Trade Tariff Countdown, Gig Deflation, Trump Targets FX: Eco Day

(Bloomberg) -- Welcome to Friday, Asia. Here’s the latest news and analysis from Bloomberg Economics to help get your day started:

• The U.S. and China began a pivotal round of trade negotiations with hours to go before the Trump administration ratchets up tariffs. Pimco reckons there’s an 80% chance the two will reach an agreement for at least a short time. Meanwhile, the U.S. trade deficit with China shrank to the narrowest in almost three years
• China has a powerful financial-market arsenal for its trade tussle with America, including a hoard of Treasuries and its currency. If you’re heading off to represent China in negotiations with a foreign power, the risk that a deal sparks a backlash at home is real. Escalating tariffs could push U.S. businesses to pass on these higher costs to consumers, said Atlanta Fed chief Raphael Bostic. Tom Orlik notes that not many Chinese firms could live with 25% tariffs
• If the gig economy plays a significantly expanded role, the impact will likely be deflationary and is going to cause trouble for central bankers, writes Tom Orlik
• The Trump administration will expand the number of countries it scrutinizes for currency manipulation in an upcoming report after lowering the bar for foreign governments to come under scrutiny
• New Zealand’s economy needs to grow at around 3% a year for the central bank to meet its inflation and employment goals, Deputy Governor Geoff Bascand said
• Malaysians are turning away from politically reincarnated Prime Minister Mahathir Mohamad after a year of failed promises
• As much of the world’s central banking community goes into a fetal pose, Norway is signaling it’s ready to deliver multiple rate hikes
• Europe’s leaders will have no-one to blame but themselves if they can’t find a female candidate to even consider to run the ECB. Meantime, a period of surging tax revenues in Germany looks over
• Jeff Bezos has revealed plans for humanity to return to the moon and showed off his private space company’s lunar lander

To contact the reporter on this story: Michael Heath in Sydney at mheath1@bloomberg.net

To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net, Chris Bourke

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