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US trade representative Lighthizer says US tariffs on China will rise on Friday

  
Analysis, Economy

Confirming the Trump tweet from Sunday. Comments crossing from US trade representative Lighthizer and US Treasury Secretary Mnuchin:

  • Lighthizer says over the course of the last week we have seen an erosion in commitments from China
  • Mnuchin says China moved away from language in the agreement that would have changed it substantially
  • Lighthizer says China was reneging in commitments
  • Lighthizer says over the last week or so the Chinese pulled back, and that was what precipitated trump’s tweet
  • Lighthizer says we are continuing talks, China delegation will be here Thursday and Friday
  • Lighthizer says he expects that the Chinese vice premier will attend the talks on Thursday and Friday
  • Mnuchin says it would be unfortunate if we cannot conclude an agreement
  • Mnuchin says the entire economic team is unified in recommending to trump that the US go ahead with tariffs if there is not an agreement by Friday
  • Lighthizer says we had good commitments on eliminating market distorting subsidies
  • Mnuchin says we had hoped to conclude a deal by the end of this week one way or another
  • Mnuchin says we are not going to negotiate to go backwards, says we have negotiated in good faith
  • Lighthizer says trump would like a deal with substantial structural changes, that is not where we are right now
  • Lighthizer says ustr will probably put out a notice on Tuesday about the increase in tariffs to 25 pct on $200 bln of Chinese goods
  • Mnuchin says if we hear something different from the Chinese this week, we will report that to trump
  • Mnuchin says the reaction by the stock market is not playing into consideration about the tariffs
  • Mnuchin says if the Chinese changed position, the US would be willing to keep talking
  • Lighthizer says he does not want to speculate on timing of a potential deal
  • Lighthizer and Mnuchin say they have not talked to the vice premier in the last 24 hours
  • Lighthizer says you have to have specificity in the agreement to make it enforceable
  • Lighthizer says there will be an exclusion process for the tariffs to deal with companies’ difficulties
  • Mnuchin says there were communications over the weekend that moved the agreement substantially backward
  • Mnuchin says we were in the process of planning a summit with Trump and Xi
Headlines via Reuters.
Risk lower on these. There had been recovery during the US day after big falls in Asia on Monday. The two officials confirming Trump’s tweet though. Risk be on the back foot heading into Asia time.

ICYMI: JP Morgan on Global manufacturing growth …. lacklustre

  
Analysis, Economy

JP Morgan global manufacturing PMI for April  – the one line summary is:

  • Global manufacturing growth remains lacklustre as international trade flows contract again
The data was published overnight (hence the ICYMI), came in at 50.3 in April,
  • from 50.5 in March
  • April’s results is the lowest since June 2016
JPM comments:
  • “The global manufacturing sector remained subdued at the start of the second quarter, with the PMI barely above the 50.0 mark and rates of expansion in output and new orders still lackluster and well below long-run trend levels. 
  • In particular, the capital goods sector PMI underscores that business capex remains stalled. International trade flows remain a significant drag on the manufacturing sector. New export business has now decreased for eighth successive months.”
JP Morgan global manufacturing PMI for April  - the one line summary is:

Mnuchin says concluded productive meetings with China’s Liu He

  
Analysis, Economy

Mnuchin tweets that talks with continue next week in Washington

The full tweet:

.@USTradeRep Ambassador Lighthizer and I just concluded productive meetings with China’s Vice Premier Liu He. We will continue our talks in Washington, D.C. next week.

Doesn’t look like there’s any major breakthrough just yet. I reckon by the time they actually agree on something, plenty of crucial parts would’ve been stripped off the deal and it won’t be of much meaning but more symbolic rather.
As Eamonn noted earlier, it certainly looks like a fun party:
US China
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