The U.S. released a new list of Chinese goods worth $200 billion with its plans to impose 10% tariffs, escalating the trade tension between the two nations. The list ranges from vacuum cleaners and windshield wipers to sterling silver spoons and badger hair. The tariffs are scheduled to take effect after August 30. Once the tariffs go into effect, the duty will amount to nearly half of all U.S. imports from the Asian nations.
China vowed to retaliate against the plan of fresh tariffs. Beijing described the latest U.S. move as “totally unacceptable” bullying and urged other countries to join China to protect free trade and multilateralism. China also promised to lodge complaints at the World Trade Organisation but didn’t detail what its retaliatory measures would be. One complication for China, the fact that it only imported $130 billion of U.S. goods last year, which is less than a third of the value of U.S. imports from China. That means, an all-out tit for tat trade war, China would not be able to match the tariffs dollar by dollar.
Chances for Further Talks?
The U.S. and China signaled they are open to resuming negotiations over trade. China’s Vice Minister of Commerce Wang Shouwen said in an interview on Tuesday that China and the U.S. “should sit down and try to find a solution to this trade problem.” On the other hand, Treasury Secretary Steven Munchin dismissed the idea that the U.S. and China are locked in a trade war, and instead described it as a dispute. He also states that Beijing must commit to deeper economic reform.
Many American Allies feared the NATO Summit might turn into last month’s G7 meeting in Canada. It came close as Trump forced a second emergency meeting to demand rapid spending increases from its allies. “In the end, it was a good outcome for NATO, although the tensions along the way could be damaging for the alliance’s underlying relationships,” said Fred Kempe, president of the Atlantic Council.
In the end, Trump did not appear to have won any concrete commitment to increase the defense budget by more than 2% of GDP target agreed in 2014. Macron simply said the allies had reaffirmed the 2014 commitment.
The government has published a long-awaited white paper detailing its proposals for the UK’s future relationship with the EU. The white paper lays out five main areas of focus:
1) The economy – developing a broad and deep relationship with the EU that maximizes future prosperity. Minimises disruption to trade between the UK and the EU, protecting jobs and livelihoods – at the same time making the most of trading opportunities around the world.”
2) Communities – ending free movement with a new immigration system, support for farming and fisheries, and what is called a “shared prosperity fund”.
3) The union – protecting the Northern Ireland peace, avoiding a hard Irish border, safeguarding the constitutional integrity of the UK and devolving appropriate powers.
4) Democracy – Leaving EU institutions and reclaiming UK sovereignty, ensuring laws are made in the UK.
5) The UK’s place in the world – promoting general principles such as openness and liberty.
The build-up to the white paper has already prompted the resignations of Boris Johnson and David Davis, also received a consistent criticism from the Brexiters. Furthermore, the white paper received a cautious response from the EU, which said it needed to consider the plans.
►Donald Trump tweeted a North Korean letter praising his energetic and extraordinary efforts in reshaping ties between the two countries to help create a new future. The letter was written before Secretary of State Michael Pompeo’s visit late last week to Pyongyang, where the U.S. and North Korea struggled to agree over plans of denuclearization. The meeting concluded with North Korean state media calling the U.S. approach “cancerous” and “gangster-like.” The North Korean letter went on to state Kim’s regime still had confidence in Trump.
►Bank of Canada announced to increase the interest rate by 25 basis points to 1.50% on Wednesday. This is the second rate hike this year and fourth over the past 12 months. The rate increase indicates the BoC’s confidence in the economy with the higher borrowing costs and the trade tensions.
► President Donald Trump is currently visiting the U.K and will stay for the next 3 days. U.K. Prime Minister Theresa May wants to impress Trump to push for a trade deal with the U.S. after the U.K. leaves the European Union next year.
► U.S. and Russian Summit is set to start on the 16 July in Helsinki, Finland. Topics of discussion will consist from the conflicts in Syria and Ukraine, sanctions imposed by the two nations against each other, the alleged meddling in the 2016 presidential election, and many others.
► Jobs figures from the U.K. and Australia are set to release on 17 July and 18 July, respectively. Job figures represent the state of the labour market and it is a great indication of the market condition.
► Inflation figures from the U.K., Japan, and Canada are set to release on the 18 July, 19 July, and 20 July, respectively. The Central Bank for all three countries wants to maintain the inflationary level between 1-3%.
This information is subject to change without notice. BlackBull Markets strives to provide the most accurate information available, but cannot guarantee that any of these events will occur nor that the outcome will be as stated. This information is to be used for educational purposes only and further research should be done before trading.
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