U.S. and China Play Whack-A-Mole in Trade War’s New Frontier
Fresh U.S.-China trade war fronts are popping up all the time, like an accelerating game of Whack-A-Mole.
Here’s our weekly wrap of what’s going on in the world economy and the lessons learned.
Trade War Fronts Multiply
There are more fronts to watch in the ongoing U.S.-China drama: China’s ready to weaponize its rare-earths supply, the U.S. is firing warnings about Chinese entities potentially doing business that violates sanctions on Iran, and China’s still using the World Trade Organization as a platform to rebuke American actions. Countervailing duties remain a U.S. Commerce tool to target certain products, as in past administrations.
Markets have come around to seeing a full-blown trade war as the most likely scenario. President Donald Trump says he’s “not ready” for an agreement, while Chinese officials are attempting to show him they won’t be pushed around. The contrast was stark with Trump’s remarkably warm visit in Japan, which signals just how much he wants to seal a deal with the longtime ally. August is the goal.
As of Thursday evening in Washington, U.S. tariffs now are being put to work to pressure Mexico on the two countries’ immigration dispute.
What the Numbers Say
An all-out U.S.-China trade war could cost the world $600 billion in 2021, Bloomberg Economics calculates, while flagging May PMI data as another shorter-term clue. Our gauge of early economic indicators shows the world’s No. 2 economy took another hit this month. Last month’s sour industrial profits already lent credence to that view, and investors also got skittish about the Chinese government’s first bank seizure in more than two decades.
- Yield Curve’s Turn Puts Microscope on U.S. Economic Reports
- Auto Industry’s Weakness Is Dragging Down Global Economic Growth
- Upbeat Bank of Canada Pours Cold Water on Rate Cut Speculation
- Mexico Central Bank Opens Door to Sub-1% Growth This Year
- False Dawn Looms Over Turkish Economy After Likely Recession End
Vietnam in Spotlight
The super-fast-growing Southeast Asian economy continues to win as a low-cost option amid an improving business climate. Building on a year-long theme, Bloomberg this week tackled how Vietnam is getting orders as a China substitute. It’s a tricky game for the U.S., which might cherish Vietnam for its loyalty in a region that relies heavily on China, but also — as seen in the Treasury’s currency report — isn’t comfortable with how lopsided the bilateral trade is becoming.
Vietnamese clinging to cash and gold for even major transactions, our Hanoi bureau writes, is one case for those arguing that development isn’t moving fast enough.
Weekend Reading and Listening
- Where The U.S.-China Trade War Stands Now (Stephanomics Podcast)
- Call Me, Please? Trump’s Appeal Prompts Online Ridicule in Iran
- Japan’s Likely Recession Mustn’t Stop Tax Hike, Says Panel Chief
- China’s Slowdown Is Global Economy’s Nightmare, Reinhart Says
- Bonanza for Baltic Boozers as Nations Race to Cut Alcohol Taxes
- ECB Seen Offering Generous Loans to Banks to Boost Feeble Growth
- Israel Faces Brain Drain as More Educated Citizens Leave Country
Video of the Week
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