Donald Trump had postponed trade war with Europe for 180 days.
US President Donald Trump decided to postpone the opening of the second front in a trade war for six months.The introduction of 25 per cent duties on cars and spare parts from Europe and Japan will be postponed, reports Bloomberg, citing a statement from the White House. The basis for the fees were the results of the investigation, which was ordered by the US Department of Commerce on the orders of Trump. In February, it reported that the import of cars and some components constituted a threat to the national security of the country.
In his statement, Trump says that the president agrees with this conclusion, but decided not to rush to the tariffs and try to negotiate. He instructed US Trade Representative Robert Lighthiser to begin negotiations to conclude agreements that would eliminate the threat. In February, the European Commission warned that it would introduce additional duties on US exports of 20 billion euros in response if it decides to hit the auto industry, primarily German.
The European Union is ready to discuss a limited trade agreement with the States, said European Trade Commissioner Cecilia Malmström on Friday. “We have taken note that the United States has postponed the decision on duties on cars for 180 days. However, we completely reject the view that our cars carry a threat to national security, ”she wrote on Twitter. The threat of a full-fledged trade war between the United States and Europe is quite real: trade negotiations are in a deadlock, says ING economist Timme Spackman.
“The United States is demanding access to the European and Japanese agricultural market. Japan can go for it but expects symmetrical step from the United States, which is unlikely, since Washington since the Second World War considers the terms of trade with Japan unfair. As for the EU, he stated that access to the agricultural market could not be part of the negotiations since European officials do not have such powers - the decision must be taken at the level of individual countries, ”explains Spackman. It is difficult to imagine, he continues, that the European Union will make a compromise on this issue, because, among other things, negotiations on the creation of a Transatlantic Trade and Investment Partnership (TTIP) have collapsed because of it. “Difficult negotiations are coming, and it is possible that deferred tariffs will still be introduced,” says Spackman.
Goldman Sachs buys Chinese shares while Trump treatens to impose tariffs.
What trade war?
Goldman Sachs Asset Management is so optimistic about the prospects for a deal between the two largest economies in the world that it recently increased its investment in Chinese stocks. While the news on US and China duties excited markets this month, the investment management unit of the bank, which oversees assets of about $ 1.4 trillion, restored a long position in mainland Chinese stocks, said executive director David Kopsi.
"In any negotiations, there must be a reason to return to the dialogue," said Kopsi, who raised the US $ on $ 115 billion in global portfolio management, to build US duties on Chinese goods. "We consider all announced currently, tariffs are substantial, but we do not think that they ultimately destabilize global economic growth." Goldman is not alone in its optimism, even though the escalation of trade tensions has reduced the capitalization of global stocks by about $ 2.6 trillion over the past week and has hit Chinese exporters. Robeco is also betting on a settlement of the dispute between the superpowers and is thinking about buying on the decline when market turmoil subsides.
Funds of mixed assets in the division of Goldman Sachs, besides, reduced investments in US stocks over the last week, which made their position in this market almost neutral. In general, they remain risk-averse although the business cycle is entering its late phases, moderate inflation, signs of economic recovery, and favourable monetary policy paint a rather rosy picture for Kopsi. His team likes emerging markets, where he expects growth to accelerate against the backdrop of support from Chinese policies. The weakening of the yuan will also help Asia's largest economy deal with higher fees, he said.
Fabiana Fedeli, head of the global division of fundamental strategies in equity markets at Robeco Institutional Asset Management BV, also hopes to resolve the conflict. Opportunities may appear in the hardest-hit markets, such as Germany, Japan, and Taiwan, although it's too early to invest, says Fedeli, whose company manages assets equivalent to about $ 182 billion.
Businesses’ struggle and debt 300% from the GDP. Economists predict a tragic final for Chinese economy.
China's economy could slow down, debt will increase dramatically, and foreign companies may leave the country if a trade war escalates, economists warn, forced to consider the most pessimistic scenarios after the escalation of tensions this week. In the worst case scenario, China's growth may slow to less than 6% for the first time in nearly three decades, Bank of America Corp., Morgan Stanley, and UBS Group AG predict. The growth of 5.8%, which is expected by the chief economist of Bank of America in Greater China, Helen Qiao, will complicate the conditions for the development of the economy more than this figure suggests.
Analysts assess the implications of imposing duties on China, which plays a central role in the global supply chain, while companies will shift production to other countries. They also warn about the growth of China's debt, which is already approaching 300% of GDP, as the government increases spending to support the economy. New restrictions related to access Huawei Technologies Co. to the US market and to American suppliers, testify to the threat of deterring China's economic expansion. "The potential long-term consequences are colossal," said Larry Hu, chief economist at Macquarie Securities Ltd. in China in Hong Kong.
OPEC Tankers attacks lifted oil prices to 2-week highs.
Oil prices are rising for the third day in a row amid increasing tensions in the Middle East and a series of attacks on oil facilities and tankers of crucial OPEC members, which the US and Saudi Arabia have put on Iran. At the auction on Thursday, Brent futures have updated their highs since the beginning of May, reaching $ 72.91 per barrel. Contracts for WTI exceeded $ 63 per barrel for the first time since the end of last week. Support for oil prices continues to exacerbate the geopolitical situation in the Persian Gulf, says Nordea analyst Tatyana Evdokimova.
Source: Voice of Nigeria
Last week, four tankers passing through the Strait of Hormuz - the key “artery” for transporting OPEC oil - were attacked. The United States is suspected of attacking Iran, which has repeatedly threatened to cut off supplies in the event of tough sanctions, White House sources told The Wall Street Journal. Iran is also responsible for the attack of drones on the East-West oil pipeline in Saudi Arabia, which had to stop pumping oil from the fields to the ports for a day, Deputy Defense Minister Khalid bin Salman said on Thursday. After a series of incidents, tankers from the Persian Gulf to Asia received orders to switch to heightened danger regime, and the companies insuring deliveries inflated the cost of their services, oil traders told Reuters.
US Secretary of State Mike Pompeo said the day before that the Iranian authorities had redeployed their troops closer to US military facilities in Iraq. Because of this, the States evacuated its employees from the embassy in Baghdad. The market fears the possibility of new attacks on oil facilities in Saudi Arabia and the United Arab Emirates, and the risks of supply disruptions are pushing up oil quotes, says BKS Broker analyst Igor Galaktionov. However, as prices go up to $ 73 per barrel for Brent, selling pressure will increase, he says.
Long-term futures are already significantly cheaper than contracts for the next month: the difference in prices, the so-called backwardation, is at its maximum in a year and a half. “This raises concerns over local overbought of oil and the risk of shifting prices to expected long-term levels,” says Galaktionov. The long-term outlook for the oil market is getting darker. On Tuesday, the International Energy Agency lowered the forecast for demand for "black gold" - according to a new estimate, it will grow not by 1.46, but by 1.3 million barrels per day. Even more - by 290 thousand barrels per day - the IEA reduced the production estimate by the OPEC countries, which is necessary to maintain a balance of supply and demand. According to the agency’s calculations, in order to keep prices, the cartel needs to extract no more than 30.29 million barrels per day.
It is even lower than the level agreed upon in the OPEC + transaction (30.44 million barrels), indicates raw material strategist Sberbank CIB Mikhail Sheibe. In other words, to maintain the balance in the market, it is necessary to extend the transaction, he concludes. However, so far such a scenario is not yet guaranteed: both Russia and Saudi Arabia have announced plans to increase oil production.
