Archives of “International taxation” tag

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China confirms 80% tariff on Australian barley

  
  Analysis
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The news that China was to impose an import tariff on Australian barley broke back on May 10

The tariff imposition has been announced in a statement from China’s Ministry of Commerce
  • anti-dumping tariff would be 73.6 per cent
  • while the anti-subsidy tariff would be 6.9 per cent
  • will remain in place for five years
This from China is in retaliation for Australia leading calls for an investigation into the origin and spread of COVID-19. China also halted imports of Australian beef last week as part of their response.
 The news that China was to impose an import tariff on Australian barley broke back on May 10 

US Treas Sec Mnuchin says tariffs on China to remain in place until phase 2

  
  Analysis
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US Treasury Secretary Mnuchin

  • says tariffs will stay in place until there’s a phase 2 of china trade agreement
  • says Trump may consider removing tariffs under phase 2
  • says China has made strong commitments it will not manipulate currency

US Treasury Secretary Mnuchin 

US negotiators offer to cut Chinese tariffs by up to 50% on $360B in imports – WSJ sources

  
  Analysis
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Breaking report

  • US would reimpose original tariff level if China fails to carry out pledges
  • Would also cancel planned Dec tariffs
  • US tariff offer made in recent days as both sides seek trade deal
  • US asking China for firm commitments on increased US products
Aside from the ‘firm commitments on purchases’ we don’t know what the US is asking for from China. We also don’t know if it’s acceptable to Beijing. Looks like they’ve left the ball in Xi’s court but I’d assume (hope?) they already had some indication from China about what they wanted.
What’s also important to note here is that this would be a pretty substantial phase one trade deal. Lowering tariffs by 50% on $360B in imports would be a big step. The total tariffs right now are on $550B of goods with China countering on $185B billion.
It’s not clear which tariffs these might be as the US added tariffs in sequences on $34B, $200B, $300B and $125B along with some tweaks at various points. Chances are that this is mostly from the Sept 1 round of $125B. China had previously demanded the US remove these but the compromise here might have been that these stay on at a lower rate (it would be 5%) with tariffs from previous rounds being cut.
Update: The full story is out right now with a few more details
  • The tariff-reduction offer was made in the past five days or so
  • US side has demanded that Beijing make firm commitments to purchase large quantities of US agricultural and other products, to better protect US IP rights and to allow greater access to China’s financial-services sector
China has already taken action on Items #2 and #3. I doubt firm commitments on purchases is a deal breaker but the WSJ report notes that China has balked at firm purchases because they run counter to WTO rules. In the bigger picture, the US demanding China violate the WTO is part of the US strategy to undermine the WTO.

Near-deal from May now being used as benchmark on how much tariffs to be rolled back – report

  
  Analysis
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US contemplates removing more tariffs than anticipated

China and the US are discussing linking the size of tariff rollbacks to the preliminary terms set in the deal that failed in May, according to Bloomberg who cites two people familiar.
The White House is still debating the precise percentage internally but the report says a deal would at least include removing the Sept tariffs and eliminating the planned Dec tariffs.
China has demanded that all tariffs imposed after May be removed immediately and those from beforehand be lifted gradually.
The report says that some of the $250B in tariffs imposed in 2018 are under consideration to be rolled back and that opposition to the move has softened. Overall, the White House is looking at the tariffs holistically and debating on whether to remove somewhere between 35% and 60%. Those percentages fall inline with what percentage of the overall deal Phase One accomplishes.
For reference, the US currently has tariffs on $360B in goods. That number was $250B before the May talks fell apart. On May 10, the US also raised the tariff rate on those $250B in goods to 25% from 10%.

Overall this report reflects a generally positive take and shows that both sides are working on a deal and perhaps closer than anticipated. This is the first indication they’re working off the May text but it’s also a hint that the US may remove more tariffs than anticipated. It would be a great signal for markets if anything from May or earlier was lowered.

Tracking Global Corporate Tax Avoidance

  
  Analysis
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40% of multinational profits are shifted to tax havens each year


Source: Missing Profits

 

Globally, about $650 billion in profits are shifted to such tax havens by multinational from all countries. This fascinating research project from the University of California at Berkeley and the University of Copenhagen is an attempt to track all of those tax avoiding dollars, to see which countries attract and lose profits in this shell game.

Missing Profits:

The loss of profit is the highest for the (non-haven) European Union countries. U.S. multinationals shift comparatively more profits (about 60% of their foreign profits) than multinationals from other countries (40% for the world on average). The shareholders of U.S. multinationals thus appear to be the main winners from global profit shifting. Moreover, the governments of tax havens derive sizable benefits from this phenomenon: by taxing the large amount of paper profits they attract at low rates (less than 5%), they are able to generate more tax revenue, as a fraction of their national income, than the United States and non-haven European countries that have much higher tax rates.

Fitch reports on Chinese tariffs impacting US agriculture

  
  Analysis
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Chinese tariffs stinging farmers

Chinese tariffs stinging farmers
  • Chinese tariffs on US agricultural imports escalate trade related risks to US farm sector , which is experiencing falling sales and land values
  • Ongoing trade wars impact equipment loan and lease ABS collateral performance
  • Ongoing trade wars have placed greater pressure on already stressed US agricultural sector
Biting tariffs will get Trump to the dealing table quicker than anything else, I would say. He won’t want to see tariffs stinging the US.

US imposes new China tariffs, raising levies to pre-WWII level

  
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The U.S. slapped fresh tariffs on Chinese goods on Sunday to bring the average to more than 20%, comparable with levels seen during the protectionist era preceding World War II.

At 12:01 a.m. EDT, the U.S. imposed additional tariffs of 15% on about $110 billion in imports from China, covering 3,243 items. Consumer goods account for about half — far more than the 20%-plus of the previous round last September, which included such products as furniture. China’s corresponding tariffs against U.S. products took effect at the same time.

U.S. President Donald Trump postponed tariffs on 555 items on the original list — including smartphones — until Dec. 15 to soften the impact on the year-end shopping season. More than 80% of American imports of these goods come from China, and finding alternative sources is difficult. Higher tariffs are likely to lead to price increases, which risk weighing on consumer spending and thus the broader economy.

Digital consumer devices such as smartwatches are among the largest import categories by value affected by Sunday’s tariffs. More than half of all apparel is taxed as well.

China is retaliating with additional duties of 5% to 10% on $75 billion in imports from the U.S. The first tranche covers 1,717 goods including soybeans and crude oil, while the second set being implemented Dec. 15 will cover 3,361 items including autos.

But all told, fewer than 1,800 of these items — only about 35%, including crude oil — are new additions. Most have already been hit by previous rounds of tit-for-tat tariffs.

Beijing has already imposed tariffs on about 70% of its imports from the U.S. by value, and after these rounds, the only items left untouched will be those that it would be disadvantageous to domestic industry to tax, such as large aircraft. Previous tariff rounds have already led to sharp declines in imports of affected goods, and further hikes are unlikely to have much of an effect.

With the September duties, the average American tariff on Chinese goods rises to slightly above 21%, up from about 3% before the trade war, according to Chad Bown of the Peterson Institute for International Economics. China’s average tariff on imports from the U.S. climbs to nearly 22%. (more…)

Trump’s new tariffs send Indices skidding lower.

  
Analysis, US Market
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Major indices end near session lows.  Give up big gains in the process

Pres. Trump surprised the stock market by announcing 10% tariffs on $300B of China good effective September 1. He is on the wires saying that the tariffs can be raised beyond 25%, and said that the 10% is for a short term period.  I guess the combination means, the 10% will go to 25% if there is no progress, not the other way around (that is how I read the it).
The news reversed strong gains.
At the highs, the:
  • Dow was up 1.16% or 311.32 points
  • S&P was up 1.11% or 33.21 points
  • Nasdaq was up 1.66% or 135.61 points
At the close the final numbers are showing:
  • Dow, down -1.05% or -280.85 points at 26583.42
  • S&P down -0.90% or -26.82 points at 2953.56
  • Nasdaq down -0.79% or -64.298 points at 8111.12
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