The World’s Big Export Engines Turn Gloomier by the Day
Manufacturing engines around the world are turning gloomier by the day.
A collapse in exports pushed Germany to the brink of a recession in the second quarter with total economic output contracting. At the same time, business confidence in Europe’s largest economy is at its weakest in almost seven years.
On the other side of the globe, South Koreans are at their most pessimistic since January 2017 as trade woes depress consumer moods. The Bank of Korea’s monthly consumer sentiment index dropped to 92.5 in August from 95.9 the previous month.
There was a warning for Singapore, too, with debt restructuring experts predicting a tide of bad corporate debt in the city-state that serves as a large hub of international shipping.
Those three bellwethers of global trade are all taking hits tied to the U.S.-China tariff battle that shows few signs of cooling off:
- After U.S. President Donald Trump said China “very badly” wants to make a deal and offered a more conciliatory tone at the weekend’s G-7 talks in France, Beijing declined to confirm trade-team phone calls Trump claimed showed progress.
- “Regretfully the U.S. has announced its decision to add new tariffs on Chinese products. Such maximum pressure will hurt both sides and is not constructive at all,” Foreign Ministry spokesman Geng Shuang said at a briefing Tuesday.
- Meanwhile, China’s yuan is headed for a record monthly plunge. That’s sure to be a sore point for U.S. officials who complain that Beijing suppresses the value of its currency to gain an export advantage.
- “China did not and will not surrender,” according to a commentary in the state-run Xinhua News Agency on Tuesday. “Any political attempt to suppress or obstruct the Chinese economy will backfire on the U.S. economy and harm American business and consumers.”
Charting the Trade War
Put a whipsaw on a roller coaster and that’s how some traders would describe the recent spate of swings in U.S. stocks, kick-started again by a barrage of Trump tweets.
Today’s Must Reads
- Japan-U.S. deal | Japan wants to lay to rest the threat of new auto tariffs before agreeing to a final deal with the U.S. as Trump declined to take that threat off the table.
- Tone shift | Trump left the G-7 summit on Monday taking a softer tone toward China, but he didn't abandon his tough tactics aimed at forcing Beijing to do a deal.
- Milk dud | American dairy farmers, already hurting from falling milk consumption and low prices, are missing out on a rare demand boom thanks the trade rift with China.
- Walking shoes | A quarter of the Chinese production capacity used by global sportswear makers is idle as companies leave the chief target of U.S. tariffs, according to an industry executive.
- Triple whammy | There’s a trio of threats hitting Swiss exporters: Weaker global demand, a surging franc and a German slump are darkening the economy’s prospects.
- Euro challenge | EU trade negotiators are in the hot seat doing a deal with the U.S.
- Import diversion | Mexico sees a $3.9 billion windfall from the U.S.-China trade war.
- Aug. 29: U.S. merchandise trade balance
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