Archives of “American people of German descent” tag

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Trump announces fresh tariffs on Chinese products, ramping up rates by 5%

  
Analysis, Economy
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Trump makes the announcement via Twitter

On October 1, Chinia is going to be hit by fresh tariffs.
Here’s the announcement, which was clearly timed to hit moments after the FX close:
For many years China (and many other countries) has been taking advantage of the United States on Trade, Intellectual Property Theft, and much more. Our Country has been losing HUNDREDS OF BILLIONS OF DOLLARS a year to China, with no end in sight Sadly, past Administrations have allowed China to get so far ahead of Fair and Balanced Trade that it has become a great burden to the American Taxpayer. As President, I can no longer allow this to happen! In the spirit of achieving Fair Trade, we must Balance this very unfair Trading Relationship. China should not have put new Tariffs on 75 BILLION DOLLARS of United States product (politically motivated!). Starting on October 1st, the 250 BILLION DOLLARS of goods and products from China, currently being taxed at 25%, will be taxed at 30% Additionally, the remaining 300 BILLION DOLLARS of goods and products from China, that was being taxed from September 1st at 10%, will now be taxed at 15%. Thank you for your attention to this matter!
One thing that’s a bit unclear is the Dec 15 tariffs. I’m guessing those are still exempted until then.
All told, this isn’t that bad. It could have been worse. He’s ramping up tariffs by 5%. It’s not some kind of apocalyptic announcement but it certainly continues the trend of escalation.
trade war

Trump pressured Mnuchin to name China a currency manipulator

  
  Analysis
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Trump increasingly dictatorial

The Washington Post reports that Trump “exerted immense pressure” on Mnuchin to name China a currency manipulator.
One of the people with knowledge of Trump’s pressure on Mnuchin said the White House wanted China labeled as a currency manipulator so that it prod Chinese officials back to the negotiating table. This has proven unsuccessful so far. Instead, it has inflamed tensions between the two countries.
Read it here.

Trump says latest tariffs could be raised to above 25%

  
  Analysis
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Trump on tariffs

  • Trump says he can do more or he can do less on tariffs depending on how negotiations go
  • Could be raised “well above” 25% but “we’re not looking to do that”
  • He also said the new tariff is for a ‘short-term’ period
  • If China doesn’t want to trade with us anymore that’s fine with me
  • I think Xi wants to do a deal, but he’s not moving fast enough
  • China isn’t moving fast enough on fentanyl
  • The stock market will “take a little hit but it it will be phenomenal”
That’s not exactly a playbook that anyone can depend on.

Trump counters Kudlow: “I didn’t say I’m not going to do something” on dollar

  
  Analysis
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Trump comments late on Friday

Trump comments late on Friday
Trump made news late in the day on Friday. Speaking to reporters, he walked back comments from economic adviser Larry Kudlow, who earlier in the day said the White House wouldn’t intervene in the dollar.
“I didn’t say I’m not going to do something,” he told reporters.
It was earlier reported that Peter Navarro gave him options on devaluing the dollar but Trump ruled them out. They also weighed proposals to publicly talk down the currency.
His public reaction is typical Trump, he rarely likes to show his hand, even in a matter that’s decided. Bloomberg sources said on Fr
He followed up that comment with several other notable quips and tweets:
  • BBG, citing two sources, said lower rates from the Fed might do the job and help avoid intervention
  • “I could do [currency intervention] in two seconds if I wanted to” he said
  • “The dollar is very strong, the country’s very strong, the dollar — it’s a beautiful thing in one way, but it makes it harder to compete.”
  • “The fed acted too soon, and I turned out to be right. They acted too soon and too violently.”
  • “I think that China will probably say, let’s wait, it’s 14, 15 months until the election”
  • “So, I don’t know if they’re going to make a deal. Maybe they will, maybe they won’t, I don’t care, because we’re taking in tens of billions of dollars worth of tariffs.”
  • “When I win, like almost immediately, they’re all going to sign deals”
  • He was asked if he will tariff French wine, after Macron levied a tax on Internet giants. “I might, I might,” he said.”I’ve always liked American wines better than French wines, even though I don’t drink wine. I just like the way they look, OK? But American wines are great.”

Lots to digest there.

Trump promises tech CEOs quick decision on supplying Huawei

  
  Analysis
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Donald Trump has promised major US companies his administration will
process their applications to supply Huawei quickly.

The president on Monday met with chief executives from seven large technology
companies, including microchip makers Qualcomm, Broadcom and
Micron, as well as Google, which sells its Android operating software
to Huawei for use on its smartphones.

According to the White House, the chief executives asked the president
to swiftly process their applications to export to Huawei, following
Mr Trump’s announcement that a ban on selling to the Chinese company
would be relaxed.

A spokesperson for Mr Trump said: “The CEOs expressed strong support
of the President’s policies, including national security restrictions
on United States telecom equipment purchases and sales to Huawei. They
requested timely licensing decisions from the Department of Commerce,
and the President agreed.”

Companies have been seeking clarity on US policy since Mr Trump
said the ban he previously announced would be eased, following a
meeting with Xi Jinping, the Chinese president.

Meanwhile the Trump administration has been urging companies to submit
applications since that decision, according to people briefed on the
situation, in the hope of pleasing Beijing amid US-China trade talks.

Who Is Winning The Trade War?

  
  Analysis
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China on Wednesday urged the Trump administration to “make up its mind” about reaching a trade deal with Beijing, warning that additional tariffs could send negotiations further off track. — South China Morning Post, July 17

We state emphatically,

Nobody Wins In A Trade War

We’re not sure how to even keep score in a trade war.  The relative performance of stock markets?  Economies?

Trade Deficit

President Trump likes to look at the bilateral trade deficit.   However, during his tenure, the cumulative trade deficit with China has increased by almost $100 billion, 8 percent higher relative to the prior 28 months before he took office.

 

China Trade War (more…)

France’s plan to tax tech companies could lead to the US imposing new tariffs on the country

  
  Analysis
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U.S. President Donald Trump has asked for an investigation into France’s planned tax on technology companies

Reuters reports, citing an unnamed source:
  • could potentially lead to the United States imposing new tariffs or other trade restrictions
  • US Trade Representative Lighthizer to set up the investigation
  • Questioning if France’s digital-tax plan would hurt US technology companies
  • A Section 301 investigation, will assess if France’s levy poses an unfair trade practice
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Previous S 301 investigations have covered Chinese trade practices and European Union subsidies on large commercial aircraft

Trump and Powell spoke for five minutes on May 20

  
  Analysis
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No word on what they spoke about

I’m sure Trump just called to say how much he respected the Fed’s independence.
The report comes from the just-published calendar.
No word on what they spoke about

Here was the news wrap from May 20. There wasn’t much going on that day but Trump and Powell did both speak later that evening. Here were the comments from Powell. He also said that it was premature to make judgement on trade & tariff impacts on path for monetary policy.

Trump – Iran is playing with fire. China trade talks are already underway.

  
Analysis, Politics
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President Trump with some remarks crossing

  • Iran is playing with fire.
  • China trade talks are already underway over phone.
  • expects President Xi will move on some of the issues that are in dispute
(pro tip – Xi will not)
President Trump with some remarks crossing

Trump, China & the Fed

  
  Analysis
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I think it’s entirely possible we leave Osaka with a mild escalation -something like expanded 10% tariffs – enough to scare both China & the Fed into more stimulus & a 50bps cut. Then walk it back in 2020 with a juiced economy. Same playbook as Iran/SA

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