sparking aggressive pushback from the U.S., which slapped new tariffs on China on Friday.

Only a handful of low and middle-income nations have managed to power into the high-income ranks since 1960—just 25 out of 156 as of 2016, according to Capital Economics. Whether China can buck those odds is probably the most important economic question of our time and will reshape the global investment environment.

A simple example illustrates the stakes. If China keeps growing around 6% a year and the U.S. keeps growing around 2%, 15 years from now China’s economy will be the largest in the world. If, however, China only grows at a compound annual rate of 4%, the U.S. economy will remain about a fifth larger. To be sure, that would still mean a massive Chinese economy. It also would mean a markedly poorer overall populace, upending growth plans of consumer-focused multinationals and making rising military expenditures more difficult. Any deterioration in the yuan’s value would widen the gap.

China’s big hope for keeping growth chugging along is boosting productivity and leveraging China’s massive internal market as a testing ground for new products, technologies and globally competitive champions. Den Rest des Beitrags lesen »

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When the World Opened the Gates of China

Posted by hkarner - 20. Januar 2019

Date: 19-01-2019
Source: The Wall Street Journal By Bob Davis

Was it a mistake for the U.S. to allow China to join the World Trade Organization? Assessments of the 2001 deal often determine positions in today’s bitter trade debate.

With a congressional vote looming in the spring of 2000, President Bill Clinton mustered his best arguments for why lawmakers should approve his proposed deal for China to join the World Trade Organization.

Adding China would link Beijing to Western economies and reduce the government’s ability to control its vast population, he said in a speech that March at Johns Hopkins’s School of Advanced International Studies. “By joining the WTO, China is not simply agreeing to import more of our products, it is agreeing to import one of democracy’s most cherished values, economic freedom,” Mr. Clinton said. “When individuals have the power not just to dream, but to realize their dreams, they will demand a greater say.” Den Rest des Beitrags lesen »

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The catastrophe if another global financial crisis strikes

Posted by hkarner - 14. September 2018

Date: 13-09-2018
Source: The Economist

Multilateral co-operation is on the wane today but is essential, says Arancha González of the International Trade Centre

IT IS 2020. The world economy is in a deep recession. Two years have passed since America imposed tariffs on many of its trading partners, prompting retaliation from China, Canada, the European Union and others. Negotiations to resolve differences faltered amid tensions over trade surpluses and deficits. The effects of the protectionist measures seemed modest at first, when global economic growth was still fairly strong. But costs gradually started to add up for businesses and consumers. Investments faltered. Global supply chains choked.

Then, in 2019, the American business cycle turned. In China, confidence in corporations’ ability to service debt fell. Financial markets plummeted. As the renminbi lost value, making Chinese products cheaper abroad, the American government placed even tougher quotas on many imports. Surplus goods from China flooded into other markets, where pressure to raise import barriers became irresistible. The downturn worsened. Job losses soared into the tens of millions.

This account is fiction, of course. But ten years ago this autumn, something similar might well have unfolded. Den Rest des Beitrags lesen »

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Europe’s Trade Coup

Posted by hkarner - 8. August 2018

Daniel Gros is Director of the Brussels-based Center for European Policy Studies. He has worked for the International Monetary Fund, and served as an economic adviser to the European Commission, the European Parliament, and the French prime minister and finance minister. He is the editor of Economie Internationale and International Finance.

At the core of the recent US-EU trade agreement is the understanding that the two sides will “work together“ toward zero tariffs and non-tariff barriers. But the potential for a free-trade deal isn’t the point; the end to the escalation of tit-for-tat tariffs is what matters – and not just to the US and Europe.

BRUSSELS – All has gone quiet on the transatlantic trade front, with last month’s agreement between US President Donald Trump and European Commission President Jean-Claude Juncker having dispelled fears of an all-out tariff war. The deal was surprising, but perhaps it shouldn’t have been.

At the core of the agreement concluded by Juncker and Trump was the understanding that the European Union and the United States will “work together toward zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods,” with no new trade barriers in the meantime. But the potential for a free-trade agreement isn’t the point; what matters is the end to the escalation of tit-for-tat measures, set in motion by Trump’s decision to impose tariffs on US imports of European steel. Den Rest des Beitrags lesen »

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Europe’s Trade Victory in Washington

Posted by hkarner - 31. Juli 2018

Simon Johnson, a former chief economist of the IMF, is a professor at MIT Sloan, a senior fellow at the Peterson Institute for International Economics, and co-founder of a leading economics blog, The Baseline Scenario. He is the co-author, with James Kwak, of White House Burning: The Founding Fathers, Our National Debt, and Why It Matters to You.

US President Donald Trump holds himself out as a brilliant negotiator, and his supporters regard his trade policy as a perfect example of his success. But in his recent trade talks with the Europeans, Trump was clearly out of his depth.

WASHINGTON, DC – On July 25, when US President Donald Trump appeared in front of the White House with Jean-Claude Juncker, the president of the European Commission, their joint statement and spoken remarks surprised many. The two sides agreed “to work together toward zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods.” It seemed like a remarkable U-turn for Trump, who, until recently, was threatening the European Union with higher tariffs – and extolling the value of trade tariffs (which are essentially taxes on imported goods) more generally. He even called the EU a “foe” as recently as June.

Substantive follow-through on the joint US-EU statement would represent a major policy shift for the Trump administration. But this is no triumph for Trump; rather, he seems to have been outmaneuvered by adroit European diplomats. Den Rest des Beitrags lesen »

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