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🚛 The Realities Of Trump's Trade War
« Reply #60 on: May 30, 2019, 12:53:05 AM »
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🚛 China threatens to blacklist foreign companies after Huawei ban
« Reply #61 on: June 01, 2019, 12:28:03 AM »

China threatens to blacklist foreign companies after Huawei ban
Julia Horowitz byline

By Julia Horowitz and Steven Jiang, CNN Business

Updated 10:47 AM ET, Fri May 31, 2019

Huawei and 5G: What's at stake

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London (CNN Business)Beijing is preparing a blacklist for foreign companies as trade tensions with the United States continue to escalate.
The Chinese government is working to establish an "unreliable entity list" which would include foreign companies, individuals and organizations, according to a statement Friday from China's Commerce Ministry.
Companies that violate market rules will be added to the list, according to the statement. Other targets include firms that block supplies to Chinese companies for "non-commercial reasons" or otherwise damage their interests.
The exact details of the plan will be announced soon, the statement added.

Huawei calls on Washington to &#39;halt illegal action&#39; against the company
Huawei calls on Washington to 'halt illegal action' against the company
The move to establish a blacklist comes after the United States hit Huawei with an export ban, effectively barring US companies from doing business with the smartphone and telecom equipment maker.
The Trump administration claims that Huawei equipment can be used by China for spying. Huawei has repeatedly denied that it poses a risk, saying the restrictions are an attempt to put it out of business.
Jude Blanchette, a senior adviser at the risk consultancy Crumpton Group, said that American companies are responding to the blacklist threat by going into "triage" mode.
"Your reaction is not going to be, 'This is no big deal,'" said Blanchette, who added that US businesses are already assessing the probability that they'll be targeted by Beijing.
Huawei fight
The US campaign against Huawei, one of China's most powerful tech companies, reached new heights earlier this month when the Trump administration added it to a list of companies said to undermine American interests.
That forced crucial suppliers like Google (GOOG) and ARM Holdings to cut ties with the Chinese company, while top carriers in the United Kingdom and Japan delayed the launch of Huawei smartphones.
Now China's blacklist could target those same companies, penalizing them for complying with the US ban.
"They have not identified which companies this means but I'm sure, knowing the Chinese as I do, that they will do counterpart targeting matching the US," said Harry Broadman, a former US trade negotiator. He added: "Clearly their buttons have been pressed, with the way we're dealing with Huawei."
Huawei CEO says China shouldn&#39;t punish Apple
Huawei CEO says China shouldn't punish Apple
For Huawei, which had aimed to become the top smartphone brand globally by the end of 2020, the ban could pose an existential threat.
Huawei bought $70 billion worth of components and parts last year from 13,000 suppliers. Of that, about $11 billion was spent on products from US businesses including Qualcomm (QCOM), Broadcom (AVGO) and Microsoft (MSFT).
Analysts had predicted that China could target US businesses as a result of the Huawei ban. Trust between the United States and China is running low as new rounds of tit-for-tat tariffs go into effect.

China has always had a range of powerful tools that it could use to target foreign firms, said Nicholas Consonery, director at consultancy Rhodium Group.
"The point is we are now in an environment where retaliatory steps against US entities operating in China is becoming more probable," he said.

Brian Fung contributed reporting.
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How tariffs on Mexican imports could affect what you pay for vegetables and cars
Paul Davidson, USA TODAY Published 5:13 p.m. ET May 31, 2019 | Updated 7:32 p.m. ET May 31, 2019

Stocks tumbled on Wall Street Friday after the U.S. announced plans to expand its trade war to Mexico. (May 31) AP

An American economy and shopper already bracing for an escalation in the U.S. trade war with China was hit by an equally damaging blow this week when President Trump unexpectedly ratcheted up his battle with Mexico.

From produce to cars, a wide variety of Mexican goods could become more expensive if Trump follows through on his threat to hit Mexican imports with tariffs that soon could climb to 25%. Trump wants to pressure Mexico into doing more to halt the flow of Central American migrants to the U.S. via the Mexican border.

The tariffs, set to begin June 10, would gradually climb to 25% on October 1 if Mexico doesn’t take steps “to dramatically reduce or eliminate” the number of migrants, Trump said on Thursday. Such a strategy would hurt American shoppers, the economy and stocks, experts say, just as U.S. growth is slowing and the threat of more tariffs on Chinese imports looms larger.

After the first 5% tariff in June, tariffs would increase by 5 percentage points each month before reaching 25% on Oct. 1

Mexican tariffs rattle stocks: Dow, stocks end lower on threat of tariffs on Mexican imports and recession fears

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USA TODAY economics reporter Paul Davidson breaks down the potential impact.

    On June 10th, the United States will impose a 5% Tariff on all goods coming into our Country from Mexico, until such time as illegal migrants coming through Mexico, and into our Country, STOP. The Tariff will gradually increase until the Illegal Immigration problem is remedied,..
    — Donald J. Trump (@realDonaldTrump) May 30, 2019

How much does the U.S. import from Mexico?

Mexico is the second-largest exporter to the U.S. behind China, shipping $346.5 billion in goods to the country in 2018, up 10.3% from 2017. Top imports are vehicles, machinery, TVs, furniture, appliances and agricultural products such as avocados and other vegetables, and beer and wine.
Can Trump legally use tariffs to prod Mexico on immigration?

The International Emergency Economic Powers act of 1977 does give the president the authority to impose tariffs in a national emergency. Trump has said he regards the influx of migrants through Mexico as such a crisis, using it to justify a shutdown of the Mexican border earlier this year. But Fred Bergsten, co-founding president of the Peterson Institute for International Economics, says that claim is dubious and almost certainly would be challenged in court. Even if the border crossings represent an emergency, it’s highly questionable that Mexico could stop them, he says. A federal judge could order the tariffs removed while the case is hashed out in court, Bergsten says.
Mexican President Andres Manuel Lopez Obrador speaks during a press conference at the Treasury Hall of the National Palace in Mexico City, Mexico, on Dec. 5, 2018.

Mexican President Andres Manuel Lopez Obrador speaks during a press conference at the Treasury Hall of the National Palace in Mexico City, Mexico, on Dec. 5, 2018. (Photo: Sashenka Gutierrez, EPA-EFE)
How much would prices go up?

A 5% tariff would likely be absorbed by retailers and manufacturers. But much of a 25% tariff likely would be passed on to shoppers, Bergsten figures, increasing costs by up $86 billion across the economy. The Trade Partnership, a research group, thinks the overall total of tariffs will be less simply because U.S. retailers and manufacturers will buy less product from Mexico because of the duties.
A red 2019 Ram 1500 Limited, an upscale full-size pickup truck.

Good sales of Ram pickups helped FCA offset a decline in Jeep sales in North America. (Photo: Fiat Chrysler Automobiles)
Let’s break it down. How about car prices?

While a 5% tariff could have no effect, prices could go up by several thousand dollars per model in the worst case scenario -- permanent 25% tariffs, says Jeff Schuster, president of global vehicle forecasting at LMC Automotive.

For example, a $30,000 vehicle imported from Mexico would suddenly be hit with $7,500 in duties. How much automakers pass on to car buyers depends on how long the tariffs last, he says.

Key models imported from Mexico to the U.S. include, for example, the second- and third-most popular models in America: Fiat Chrysler’s Ram pickup and GM’s Chevrolet Silverado pickup. Automakers would want to avoid major spikes in individual models, choosing instead to spread out the costs across their entire lineup.

All told, Deutsche Bank projected an average price increase of about $1,300 per vehicle.

“For the consumer I think initially it’s a wait and see, but it could become costly,” Schuster said.

And car parts would be affected, too. “So even holding on to an existing vehicle will become more expensive,” according to the Center for Automotive Research.
Tariffs on all Mexican imports could hurt U.S. consumers

Tariffs on all Mexican imports could hurt U.S. consumers (Photo: Mark Wilson / Getty Images)
Where else will shoppers feel the impact?

One of the first places is the supermarket. Mexico sold U.S. grocers $26.2 billion worth of food in 2017. The produce section is especially vulnerable. Half of Mexican food imports are fruits and vegetables. Produce has a shorter shelf life than items like beer, so U.S. supermarkets will start paying them faster than products that may be sitting in a warehouse.

Supermarkets may try to mitigate higher Mexican imports by buying some imports from other countries – but that’s harder to do for some categories: Almost 95% of imported strawberries come from Mexico. Supermarkets may also try to blunt the higher costs of some items by raising prices of higher-volume staples that are less affected. So even though 7% of banana imports come from Mexico, a grocer might raise those prices slightly to keep from raising avocado prices (almost 90% of imports from Mexico) too sharply.
Mexico sold U.S. grocers $26.2 billion worth of food in 2017.

Mexico sold U.S. grocers $26.2 billion worth of food in 2017. (Photo: Getty Images)
What else on store shelves?

Beer. Mexico is a top exporter of beers thanks to the popularity of brands like Corona, Modelo and Dos Equis. The U.S. imported $3.2 billion worth of Mexican beer in 2017. Mexico also exported more than $1.3 billion in Tequila and other liquors.
Will this make my guacamole very expensive?

Avocados imported from Mexico have become a mainstay of the American diet. For example, of the 51 million pounds in the U.S. the week of May 19, almost 37 million came from Mexico, according to the most recent data from the marketing group Avocados from Mexico.

Phil Flynn, senior market analyst at the Price Futures Group in Chicago, said that while the proposed tariff is 5%, shoppers would end up paying 10% more at stores and, at least at the beginning, California avocados could cover some of it.

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A glass of sparkling water with slices of lemons and limes.

 (Photo: Getty Images)
What does this mean for my summer picnic?

It depends on what you serve. The U.S. imports plenty of fresh fruits and vegetables besides avocados, including cucumbers, berries, tomatoes, lemons and limes.

Phil Lempert, founder of, which tracks industry news and trends, says prices for all foods from Mexico could catapult to more than 20% higher.

“What we’re going to see happen is Mexico, as we’ve seen with China, will find other partners (to sell) produce to, beer to, tequila to,” he said. “What I think will happen is that resource for us will dry up. We’ll have scarcity, so prices will go much higher than 5%.”
How about electronics?

“A lot of parts come out of China but a lot of production and assembly go on at the Mexican border,” says Sage Chandler, vice president for international trade policy at the Consumer Technology Association.

Top consumer tech imports include desktop PCs and servers ($24.3 billion in 2018), TVs, ($8 billion) and refrigerators and freezers ($3.8 billion), the CTA says.

Chandler says there’s a lot of confusion coming out of the White House. Would tariffs apply to products made in Mexico that come into the U.S. or anything that ships from Mexico regardless of its country of origin? And some tariffs could be applied, she says, on multiple occasions, as products or parts move back and forth across the border.

Consumers are price sensitive when it comes to tech products, and consumer electronics companies could even cancel planned back-to-school promotions or deals tied to Amazon Prime Day, says Bernie Thompson, CEO of Plugable, a leading developer of docking stations and other computer peripherals.
How would tariffs affect mall purchases?

It's unclear which goods would see the biggest price hikes as retailers often shy away from sharing pricing strategies for specific items in advance. However, Mexico’s textile exports to the U.S. are sizable. Produce, appliances and electronics and clothiers could be affected heavily if the tariffs were to occur, according to Daniel Martins, the founder of DM Martins Research.
What would the effect be on the U.S. economy?

A 25% tariff would reduce economic growth next year by seven-tenths of a percentage point, says economist Greg Daco of Oxford Economics. It would mean 600,000 fewer jobs. And that doesn't include the impact of the tariffs Mexico would impose on U.S. exports in retaliation. Throw in that and proposed tariffs on another $300 billion in Chinese imports later this year and the spreading trade war could tip the country into recession.
Why did Trump take this dramatic step?

Besides pressuring China on illegal immigration, Goldman Sachs says Trump hopes the gambit prods Congress into finally passing the United States-Mexico-Canada Agreement, known as the new NAFTA. The administration earlier Thursday submitted the text of the deal to Congress, launching a process for lawmakers to vote on it.
car carrier

The U.S. president on Thursday said the nation will impose tariffs on all goods imported from Mexico unless the country stems the flow of illegal migrants to the United States. The auto industry, in particular, could take a big hit. (Photo: Lalocracio / Getty Images)
Could the strategy work?

Bergsten says it could work by forcing Mexico to take more aggressive steps to curb immigration. After all, exports to the U.S. make up about 30% of the Mexican economy, according to Oxford, and 25% tariffs are likely to topple that country into recession. It’s not clear, though, how well Mexico will respond to such a brass-knuckled approach, Bergsten says. Meanwhile, U.S. lawmakers have indicated the tariffs will only make them less likely to pass USMCA.

“It’s very risky,” Bergsten says. “It could blow up the whole” trade agreement while burdening Americans with higher prices.
How about stocks?

The Dow Jones industrial average fell 354 points Friday, or 1.4%, as investors blindsided by the tariffs worried they could undercut the trade deal or even lead to a recession.
A male soybean farmer crouched down while inspecting plants in a field

Soybean is a key battleground area in the U.S. and China trade dispute. (Photo: Getty Images)
Will Mexico retaliate?

Mexican officials said they will respond strongly. So expect tariffs on virtually all U.S. goods exported to Mexico if the U.S. hits Mexico with a 25% duty. U.S. exports to Mexico totaled $265 billion last year. Among the leading products are machinery, cars and plastics. Mexico is the nation’s second-largest market for agricultural products, especially corn, soybeans, dairy and pork. That would compound the struggles of American manufacturers and farmers already hobbled by China’s tariffs.

Contributing: Edward C. Baig, Dalvin Brown and Zlati Meyer in New York: Nathan Bomey in Virginia; and Alexander Coolidge in Cincinnati.
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'Mayhem,' 'Crippling,' 'Serenity now': Trump's threatened tariffs on Mexico would spur chaos, Wall Street warns
Rebecca Ungarino
Jun. 1, 2019, 09:06 AM

    Stock markets around the world were thrown into disarray Friday after President Donald Trump unexpectedly announced he planned to impose tariffs on US-bound goods from Mexico.
    Strategists and economists think the worst is yet to come.
    Visit Markets Insider's homepage for more stories.

Investors already on edge from the ongoing trade war between the US and China are dealing with a new headache.

Financial markets were thrown into disarray on Friday after President Donald Trump threatened to impose tariffs, starting June 10, on all the goods the US imports from Mexico until the "illegal immigration problem is remedied."

Global equities plunged. The Mexican peso cratered. Germany's 10-year Bund yield scraped to the deepest below zero on record low. The VIX, the S&P 500's "fear gauge," touched a two-week high. And strategists, economists, and analysts up and down Wall Street warned the worst is yet to come.

"So this is no more about free and fair trade, reciprocity, and protection of technological expertise," Peter Boockvar, the chief investment officer at Bleakley Advisory Group, said Friday in an emailed report he called "Serenity Now."

"Tariffs can be thrown around as an economic bomb for anything now," he said. "Global growth rates will only continue to suffer."

The Trump administration's sudden announcement comes as Washington and Beijing are locked in their own trade dispute that has been dragging on for over a year. Experts say the duties Trump is threatening could heavily impact supply chains between the US and Mexico — and inject a new wild card into equity markets.

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"Despite a less severe impact on GDP, the impact on supply chains and economic activity could be significant, implying that financial markets could be affected materially," Nomura research analysts led by Lewis Alexander said in a note out Thursday.

Automobiles and capital goods are two groups particularly sensitive to the proposed tariffs as they accounted for most of the US's imports from Mexico last year, the analysts said. Auto stocks like General Motors and Ford slid on Friday, and a team of Deutsche Bank economists said the anticipated costs for US automakers would be "crippling."

"With businesses already grappling with the ramp up in US-China trade tensions, further uncertainty created by tonight's announcement could amplify a decline in business confidence," they wrote.


The development knocked down equity markets, at least in the US, that were already in the midst of a dismal run. May marked the first negative month of 2019, and the Dow Jones Industrial Average fell for a sixth-straight week.

The S&P 500's "large topping pattern remains in effect, which, after the latest Tariff news on Mexico, has a chance of playing out further now," said Frank Cappelleri, the chief market technician at Instinet, told clients Friday.

He added in a note out early Friday called "Mayhem" that the S&P 500 has "decidedly broken down," with a downside target of 2,650. The benchmark index has already fallen 7% from its May 1 high, and that would mean a drop of another 3.6% from here.

Still, the question remains whether Trump's announcement is a negotiating tactic or whether the proposed tariffs will be implemented on June 10.

"Could the threat of monthly escalating tariffs on Mexico be a negotiating ploy? Certainly," Sam Rines, the chief economist at Avalon Advisors, told clients on Friday.

"That might even be the most probable outcome of the threat. But — even if it is just a negotiating ploy — it is not something that can be ignored. The threat creates incremental uncertainty, further crippling already flagging business investment."

Read related coverage from Markets Insider and Business Insider:

The US-China trade war just sparked a $14.6 billion exodus from emerging markets

Trump's latest trade-war grenade has the global economy heading towards a scenario where no one wins

The Mexican peso is getting clobbered after Trump threatens to hit Mexican goods with tariffs

Avocado buyers Chipotle and Calavo Growers are getting slammed as Trump's Mexico tariffs threaten to raise prices
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🚛 Worst May Be Yet to Come for U.S. Jobs as Trade War Intensifies
« Reply #64 on: June 08, 2019, 01:44:15 AM »

Worst May Be Yet to Come for U.S. Jobs as Trade War Intensifies
By Reade Pickert
June 7, 2019, 12:25 PM AKDT

    Shock May slowdown saw weakness spread from goods to services
    Consumer spending may get hit as employers put plans on ice

Current Time 0:05:48
Duration Time 1:40:13
'Bloomberg Markets: The Close' Full Show (6/7/2019)

How Wall Street Views the U.S. May Jobs Report

The slowdown in U.S. hiring seen in Friday’s jobs report could get even worse, as President Donald Trump’s still-escalating trade war threatens further blows to employers.

The May payroll figures -- which missed all economist estimates and included steep downward revisions -- translated into a four-month average jobs gain of 127,000. That’s the slowest since 2012, and compares with an average of 201,000 over Trump’s first two years as president.

The numbers showed strains beyond goods-producing industries that are typically on the trade front-lines. A measure of the breadth of job-creation fell to a two-year low, and service providers also saw the fewest gains in that period, with weakness from health care to retail. As for manufacturing, it added an average of 3,000 jobs in the past four months -- the worst numbers since Trump took office pledging to revive America’s factories.
Industries add fewest workers in nearly two years

The report -- which also included the slowest wage gains since September -- suggests trade tensions were already hitting the labor market, and could have a bigger effect should Trump follow through on threats of more tariffs on imports from China. Investors increased bets that the Federal Reserve will cut interest rates to contain the fallout.

“The heightened degree of uncertainty related to the trade war has likely encouraged some employers to be a bit more cautious in this environment, and hold back some hiring plans until they have a better idea of how things are going to progress,” said Michelle Meyer, head of U.S. economics at Bank of America Corp.

“My concern is that in the coming months the uncertainty shock gets bigger and we see a larger impact,” Meyer said.

But the slowdown in hiring reflects more than just tariffs. Concern about slowing growth in the U.S. and abroad may be giving companies another reason to pull back, said Sam Bullard, senior economist at Wells Fargo & Co.

“We’re definitely late in the economic cycle and maybe that is also weighing upon firms not wanting to get too far ahead of their skis,” Bullard said. “There’s certainly a lot of uncertainty outside the U.S. as well, not just trade related, but just softening economic activity numbers in China and Europe.”

    What Our Economists Say

    “Hiring in sectors directly related to international trade has cooled over the past several months, and the downdrafts now appear to be stretching into related industries. More broadly, rattled economic confidence appears to be resulting in a cautious approach to hiring across the private sector.”
    -- Carl Riccadonna and Yelena Shulyatyeva, economists
    Click here for the full note.

It’s possible that one-time events hit the labor market last month. Flooding in the central U.S. could have reduced the May payroll number by 40,000 jobs, Kevin Hassett, the departing chairman of Trump’s Council of Economic Advisers, told Bloomberg Television.

While the Labor Department didn’t mention any special weather impact, Bullard said it’s “reasonable” that the flooding lowered the May numbers following an outsize bump in construction jobs in April.

Still, the slowdown means “you’re probably going to have less money in people’s pockets,” Bullard said. “That translates into most likely lower consumer spending growth as well.”
U.S. hiring 3-month average steps down, falling below 1- and 2-year averages

U.S. stocks jumped on Friday, amid expectations the Fed will move to boost growth in line with Chair Jerome Powell’s comment this week that the central bank will “act as appropriate to sustain the expansion.” Most Fed watchers said there’ll probably be no interest-rate cut before July, allowing time for more data to come in.

Meyer said markets will be watching for a sustained downtrend in indicators, like the Institute for Supply Management’s non-manufacturing survey, as well as in payrolls.

“If that becomes clear, then I think we should prepare for more significant slowing in the economy,” she said.

— With assistance by Katia Dmitrieva
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aka, Trumpovetsky folded like a wet napkin to Wall Street.


The deal that Trump announced would avert tariffs on Mexico reportedly mostly includes things Mexico agreed to do months earlier
Michelle Mark

President Donald Trump claps after greeting supporters waiting at the White House with first lady Melania Trump as they returned to the White House, Friday June 7, 2019, in Washington. Associated Press/Jacquelyn Martin

    President Donald Trump announced a new deal on Friday to avert major tariffs on all imports from Mexico into the United States.
    Trump had vowed to impose the tariffs on June 10 if Mexico did not crack down on migrants traveling through the country en route to the US.
    But the deal announced Friday contains few new concessions from Mexico, The New York Times reported Saturday.
    Instead, the deal contains actions that Mexico had agreed to months earlier.
    Visit Business Insider's homepage for more stories.

The deal with Mexico that President Donald Trump said Friday would avert his impending tariffs mostly contains actions that Mexico had agreed to months ago, The New York Times reported Saturday.

Among the items included in the agreement was a promise to deploy Mexico's National Guard throughout the country and its southern border — but officials from both countries say the Mexican government had already vowed to do so in March, according to The Times.

Another part of the deal was to expand Mexico's cooperation with a Trump administration effort to force asylum-seekers to wait in Mexico while their cases move through the US immigration court system. But Mexico had actually agreed to the arrangement in December, The Times reported.

Throughout the last week, Trump administration negotiators tried to convince the Mexican government to adopt what's known as a "safe third country" agreement, which would force most migrants to seek asylum in Mexico, rather than the United States. But Mexican officials resoundingly rejected the policy.

Read more: DEAL REACHED: Trump says upcoming Mexico tariffs will be 'indefinitely suspended'
Mexican President Andres Manuel Lopez Obrador arrives at a rally in Tijuana, Mexico, Saturday, June 8, 2019. Associated Press/Eduardo Verdugo

But President Donald Trump has praised the Mexican president for his cooperation.

"I would like to thank the President of Mexico, Andres Manuel Lopez Obrador, and his foreign minister, Marcelo Ebrard, together with all of the many representatives of both the United States and Mexico, for working so long and hard to get our agreement on immigration completed!" Trump tweeted Saturday.

Trump also tweeted Saturday morning that Mexico had agreed to "immediately begin buying large quantities of agricultural product from our great patriot farmers." Mexico agreed to no such thing, Bloomberg News reported, citing three Mexican officials.

The Times reported that it's unclear whether Trump understands that the deal with Mexico includes few major concessions, or whether he has simply touted the agreement as a way to save face, amid tariffs that experts agreed would damage both countries' economies.
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🤡 Trump’s Trade Threats are Really Cold War 2.0
« Reply #66 on: June 19, 2019, 01:03:26 AM »

June 14, 2019
Trump’s Trade Threats are Really Cold War 2.0
by Michael Hudson

Photograph Source: PAS China – Public Domain

President Trump has threatened China’s President Xi that if they don’t meet and talk at the upcoming G20 meetings in Japan, June 29-30, the United States will not soften its tariff war and economic sanctions against Chinese exports and technology.

Some meeting between Chinese and U.S. leaders will indeed take place, but it cannot be anything like a real negotiation. Such meetings normally are planned in advance, by specialized officials working together to prepare an agreement to be announced by their heads of state. No such preparation has taken place, or can take place. Mr. Trump doesn’t delegate authority.

Trump opens negotiations with a threat. That costs nothing, and you never know (or at least, he never knows) whether he can get a freebee. His threat is that the U.S. can hurt its adversary unless that country agrees to abide by America’s wish-list. But in this case the list is so unrealistic that the media are embarrassed to talk about it. The US is making impossible demands for economic surrender – that no country could accept. What appears on the surface to be only a trade war is really a full-fledged Cold War 2.0.

America’s wish list: other countries’ neoliberal subservience

At stake is whether China will agree to do what Russia did in the 1990s: put a Yeltsin-like puppet of neoliberal planners in place to shift control of its economy from its government to the U.S. financial sector and its planners. So the fight really is over what kind of planning China and the rest of the world should have: by governments to raise prosperity, or by the financial sector to extract revenue and impose austerity.

U.S. diplomacy aims to make other countries dependent on its agricultural exports, its oil (or oil in countries that U.S. majors and allies control), information and military technology. This trade dependency will enable U.S. strategists to impose sanctions that would deprive economies of basic food, energy, communications and replacement parts if they resist U.S. demands.

The objective is to gain financial control of global resources and make trade “partners” pay interest, licensing fees and high prices for products in which the United States enjoys monopoly pricing “rights” for intellectual property. A trade war thus aims to make other countries dependent on U.S.-controlled food, oil, banking and finance, or high-technology goods whose disruption will cause austerity and suffering until the trade “partner” surrenders.

China’s willingness to give Trump a “win”

Threats are cheap, but Mr. Trump can’t really follow through without turning farmers, Wall Street and the stock market, Walmart and much of the IT sector against him at election time if his tariffs on China increase the cost of living and doing business. His diplomatic threat is really that the US will cut its own economic throat, imposing sanctions on its own importers and investors if China does not acquiesce.

It is easy to see what China’s answer will be. It will stand aside and let the US self-destruct. Its negotiators are quite happy to “offer” whatever China has planned to do anyway, and let Trump brag that this is a “concession” he has won.

China has a great sweetener that I think President Xi Jinping should offer: It can nominate Donald Trump for the Nobel Peace Prize. We know that he wants what his predecessor Barack Obama got. And doesn’t he deserve it more? After all, he is helping to bring Eurasia together, driving China and Russia into an alliance with neighboring counties, reaching out to Europe.

Trump may be too narcissistic to realize the irony here. Catalyzing Asian and European trade independence, financial independence, food independence and IT independence from the threat of U.S. sanctions will leave the U.S. isolated in the emerging multilateralism.

America’s wish for a neoliberal Chinese Yeltsin (and another Russian Yeltsin for that matter)

A good diplomat does not make demands to which the only answer can be “No.” There is no way that China will dismantle its mixed economy and turn it over to U.S. and other global investors. It is no secret that the United States achieved world industrial supremacy in the late 19th and early 20th century by heavy public-sector subsidy of education, roads, communication and other basic infrastructure. Today’s privatized, financialized and “Thatcherized” economies are high-cost and inefficient.

Yet U.S. officials persist in their dream of promoting some neoliberal Chinese leader or “free market” party to wreak the damage that Yeltsin and his American advisors wrought on Russia. The U.S. idea of a “win-win” agreement is one in which China will be “permitted” to grow as long as it agrees to become a U.S. financial and trade satellite, not an independent competitor.

Trump’s trade tantrum is that other countries are simply following the same economic strategy that once made America great, but which neoliberals have destroyed here and in much of Europe. U.S. negotiators are unwilling to acknowledge that the United States has lost its competitive industrial advantage and become a high-cost rentier economy. Its GDP is “empty,” consisting mainly of the Finance, Insurance and Real Estate (FIRE) rents, profits and capital gains while the nation’s infrastructure decays and its labor is reduced to a part-time “gig” economy. Under these conditions the effect of trade threats can only be to speed up the drive by other countries to become economically self-reliant.
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Trump and Xi meet Saturday — If it goes poorly, the global economy could teeter into recession
Published Tue, Jun 25 2019 2:37 PM EDTUpdated Tue, Jun 25 2019 9:11 PM EDT
Patti Domm @pattidomm
Key Points

    The outcome of the G-20 meeting between U.S. President Donald Trump and China President Xi Jinping could be a watershed moment that could impact the course of markets and the global economy for the second half of the year.
    The G-20 summit in Osaka could end in a ‘feel good’ moment for markets, but the thorny issues in U.S.-Chinese trade talks are unlikely to be resolved and tariffs are expected to continue.
    The meeting between President Trump and President Xi Saturday could lead to improved negotiations but the drag on the economy from tariffs and weakened sentiment is expected to continue until there is a real deal.
    One economist said if the talks fail and the trade war escalates, the world is at risk of a recession.

President Donald Trump and China’s President Xi Jinping make joint statements at the Great Hall of the People in Beijing, Nov. 9, 2017.
Jonathan Ernst | Reuters

Stocks are likely to see a temporary relief rally and bonds could sell off if there is a ‘ceasefire’ declared in the trade wars by the U.S. and China this weekend, but the damage to the global economy could continue until a tariff-ending deal is struck.

Wall Street has been handicapping the outcome of the much anticipated meeting between President Donald Trump and President Xi Jinping, and many investors believe the two will likely agree to hold off on new tariffs and restart negotiations, but existing tariffs would not be rolled back by much, if at all.

The meeting, at the G-20 summit, is so important that market pros broadly see it as an event that could affect the course of markets for the rest of the year; impact the trajectory of global economic growth, and help determine when and what actions the Federal Reserve and other central banks might take.

“You just amp up the odds even greater that we’re going to have a global recession, if there’s no detente between the U.S. and China. With respect to G-20, I don’t think there will be anything negative, and it will probably be a ‘kumbaya’ moment,” said Peter Boockvar, chief investment strategist at Bleakley Advisory Group.

Trade representatives have been meeting ahead of the Osaka dinner between Trump and Xi Saturday, and even with so much at stake, there are no expectations for a significant deal in the near future. Bank of America Merrill Lynch surveyed investors and found that about two-thirds expected that there would be no deal this weekend, but there would be no new tariffs either.

While few expect an absolute failure at the meeting, UBS economists said if that were the case and the trade war escalated with new tariffs, the world could see a recession-like slowdown in growth.

If the trade war escalates, “we estimate global growth would be 75 [basis points] lower over the subsequent six quarters and that the contours would resemble a mild ‘global recession’ —similar in magnitude to the Eurozone crisis, the oil collapse in the mid-1980s and the ‘Tequila’ crisis of the 1990s,” UBS global head of economic research Arend Kapteyn wrote in a note.
Ceasefire scenario

An unnamed Trump administration official told Reuters on Tuesday that U.S. goals for the talks are to reopen negotiations and there could be a possible agreement on no new tariffs. The official said the U.S. would like negotiations to resume where they broke down in May.

Boockvar said markets should react positively to a “ceasefire” scenario, and stocks could rally, while bond sell off and the dollar could bounce. “The fact tariffs are still on will limit the extent of that relief rally,” he said. “If all of a sudden people say the Fed won’t have to be as aggressive because there’s potential for a trade deal, then you will see an adjustment in the bond market.”

After months of leaving interest rates on hold, the Fed signaled last week that it could cut interest rates this year, with the first cut possible in July. The Fed has said it is concerned both by trade and a slowing global economy.

Citigroup global economist Cesar Rojas said he expects a “ceasefire with a hand shake agreement” between Trump and Xi that would avoid escalation of the national security issues and tariffs, and aim for a deal later this year. Trump would likely refrain from putting his threatened 25% tariffs on the remaining $300 billion in Chinese goods that so far have not been impacted.
Economic impact of trade war

“That still harms the economy because we still have the tariffs in place on the $250 billion and also because you will have continued uncertainty,” he said. Rojas said the hit to the U.S. economy from existing tariffs is expected to be about 0.1 percentage points of GDP, but 0.8 percentage points to Chinese growth over the next one to two years.

The trade war has become complicated by other issues, such as the U.S. black listing of Chinese telecom company Huawei. On the other side, China has dominance over rare earth minerals and could invoke a damaging embargo. There are also other sources of tension, like the U.S. sanctions on Iran, a supplier of Chinese oil .

Economic damage has also shown up in the trade data of both counties. The U.S. trade deficit narrowed by 2.1% in April, but the decline in both imports and exports signaled that the U.S. was trading less with the rest of the world. The deficit with China, however, surged 29.7% in April to $26.9 billion.

Capital Economics said the exports of Chinese goods that were not under tariff increased to the U.S., but specific Chinese exports, subject to tariffs, dropped off.

“Shipments of goods in the $50 [billion] list were almost 30% lower in the first four months of 2019 than they were a year before. Exports of goods in the $200 [billion] list, which had been holding up fairly well last year, have now slumped as well,” wrote Capital Economics. “In contrast, exports to the US of non-tariffed goods have been growing at broadly the same pace as China’s exports to the rest of the world. These will be the next in the firing line if there is a further escalation in the trade war.”

In the U.S., the trade wars have hit business confidence and slowed investment spending, and that could continue. “To the extent that there is uncertainty remaining, we’re going to see a delay in investment, and that hits the economy,” Rojas said.

If Trump and Xi agree to keep negotiating that could head off more severe problems but not stop the impact of the trade conflict from spreading, economists said.

On Tuesday, the latest consumer confidence reading fell sharply to 121.5, about 10 points lower than May. The Conference Board said the escalation in tariffs and trade tensions earlier in the month “appears to have shaken consumer confidence.”
Grand bargain?

Bank of America Merrill Lynch economists say there is little chance a “grand bargain” can be reached in Osaka, and in fact the Trump administration has lowered expectations for one. They noted that for instance, Commerce Secretary Wilbur Ross said that “the most that will come out of the G-20 might be an agreement to actively resume talks.”

While both countries ultimately want a deal, China may be willing to play a long game and Trump is not yet being pressured by the 2020 election. The pivot by the Fed to position for a rate cut has helped calm markets and drive stocks to new highs, giving Trump more leeway.

“Another reason to fade the chances of a breakthrough is that the US administration is not under much pressure to compromise at the moment. Our framework for the trade war has consistently been ‘no pain, no deal.’ With the stock market near its all-time high, markets expecting a strong ‘Powell put’ and GDP growth running at more than 3% yoy, the US is likely to try to drive a hard bargain. Like it or not, the Fed’s dovish message of offsetting downside risks encourages trade war escalation,” the BofA economists noted.

They also note that the two sides appear to be very far apart, and talks broke down in May because China reportedly did not want to commit to changes in its laws to help allay U.S. concerns about intellectual property theft, forced technology transfers and currency manipulation.

“Without such commitments, it is difficult to imagine that the U.S. will acquiesce to China’s red line that any trade agreement should include the removal of all tariff increases since last year,” the economists noted.

Even if there is a handshake agreement Saturday, the trade tensions could escalate later, as they did after the two leaders met in Argentina last year.

“Just because he doesn’t do [more tariffs] now doesn’t mean he doesn’t eventually do it,” said Boockvar. But there are also reasons for Trump to take a more moderate stance. “I think the data is becoming clear that we’re seeing slowing, and he’s got an election coming up.”
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If Trump can’t make a deal with Xi, rising tariff impact could help Democrats
Published 6 hours ago
Kevin Breuninger   @KevinWilliamB
John W. Schoen   @johnwschoen

A docker works in front of a container ship at Qingdao Port in Qingdao, Shandong Province of China.
ChinaFotoPress | Getty Images
Key Points

    Tariffs could become a political hot-button in 2020 if Trump’s trade war continues.
    Trump is scheduled to discuss trade with Chinese President Xi Jinping at the G-20 summit. But he has also threatened to impose tariffs on hundreds of billions in Chinese goods.
    Some Democratic presidential have already lashed out at Trump on tariffs.

GP: China economy shipping GDP 181101 Asia

If President Donald Trump’s high-stakes trade talks at the G-20 summit with Chinese President Xi Jinping are a bust, the ongoing trade war could become a potent issue for Democrats in the 2020 election.

Trade talks between the world’s two largest economies stalled out last month, and some experts and administration officials are predicting that Trump’s meeting with Xi on Saturday could rekindle the negotiations. A senior White House official told CNBC that Trump might agree to a truce in the trade war without asking for very much from Xi in that meeting.

But current and former administration officials have cautioned that a deal with China likely won’t come at the G-20 itself. Trump has also threatened on multiple occasions to levy duties on $300 billion in Chinese goods that are imported to the U.S., which would result in taxes on nearly all U.S. imports of Chinese products.

The Trump administration has slapped tariffs on $250 billion worth of Chinese goods. China has responded with $110 billion in tariffs on U.S. goods, as the two sides grapple over issues including trade deficits, alleged Chinese intellectual property theft and forced technology transfers.

U.S. tariffs on China and other sources have reportedly already raised prices on some goods. The Becker Friedman Institute of Economics at the University of Chicago, for instance, found that the price of washers and dryers rose by 12% in response to tariffs levied in 2018.

Taxing all imports from China would do the same for many more products — and that could be a liability for Trump’s reelection chances.

Trump has long touted the benefits of tariffs as a way to bring companies back to the U.S. and make tax revenue. But tariffs also raise costs on American families by hundreds of dollars: the Federal Reserve Bank of New York found that tariffs imposed 2018 led to an annual cost of $419 for the typical household.

When Trump hiked tariffs on $200 billion of Chinese goods to 25% in May after the trade talks broke down, that annual cost shot up to $831 per year, according to the New York Fed.

Trump could open himself up to more attacks from Democrats on tariffs as the 2020 election nears. And while it was hardly the main focus of the first presidential debates, some candidates have already lashed out.

“The tariffs and the trade war are just punishing businesses and producers and workers on both sides,” entrepreneur Andrew Yang said during the Democratic primary debate Thursday night.

China’s retaliatory tariffs, which hit a wide variety of agricultural products, are already deeply affecting U.S. farmers in states that Trump won in the 2016 election.

Yang recalled an interaction he had with an Iowa farmer “who said he spent six years building up a buying relationship in China that’s now disappeared and gone forever. And the beneficiaries have not been American workers or people in China. It’s been Southeast Asia and other producers that have then stepped into the void.”

The White House in May rolled out a $16 billion farm and ranch aid package for those affected by the trade war. Trump assured farmers that his tariffs on Chinese imports would cover the cost.

South Bend, Ind., Mayor Pete Buttigieg appeared to be citing the New York Fed’s analysis when he knocked Trump’s tariffs at the debate Thursday night. “Tariffs are taxes. And Americans are going to pay on average $800 more a year because of these tariffs,” Buttigieg said.

“Folks who aren’t in the shadow of a factory are somewhere near a soy field where I live. And manufacturers, and especially soy farmers, are hurting,” Buttigieg added.
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🤡 Trump Bows to Xi Jinping's Huawei Demands at G20
« Reply #69 on: June 29, 2019, 01:31:54 PM »
Trumpovetsky folds again to the Chinese.  If you played Poker like that, you'd be broke before the deal made it around the table.  ::)


Trump Bows to Xi Jinping's Huawei Demands at G20

Selling American chips to a company branded as a security risk was only one of the areas where Trump gave ground.
Gordon G. Chang
Updated 06.29.19 10:52AM ET / Published 06.29.19 8:47AM ET

The United States will resume sales of products to Huawei Technologies, the Chinese telecom equipment manufacturer, President Donald Trump said in his post-G20 press conference Saturday in Osaka.

The action appears to be a surrender to publicly issued Chinese demands.

Effective May 16, the U.S. Commerce Department added Huawei, the world’s largest telecom-equipment manufacturer, to its Entity List. As a result, no American company, without prior approval from the Bureau of Industry and Security, may sell or license to Huawei products and technology covered by the U.S. Export Administration Regulations.

In recent weeks, Beijing had demanded the Trump administration withdraw the designation. On Thursday, for instance, the Wall Street Journal reported that Huawei’s removal was one of China’s three main preconditions to a trade deal. The other two demands were the lifting of tariffs Trump had imposed under Section 301 of the Trade Act of 1974 and the end to Washington’s efforts to get China to buy U.S. goods in excess of what was agreed in December 2018.

American companies had begun complying with the Entity List prohibition, but Intel, Qualcomm, and other chip suppliers have lobbied the Trump administration to ease the ban on Huawei, which American officials believe poses a threat to American national security. Washington, to inhibit Chinese spying, is trying to persuade American allies to not install Huawei equipment in soon-to-be-built 5G telecommunications networks.

Trump, however, undercut these efforts Saturday by making it appear that his Huawei campaign was merely a tactic to gain an advantage in the so-called “trade war” with China.

Trump, in response to a reporter’s question at the Osaka press conference, refused to confirm he would be taking Huawei off the Entity List, and he did mention there would be a meeting Sunday or Tuesday on the topic. Nonetheless, the president’s initial words made it clear that his administration would resume the flow of high-tech American products to the embattled Chinese company.

Trump’s just-announced concession on Huawei mirrors his reprieve last May of ZTE, another large Chinese telecom-equipment maker. Trump, in what he described as a “personal favor” to Chinese ruler Xi Jinping, removed ZTE from the Entity List.

Trump, in his initial comments at the press conference in Osaka, said that Huawei matters would be decided at the end of the trade talks. Presumably this is a reference to efforts of his administration last month to prevent the company from selling telecommunications equipment to American network operators—Trump last month issued an executive order on the subject—and perhaps a reference to the Justice Department’s criminal prosecutions of Huawei and its chief financial officer, Meng Wanzhou. The U.S. has filed an extradition request for Meng, currently held in Vancouver.

Trump also mentioned at the press conference that he would not be imposing any additional tariffs on Chinese goods. Previously, he had threatened to tariff an additional $325 billion of such products.

In other comments, Trump said trade talks would resume and that China had agreed to start buying American farm products.
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💱 Europe Circumvents U.S. Sanctions On Iran
« Reply #70 on: July 01, 2019, 12:10:26 AM »
Trumpovetsky is having ZERO success, anywhere.


Europe Circumvents U.S. Sanctions On Iran
Frances Coppola Senior Contributor
Banking & Insurance
I write about banking, finance and economics.

Europe has found a way of circumventing U.S. sanctions on Iran. The governments of France, Germany and the United Kingdom have developed a special purpose vehicle (SPV) to enable European businesses to maintain non-dollar trade with Iran without breaking U.S. sanctions. That SPV, known as INSTEX, is now up and running.
WASHINGTON, DC - JUNE 24: President Donald Trump signs an executive order imposing fresh sanctions on Iran in the Oval Office of the White House on June 24, 2019 in Washington, DC. Next to Trump, Vice President Mike Pence and Treasury Secretary Steven Mnuchin. (Photo by Oliver Contreras/For The Washington Post via Getty Images)

WASHINGTON, DC - JUNE 24: President Donald Trump signs an executive order imposing fresh sanctions on Iran in the Oval Office of the White House on June 24, 2019 in Washington, DC. Next to Trump, Vice President Mike Pence and Treasury Secretary Steven Mnuchin. (Photo by Oliver Contreras/For The Washington Post via Getty Images) Getty

The three governments announced the successful implementation of INSTEX at a meeting of the Joint Commission of the Joint Comprehensive Plan of Action (JCPOA) on June 28, 2019. The meeting was chaired on behalf of the EU by the Secretary General of the European External Action Service (EEAS), Helga Schmid, and was attended by representatives of China, France, Germany, Russia, the United Kingdom, and Iran.

In a statement, Schmid said:

    France, Germany and the United Kingdom informed participants that INSTEX had been made operational and available to all EU Member States and that the first transactions are being processed. Ongoing complementary cooperation with the Iranian corresponding entity (STFI), which has already been established, will speed up. They confirmed that some EU Member States were in the process of joining INSTEX as shareholders, the special purpose vehicle aimed at facilitating legitimate business with Iran. They are also working to open INSTEX to economic operators from third countries.

JPCOA is better known as the “Iran nuclear deal.” The U.S. unilaterally withdrew from JPCOA in May 2018, when it reimposed sanctions on Iran’s oil export sector. But other countries, including EU member states, have so far declined to follow suit. They claim that Iran is complying with the terms of the deal, and the U.S.’s decision to reimpose sanctions was unjustified.
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When the U.S. withdrew from JPCOA, it said that companies breaking the reimposed sanctions would face stiff penalties. Among the companies the U.S. administration listed as potential sanctions-breakers was the Brussels-based international messaging service SWIFT, which is the lifeblood of international payments. In November, evidently concerned about the potential consequences for global payments if the U.S. retaliated against it, SWIFT announced that it would comply with U.S. sanctions:

    In keeping with our mission of supporting the resilience and integrity of the global financial system as a global and neutral service provider, Swift is suspending certain Iranian banks’ access to the messaging system. This step, while regrettable, has been taken in the interest of the stability and integrity of the wider global financial system.

This was widely seen as a setback for the EU, which had been hoping that SWIFT would defy the U.S. and maintain payment services to Iran. But European governments were still determined to find a way of keeping trade with Iran going. If SWIFT wouldn’t help, they would create something to replace SWIFT for Iranian trade. Thus, INSTEX was born.

Exactly how does INSTEX facilitate trade with Iran without making sanctions-busting cross-border payments? In a word – barter. INSTEX matches the Euro payments of companies buying goods from Iran with the Euro receipts of companies selling goods to Iran. Imagine a company based in France wants to sell transport equipment to a buyer in Iran. Receiving Euro payments directly from that buyer would break U.S. sanctions. So instead, the French company would register the sale documentation with INSTEX. INSTEX would look on its own books for a company buying foodstuffs from Iran. It would match the two cash flows so that in effect the two European companies pay each other. The goods would still travel to and from Iran, but the money would stay entirely within the EU.

On the Iranian side, INSTEX is mirrored by a similar SPV, known as STFI. STFI would likewise match incoming and outgoing transactions. So the two Iranian entities would also effectively pay each other. Thus, everyone would receive their goods and payments, but no money would cross the Iranian border.

INSTEX will most likely facilitate trade by smaller firms, especially in humanitarian produce (food, medicines), at least to start with. However, trade volumes need to be high enough for INSTEX to be able to match cash flows reliably. If volumes fall too low, or become significantly imbalanced, there would be payment delays and potentially solvency problems for INSTEX itself. European governments, concerned that companies might be reluctant to use INSTEX for fear of U.S. retaliation, have therefore taken two further steps to encourage its use.

Firstly, they have created a “diplomatic shield.” INSTEX is explicitly backed by the three sponsoring governments, and its governing council consists of high-level government officials. The JPCOA statement also reveals that other EU countries are becoming shareholders of INSTEX. The idea is that the U.S. would find it diplomatically difficult to pressure companies whose governments are backing INSTEX. Admittedly, the present U.S. administration has shown little concern for diplomatic niceties: if a country does something it doesn’t like, it retaliates. It is therefore unclear how effective this “diplomatic shield” will be.

Secondly, as the JPCOA statement indicated, the aim is to open INSTEX to third countries. China and Russia were both present at the meeting, and both have an interest in trading with Iran. Crucially, their trade could include oil. The European Council on Foreign Relations (ECFR) observes that “the SPV is more likely to succeed if it links with revenues related to Iran’s oil exports to countries such as China, India, and Japan.”

Washington has not yet responded to the announcement that INSTEX is up and running. But it could regard such defiance of its stance on Iran as an unfriendly act, particularly as tensions escalate between the two countries over the shooting down of an American drone. Arguably, by helping companies circumvent sanctions, the EU is inviting retaliatory action. But should the U.S. really be able to force other countries to follow its lead when those countries fundamentally disagree with its stance?

The fact that INSTEX's implementation went ahead despite President Trump imposing additional sanctions on Iran shows how little support there is in Europe for the U.S. administration's belligerence. If INSTEX also succeeds in attracting major third countries such as China, the U.S. may find itself increasingly isolated. This could call into question not only the relationship between the U.S. and its allies, but also the U.S.'s power in the world.
« Last Edit: July 01, 2019, 12:12:59 AM by RE »
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🤡 What exactly is happening with Huawei right now?
« Reply #71 on: July 02, 2019, 12:01:26 AM »
I ALMOST feel sorry for the trader trying to trade this shit now.  Every time Trumpovetsky farts, the wind reverses and the sails on the ship of state all do a hard jibe.


Photo: Kevin Frayer (Getty)

What exactly is happening with Huawei right now?

You could be forgiven if you feel like you’ve lost the plot. The Chinese tech giant has been an important but difficult-to-track chess piece in the increasingly tense rivalry between Beijing and Washington. In one moment, it’s a potent enemy spying on us, and there’s no compromise in sight. In the next, it’s a trade piece worth bargaining.

Pivoting drastically and without any explanation, President Donald Trump announced this weekend that American companies would be allowed to sell software and hardware components to Huawei, effectively reversing U.S. policy on the matter. The announcement came following a G20 summit meeting in Japan on Saturday where Trump and Chinese President Xi Jinping agreed to pause new tariffs and continue trade negotiations.

It’s a step away from conflict that’s been escalating and occasionally swerving virtually ever since Trump entered the White House.
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Trump Says He'll Relax Sanctions on Huawei as Part of Trade Talks With China

Donald Trump and his Chinese counterpart, Xi Jinping, met during the Group of 20 summit in Osaka,…
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The decision to reverse on the Huawei ban first instituted in May—after Trump called the company “dangerous”—drove some marquee Republicans to criticize the administration. Here’s Florida Senator Marco Rubio on Twitter calling the move a “catastrophic mistake” and promising congressional action.

Other Republicans including Florida Senator Rick Scott and Tennessee Senator Marsha Blackburn joined in the criticism of Trump’s move.

Huawei, on the other hand, was pleased. On an official Twitter account, the company posted: “U-turn? Donald Trump suggests he would allow #Huawei to once again purchase U.S. technology!”

Feeling deja vu? We’ve been here before. Last year, Trump banned business with the Chinese telecom company ZTE, and Rubio cheered as both cited persistent national security threats originating from Beijing. Trump then reversed course and Rubio, saying the U.S. got played, called for congressional action.

You’re probably wondering now what changed regarding Huawei. Why signal danger and then reverse course? And really, what exactly has changed? Is everything back to the way it was before the trade war commenced?

After a vague press conference from the American president and some opaque notes in Chinese state-controlled press, no one is really clear. Trump did, however, say that the deal was regarding “equipment where there’s not a great national security problem with it.”

Appearing on Fox News on Sunday, White House adviser Larry Kudlow said American businesses can sell to Huawei as long as the sale is not a national security threat. Kudlow said the Commerce Department would look to grant “some temporary licenses” to American firms to sell to Huawei.

This vagueness leaves unanswered whether Google can still provide its Android operating system to Huawei phones or whether Microsoft can license Windows to Huawei laptops—although a Microsoft spokesperson told CNBC that it would “continue to offer Microsoft software updates to customers with Huawei devices.”
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Both U.S. and Chinese firms have talked publicly about their business suffering due to the geopolitical conflict between the two countries. Chinese chipmakers have said they wouldn’t hit Chinese national targets as a result of the trade war while American tech companies have been pushing the White House to end the fight so they can continue selling to China.

“I said, that’s okay, that we will keep selling that product, these are American companies that make these products. That’s very complex, by the way,” Trump said, according to Bloomberg. “I’ve agreed to allow them to continue to sell that product so that American companies will continue.”

Several American companies, including Intel and Micron, had already resumed sales to Huawei three weeks ago despite the lack of a clear and public deal on the matter.
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⛩️ Trade War Is Hiding China's Big Problems
« Reply #72 on: July 28, 2019, 01:50:49 AM »

Jul 27, 2019, 02:21pm
Trade War Is Hiding China's Big Problems
Panos Mourdoukoutas

The ongoing US-China trade war is a distraction from China’s big problems: the blowing of multiple bubbles and the country’s soaring debt, which will eventually kill economic growth.
It happened in Japan in the 1980s. And it’s happening in China nowadays.
The trade war is one of China’s problem that dominates social media these days. It’s blamed for the slow-down in the country’s economic growth, since its economy continues to rely on exports. And it has crippled the ability of its technology companies to compete in global markets.
But it isn’t China’s only problem. The country’s manufacturers have come up with ways to minimize its impact, as evidenced by recent export data. And it will be solved once the US and China find a formula to save face and appease nationalist sentiment on both ends.

One of China’s other big problems , however, is the multiple bubbles that are still blowing in all directions. Like the property bubble—the soaring home prices that makes landlords rich, while it shatters young people’s dreams of starting a family, as discussed in a previous piece here.
New Home Prices 2015-19

New Home Prices 2015-19 Koyfin

Unlike the trade war, that’s a long-term problem. Low marriage rates are followed by low birth rates and a shrinking labor force, as the country strives to compete with labor-rich countries like Vietnam, Sri Lanka, the Philippines and Bangladesh—to mention but a few.
Then there’s the unfavorable “dependency rates” — too few workers, who will have to support too many retirees.
And there’s the impact on consumer spending, which could hurt the country’s bet to shift from an investment driven to a consumption driven economy.
Japan encountered these problems over three lost decades, even after it settled its trade disputes with the US back in the 1980s. China experience many more.
Meanwhile, there’s the infrastructure investment bubble at home and abroad, as discussed in a previous piece here. At home infrastructure investments have provided fuel for China’s robust growth. Abroad infrastructure investments have served its ambition to control the South China Sea and secure a waterway all the way to the Middle East oil and Africa’s riches.

City overpass in the morning

While some of these projects are well designed to serve the needs of the local community, others serve no need other than the ambitions of local bureaucrats to foster economic growth.
The trouble is that these projects aren’t economically viable. They generate incomes and jobs while they last (multiplier effect), but nothing beyond that—no accelerator effect, as economists would say.
That’s why this sort of growth isn’t sustainable. The former Soviet Union tried that in the 1950s, and it didn’t work. Nigeria tried that in the 1960s ;Japan tried that in the 1990s, and it didn’t work in either of those cases.
That’s why bubbles burst - and leave behind tons of debt.
Which is another of China’s other big problem s.
How much is China’s debt? Officially , it is a small number: 47.60%. Unofficially, it’s hard to figure it out. Because banks are owned by the government, and give loans to government-owned contractors, and the government owned min ing operations and steel manufacturers. The government is both the lender and the borrower - o ne branch of the government lends money to another branch of government, as described in a previous piece here.
But there are some unofficial estimates. Like one from the Institute of International Finance (IIF) last year, which place d China’s debt to GDP at 300%!
Worse, the government’s role as both lender and borrower concentrates rather than disperses credit risks. And that creates the potential of a systemic collapse.
Like the Greek crisis so explicitly demonstrated.
Meanwhile, the dual role of government conflicts and contradicts with a third role -- t hat of a regulator, setting rules for lenders and borrowers. And it complicates creditor bailouts in the case of financial crisis, as the Greek crisis has demonstrated in the current decade.
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Stocks sink after Trump raises tariffs on China: Dow sours after positive morning
Associated Press Published 2:58 p.m. ET Aug. 1, 2019 | Updated 4:57 p.m. ET Aug. 1, 2019

Traders works after the opening bell at the New York Stock Exchange (NYSE) on Wall Street, August 1, 2019, in New York City. (Photo: JOHANNES EISELE, AFP/Getty Images)

Stocks dropped sharply Thursday and bond prices spiked after President Donald Trump announced the U.S. will slap a new 10% tariff on some $300 billion worth of goods from China beginning next month.

The news erased a broad rally on Wall Street, sending the Dow Jones Industrial Average from a gain of more than 250 points and fell as much as 278. The S&P 500 had been on pace for its best day in nearly two months.

The escalation in the long-running and costly trade dispute comes only a couple of days after both sides resumed negotiations. In a series of tweets, Trump noted that while the slow-moving trade talks have been “constructive,” China has not followed through on some prior agreements, including the purchase of large quantities of U.S. agricultural products.

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The new tariff would take effect Sept. 1. The U.S. has already applied tariffs of 25% on $250 billion worth of goods from China. Beijing has retaliated with tariffs on $110 billion in American goods, including agricultural products, in a direct shot at Trump supporters in the U.S. farm belt.

Companies that rely heavily on doing business with China took the brunt of the selling. Apple quickly went from a gain of 1.4% to a loss of 2.3%. Electronics retailer Best Buy went from a slight gain to a drop of 9.3% in heavy trading.

Banks, industrials and energy companies also fell. Utilities and real estate stocks rose as traders shifted money into more stable, high-yield stocks. Bond prices spiked as traders sought safety. The yield on the 10-year Treasury dropped to the lowest it’s been since the 2016 election. The price of U.S. crude oil skidded 8%.

The afternoon sell-off puts the market on track to extend its losses for the week. The S&P 500 had its worst day in two months Wednesday after the Federal Reserve’s latest interest rate policy signals disappointed investors.

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Keeping score

The S&P 500 index was down 0.9% as of 2:36 p.m. Eastern time. The Dow dropped 251 points, or 0.9%, to 26,612. The Nasdaq composite lost 1%. The Russell 2000 index of small companies slid 1.6%.


Prices for U.S. government bond rose sharply, sending yields even lower. The yield on the benchmark 10-year Treasury fell to 1.90%, the first time it’s been below 2% since July 3. That yield, a benchmark used to set interest rates on mortgages and other loans, has been declining steadily since November, when it traded as high as 3.23%.

Meanwhile, the yield on the 2-year Treasury note slid to 1.73% from 1.87% late Wednesday, a very large move.
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Offline RE

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⛩️ Fact check: Trump says China is paying for his tariffs. He's wrong.
« Reply #74 on: August 02, 2019, 04:29:14 PM »

Fact check: Trump says China is paying for his tariffs. He's wrong.
"Somebody in the U.S. is paying higher prices," one economist said.
Aug. 2, 2019, 11:06 AM AKDT
By Jane C. Timm

President Donald Trump told an Ohio audience Thursday that China is footing the bill for the massive tariffs he's slapped on foreign goods coming into the United States.

“Don’t let them tell you, the fact is — China devalues their currency, they pour money into their system. Because of that, you’re not paying for those tariffs. China’s paying for those tariffs,” the president said, hours after announcing the new set of tariffs on Chinese goods. “Until such time as there is a deal, we will be taxing the hell out of China.”

But economists say that's not how tariffs work, and that Americans are the ones footing the bill so far.
The facts

Trump has long championed his methods — last year he dubbed himself "Tariff Man" — as righting wrongs inflicted on the U.S. by other countries. But most economists agree a trade war hurts the economy and consumers alike.

Tariffs are taxes on goods coming in to the U.S., paid by the importer. The exporter — in this scenario, China — doesn't pay a thing.

"All of the U.S. tariffs have been passed to U.S. importers, U.S. retailers, U.S. consumers,” said Stephen Redding, a Princeton University economist and author of a recent study analyzing the effects of Trump’s trade war in 2018. “Somebody in the U.S. is paying higher prices.”
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