Tag Archives: China-US trade

The near-term impact will likely be limited but this is a clear negative for trade negotiations. Shortly after the renminbi’s sharp depreciation on Monday, the US Treasury Department labelled China a currency manipulator. This is the first time in 25 years that the US government has designated a country as a currency manipulator. According to the US Treasury Department, the decision was triggered by the perceived lack...

The near-term impact will likely be limited but this is a clear negative for trade negotiations.Shortly after the renminbi’s sharp depreciation on Monday, the US Treasury Department labelled China a currency manipulator. This is the first time in 25 years that the US government has designated a country as a currency manipulator.According to the US Treasury Department, the decision was triggered by the perceived lack of action by the PBoC to resist the renminbi depreciation. Given that the US...

With additional tariffs in the pipeline, should the Fed take notice?US President Trump pre-announced a further expansion of the US tariffs on imports from China: the remaining half of imports not yet taxed will be at a rate of 10%. It was our central scenario that the tariff net would be increased before the 2020 elections, but we are surprised by the timing, so close on the heels of the G20 meeting in Osaka.Such tariffs further reduce the possibility of an encompassing trade deal with China...

Reasoning suggests China will not use US treasuries or the RMB as trade weapons.Trade tensions between the US and China have risen sharply but we believe the situation would need to escalate much further before China resorts to the extreme weapons of currency devaluation and/or selling down its US Treasuries.The fundamental reason for this argument is that such strategies do not serve China’s own interests. On the contrary, they could cause severe damage to the Chinese economy.Should markets...

Regarding US trade, there are two key recent pieces of news and one major source of uncertainty.The first is the bilateral trade deficit with China, which rose to a new high: USD 393 billion in the twelve months to July, with imports of USD 529 billion, according to US customs data. The second is that Trump’s focus is increasingly on the imports of consumer electronics, as he has recently threatened to cover a major consumer electronics brand (and importer) with levies. Bizarrely, electronics...

A new set of tariffs on Chinese imports threatened by the Trump administration look like a stealth tax on consumers.After the steel and aluminium tariffs introduced in early June, another stage was reached last week when the Trump Administration announced that further tariffs specifically aimed at imports from China will kick in on 6 July (first on USD34 billion of imports, to be followed shortly thereafter by tariffs on a further USD16 billion). The tariff rate will be 25%. Officially,...

We are not yet in a trade war, but US brinkmanship means the risk is rising.The US will hit USD34 billion (out of a total of USD500 billion) of imports from China with a 25% trade tariff, effective 6 July. The official reason is to sanction China’s intellectual property theft and to fire a warning shot against the ‘Made in China 2025’ industrial policy. This move has prompted retaliatory measures by the Chinese authorities on imports from the US of the same scale and intensity. For now, the...