China and US make progress ...
Great new from Osaka this week, the trade talks between China and the USA are back on track. "Good Trump" was on display in Osaka. The President, following "excellent talks" with President Xi, promised no further tariffs for the moment, eased the pressure on Huawei and agreed to meet Kim Jong-un in the Korean DMZ on the way home.
Earlier in the week it hadn't looked so good. Days ahead of the crucial G20 meeting, China’s state media ramped up the rhetoric. US Secretary of State Mike Pompeo was described as the “source of all chaos” in international affairs by the Global Times.
“It is extremely rare for a world power to have such a crazy person as their top diplomat" claimed the tabloid, "Pompeo has become a person who threatens world peace and adds fuel to flash points between countries with conflicts.”
Pompeo may well be flattered, talking an obvious hit for the President. He may also feel badly done to, the "bad boy" role is usually assigned to National Security Advisor John (the mustache) Bolton.
North Korea had previously made clear the regime views on Bolton. “Crooked sound will always come out the mouth of a man who is structurally flawed. It is best this defective human product goes away as soon as possible.” It is not clear if Bolton will accompany President Trump to the Demilitarized Zone.
Donald Trump has declared US trade negotiations with China to be “right back on track” after the highly anticipated meeting with Xi Jinping on the sidelines of the G20 summit in Osaka.
Trump said the US would not impose further tariffs in a trade war that threaten the global economy. The world’s two biggest economies will restart negotiations on a trade deal.
The tariff policy is facing increasing pressure at home. More than 300 companies were in discussions with government officials in Washington this month. The trade war between the U.S. and China has been detrimental to business. As Best Buy's merchandising director explained ... “American manufacturers may lose share almost immediately to foreign competitors whose products are not made in China and, therefore, not subject to price increases in the form of tariffs.”
Apple, having warned of the potential threat to competitiveness last week, announced this week, the decision to move the Mac Pro assembly out of the U.S. and into China. It is a clear blow to the President's policy on trade and tariffs. The President is obliged to ease back on the aggressive trade stance. The new deal includes a promise to farmers they would win back lost markets as a result of the revived talks with China ...
Vauxhall issues warning ...
In the U.K, Boris Johnson may be committed to leaving the EU on the 31st October with or without a deal but Vauxhall issued a clear warning this week.
French carmaker PSA Group has made it clear, it will only build the new Vauxhall Astra at Ellesmere Port, if the UK avoids a no-deal Brexit.
PSA said, “The decision on the allocation to the Ellesmere Port plant will be conditional on the final terms of the UK’s exit from the European Union.” No deal means no new Astra. The new line will be headed for Poland instead.
The Society of Motor Manufacturers and Traders also warned this week, a no deal Brexit could deliver a “knockout blow” for UK car manufacturing. Frictionless trade with the EU is essential to maintain markets and supply lines. Border delays could cost the industry up to £50,000 a minute if the country were to leave the European Union without an agreement.
Projections released by the society suggest that British automotive producers and suppliers would face costs of up to £70 million a day. Disruptions at the border would fracture just-in-time manufacturing lines. The industry generates a turnover of £82 billion. It made about 1.3 million vehicles for export last year, the majority of which are destined for Europe.
The outlook for the UK and world economy is threatened by Trump and Tariffs on the one hand and Boris and Brexit on the other. We cannot be sure if the President is really going to be capable of a long term detente on trade. Neither can we be sure, the next Prime Minister of the UK will be able to deliver an exit from the EU on the 31st October with or without a deal.
For the moment, the prospects for progress, appear to be more promising from the President but then ...
G20 looks on ...
In a G20 declaration issued at the end of the two-day summit, the world leaders committed themselves to realizing “free, fair and non-discriminatory” trade and to “keep markets open”. The declaration avoided criticism of Trump style protectionism.
On climate change, all G20 nations except the US reiterated their determination to implement the Paris agreement. A separate note stated Washington intended to withdraw from the agreement “because it disadvantages American workers and taxpayers”.
Fears that disagreement over the climate crisis could sink the G20 declaration were overcome with a compromise that again left the US isolated in international efforts to reduce greenhouse gas emissions.
The lack of progress on the climate emergency, despite it being flagged as a priority by the summit’s Japanese hosts, drew an angry reaction from campaigners.
Kimiko Hirata, international director of the Kiko Network, said Japan’s prime minister, Shinzo Abe, had “raised expectations that he would use this G20 moment to take bold action for the planet. Instead, the Japanese Prime Minister falied to build a clear majority of support for climate action.
“Prime Minister Abe and other G20 leaders need to get serious about their climate commitments and make sure they don’t show up empty-handed for the climate action summit in September.”
The Kiko network is a non-governmental organization (NGO) supported by individuals, organizations and regional networks from all over Japan. The primary goal is the practical implementation of the Kyoto Protocol and the prevention of dangerous climate change.
So some progress on trade in Osaka, little progress on climate change. The Japanese government seized the moment to re launch the whaling fleet. Japan has withdrawn from the International Whaling Commission
which banned hunting. Japan will send out its first official whaling fleet next month, in local waters of course.
That's all for this week, have a great weekend. We will be back with more news and updates next week!
The Saturday Economist
John Ashcroft publishes the Saturday Economist. Join the mailing list for FREE weekly updates on the UK and World Economy.
|The Saturday Economist|
The material is based upon information which we consider to be reliable but we do not represent that it is accurate or complete and it should not be relied upon as such. We accept no liability for errors, or omissions of opinion or fact. In particular, no reliance should be placed on the comments on trends in financial markets. The presentation should not be construed as the giving of investment advice.