LyrArc Article Gist
Samuelson says the bill in the U.S. Senate is symbolic because it allows companies to cite the undervalued renminbi as an illegal subsidy and have the Commerce Department impose duties on Chinese products. This would have to be done on a case by case basis, making it largely ineffective in dealing with the large trade deficit with China. He also cites the differences among economists that show a range between 1 million and 2.8 million jobs lost. The 2.8 million jobs estimate is from the Economic Policy Institute for the period 2001-2010. The 1 million is an estimate for 1990-2007, which estimates a loss of quarter of all manufacturing jobs. By WTO rules subsidies that are not targeted at specific industries or firms are allowed, according to lawyers. Which means China could appeal to the WTO, and impose retaliatory duties. In the meantime the trade deficit with China, with imports of $364 billion in 2010, and $86 billion in exports, would remain largely unaffected. This is the reason some Senators, including Republican Orrin Hatch (Utah), see this move as political posturing by President Obama and the Democrats, because the administration has no new proposals to address the trade deficit and the gradual erosion of America's manufacturing base. Samuelson cites Arvind Subramanium of the Peterson Institute, and his book "Eclipse: Living in the Shadow of China's Economic Dominance." Subramanium says what is at stake is not a temporary imbalance in world trade a happened with Japan in the 1980's, but a gradual shift to a system of trade in which China has preferential access to raw materials (oil, grain, minerals), subsidizes exports in new industries as it moves upscale from shoes and textiles to automobiles, aircraft and alternative energy, and changes the very nature of the global trading system as it becomes the dominant trading nation in the world. By Subramanium's estimate China's share of global trade increased from 1.6% to 9.8% in the 2 decades from 1990 to 2010. In two more decades he estimates China could increase this to 15% of global trade, significantly larger than the U.S. In a response to Congressmen, businessmen and policymakers wary of starting a trade war, Samuelson says there already is a trade war as a "fixed" system of trade undermines America's manufacturing and industrial base. The only difference being that today only one side is fighting that war, and America is slow to grasp the implications or its policymakers are clueless how to respond....

LyrArc Article Gist
The U.S. Federal Reserve plans a quarter percentage point rate cut to tackle weaker global growth, trade uncertainty from tariffs wars, with muted inflation, according to indications from New York Fed President John Williams. Fed chairman, Jerome Powell, cut rates to the range of 2% and 2.25% current range in July 2019.

LyrArc Article Gist
The U.S. and India face difficult trade negotiations as India moves to build its Make in India campaign, building capabilities of Indian manufacturing companies for global supply chains. Mr. Trump will sign a $3 billion defense deal with India for supplying helicopters and other equipment to India. Indian policy on trade is to ensure local content and transfer of technology to build capabilities of local companies. The goodwill generated by the visit by Mr. Trump to India, and deals on defense could lead to agreement on other trade issues, as India and the U.S. balance other considerations such as the rise of China into the picture. This will take time and is likely to be done after the elections. Differences on tariffs will continue in the same way that differences with China led only to a partial deal, with contentious trade issues on technology left for the future.

LyrArc Article Gist
The Japanese ambassador to India, Hiroshi Suzuki, tells the Hindustan Times how close coordination was done between the Hiroshima G7 meetings and the G20 meetings in India. He say the problems of the Global South such as debt, food prices, climate change, are serious in prime minister Kishida's thinking and there is a need to show results. All aspects of India Japan relations including trade and economic ties and defense are moving forward, he says.

LyrArc Article Gist
China's export performance is stalling. Chinese exports to the US fell by an annual 6.5%. The exports of China have risen by 8% over the prior year yet this was over 2022 when China was under a lockdown. South Korea and Taiwan which supply parts to Chinese factories had exports drop by 14% over prior year.

LyrArc Article Gist
Marco Rubio speaks for the US with profound convictions and long experience in the Florida legislature and the US Senate, and as akey member of the DJT administration. In his speech in Munich at the MSC he recalls his grandparents being from Piedmeont Sardinia in Italy and from Sevilla in Spain. He talks proudly of his Spanish and Italian heritage, of America founded by European settlers. For Europe this is a speech that shows America is profoundly part of Western Civilization that started in Europe. Here are some parts of the speech and Rubio's call for America and Europe to respond strongly to the mistakes in migration and deindustrialization that have hurt the people of Europe and America, with deeply felt negative consequences. "That infamous wall that had cleaved this nation into two came down, and with it an evil empire, and the East and West became one again.  But the euphoria of this triumph led us to a dangerous delusion:  that we had entered, quote, “the end of history;” that every nation would now be a liberal democracy; that the ties formed by trade and by commerce alone would now replace nationhood; that the rules-based global order – an overused term – would now replace the national interest; and that we would now live in a world without borders where everyone became a citizen of the world.  This was a foolish idea that ignored both human nature and it ignored the lessons of over 5,000 years of recorded human history.  And it has cost us dearly.  In this delusion, we embraced a dogmatic vision of free and unfettered trade, even as some nations protected their economies and subsidized their companies to systematically undercut ours – shuttering our plants, resulting in large parts of our societies being deindustrialized, shipping millions of working and middle-class jobs overseas, and handing control of our critical supply chains to both adversaries and rivals.  We increasingly outsourced our sovereignty to international institutions while many nations invested in massive welfare states at the cost of maintaining the ability to defend themselves.  This, even as other countries have invested in the most rapid military buildup in all of human history and have not hesitated to use hard power to pursue their own interests.  To appease a climate cult, we have imposed energy policies on ourselves that are impoverishing our people, even as our competitors exploit oil and coal and natural gas and anything else – not just to power their economies, but to use as leverage against our own.  And in a pursuit of a world without borders, we opened our doors to an unprecedented wave of mass migration that threatens the cohesion of our societies, the continuity of our culture, and the future of our people.  We made these mistakes together, and now, together, we owe it to our people to face those facts and to move forward, to rebuild.  Under President Trump, the United States of America will once again take on the task of renewal and restoration, driven by a vision of a future as proud, as sovereign, and as vital as our civilization’s past.  And while we are prepared, if necessary, to do this alone, it is our preference and it is our hope to do this together with you, our friends here in Europe.  For the United States and Europe, we belong together.  America was founded 250 years ago, but the roots began here on this continent long before.  The man who settled and built the nation of my birth arrived on our shores carrying the memories and the traditions and the Christian faith of their ancestors as a sacred inheritance, an unbreakable link between the old world and the new.  We are part of one civilization – Western civilization.  We are bound to one another by the deepest bonds that nations could share, forged by centuries of shared history, Christian faith, culture, heritage, language, ancestry, and the sacrifices our forefathers made together for the common civilization to which we have fallen heir. And so this is why we Americans may sometimes come off as a little direct and urgent in our counsel.  This is why President Trump demands seriousness and reciprocity from our friends here in Europe.  The reason why, my friends, is because we care deeply.  We care deeply about your future and ours.  And if at times we disagree, our disagreements come from our profound sense of concern about a Europe with which we are connected – not just economically, not just militarily.  We are connected spiritually and we are connected culturally.  We want Europe to be strong.  We believe that Europe must survive, because the two great wars of the last century serve for us as history’s constant reminder that ultimately, our destiny is and will always be intertwined with yours, because we know – (applause) – because we know that the fate of Europe will never be irrelevant to our own.  National security, which this conference is largely about, is not merely series of technical questions – how much we spend on defense or where, how we deploy it, these are important questions.  They are.  But they are not the fundamental one.  The fundamental question we must answer at the outset is what exactly are we defending, because armies do not fight for abstractions.  Armies fight for a people; armies fight for a nation.  Armies fight for a way of life.  And that is what we are defending: a great civilization that has every reason to be proud of its history, confident of its future, and aims to always be the master of its own economic and political destiny. It was here in Europe where the ideas that planted the seeds of liberty that changed the world were born.  It was here in Europe where the world – which gave the world the rule of law, the universities, and the scientific revolution.  It was this continent that produced the genius of Mozart and Beethoven, of Dante and Shakespeare, of Michelangelo and Da Vinci, of the Beatles and the Rolling Stones.  And this is the place where the vaulted ceilings of the Sistine Chapel and the towering spires of the great cathedral in Cologne, they testify not just to the greatness of our past or to a faith in God that inspired these marvels.  They foreshadow the wonders that await us in our future.  But only if we are unapologetic in our heritage and proud of this common inheritance can we together begin the work of envisioning and shaping our economic and our political future. Deindustrialization was not inevitable.  It was a conscious policy choice, a decades-long economic undertaking that stripped our nations of their wealth, of their productive capacity, and of their independence.  And the loss of our supply chain sovereignty was not a function of a prosperous and healthy system of global trade.  It was foolish.  It was a foolish but voluntary transformation of our economy that left us dependent on others for our needs and dangerously vulnerable to crisis. Mass migration is not, was not, isn’t some fringe concern of little consequence.  It was and continues to be a crisis which is transforming and destabilizing societies all across the West.  Together we can reindustrialize our economies and rebuild our capacity to defend our people.  But the work of this new alliance should not be focused just on military cooperation and reclaiming the industries of the past.  It should also be focused on, together, advancing our mutual interests and new frontiers, unshackling our ingenuity, our creativity, and the dynamic spirit to build a new Western century.  Commercial space travel and cutting-edge artificial intelligence; industrial automation and flex manufacturing; creating a Western supply chain for critical minerals not vulnerable to extortion from other powers; and a unified effort to compete for market share in the economies of the Global South.  Together we can not only take back control of our own industries and supply chains – we can prosper in the areas that will define the 21st century." ...

LyrArc Article Gist
The recent appointment of fast food executive Andrew Puzder as Labor Secretary has caused great concern among union leaders. Puzder supports a $9 minimum wage compared to $15 supported by Democrats. Unions now represent 7% of the labor force, down from a high of 20% during Reagan's time when Reagan appointed a construction company executive as Labor Secretary and cut regulations.  Globalization has thinned the ranks of workers in unions. And the failure of Democratic administrations to stem the shift of factories overseas to China, Mexico and other places, as part of global supply chains focussed on cost, has weakened Democratic support among workers since the period of Bill Clinton. It eroded to the point where Obama won 65% of support among unions and Hillary Clinton won 56% in 2016. Interestingly the Republican Romney gained 33% versus 37% for Trump, showing voters were more inclined to move away from Democrats and only a smaller number willing to support Republicans, but the shift enough to give Republicans a win in 2016 for the presidency. The figures are from a Election Day survey of trade union AFL-CIO, and a larger proportion in midwestern states showed disaffection with policies from Clinton to Obama. In fact Obama spent years promoting another free trade agreement TPP that favored tech more than auto and older industries, just as Bill Clinton had promoted NAFTA, without giving thought to what this was doing to its worker base of support. A similar situation happened with Social Democrats in Germany as a SPD administration moved to the centre and handed Christian Democrats led by Merkel a win in parliamentary elections. As Democrats such as former Labor Secretary Reich, a professor at UC Berkeley who served under Bill Clinton, describe the problems of working class people their is less reflection on the impact of the changes from globalization and how Democrats handled or mishandled it, and more on the politics between the two parties.   ...

LyrArc Article Gist
Oil prices in the U.S. drop to $55 a barrel on the New York Mercantile Exchange, and $65 a barrel for Brent crude price. Earlier expectation of the impact of reimposed sanctions on Iranian oil shrinking global oil supplies have been reversed with increased production from Saudi Arabia, Russia and the U.S.

Another new development that caused this reversal in sentiment is that the Trump administration granted waivers to some buyers of Iranian crude oil. The U.S. trade dispute with China has also added to this with lower growth forecasts. Unlike in previous years OPEC or Saudi Arabia cannot by itself shrink global supplies with production cuts. The U.S. and Russian output also plays a significant part.

LyrArc Article Gist
India's Commerce and Industry Minister Piyush Goyal sets out the new Foreign Trade Policy. It moves away from giving incentives to exporters to remission of taxes and lower costs for smaller medium sized enterprises. The new export target is for goods and services exports to reach 2 trillion dollars by 2030 from $760 billion in 2023. The new policy will go into effect in April 2023. India's exports have grown 75% from $435 billion in 2015 to $760  billion in 2023. Under the new policy Indian exporters can source goods in one country and send them to a third country without touching Indian shores. Wider engagement will take place with States and Districts to promote exports at grassroots level. DGFT, Director General of Foreign Trade offices of DGFT will interact with district collectors to push exports. India's Commerce Ministry will also conduct a massive global outreach sectorally and country wise in tandem with the External Affiars Ministry  over the next 4-5 months. E commerce hubs will be established to generate $200-$400 billion in e-commerce exports. India's share of world trade is very low and needs to be pushed up to 7-10% says Commerce Secretary Sunil Barthwal. ...

LyrArc Article Gist
The global economic map is rapidly redrawing bringing US and Europe closer. The US has imported more goods from Europe this year than from China. In September alone says WSJ Germany exported 50% more goods to the US year over year with the weaker euro increasing the momentum. European FDI foreign direct investment in the US increased by 13.5% in 2021 to $3.2 trillion. US FDI to Europe increased by 10% to $4 trillion. There is a push on both sides of the Atlantic to increase local manufacturing, and to increase trade, and shift supply chains away from the overdependence on China.  

LyrArc Article Gist
Brexiters dream of a revival of colonial trade links with a nostalgic view of Britain. The idea of "global Britain." Yet there is a flaw in this vision as only 3.3% of Indian exports went to Britain in 2016, and 17% went to EU countries. As an exporter Britain barely comes into India's top 20 trading partners. Part of the reason is that British companies build domestic plants in India. Much of the optimism comes from the UK-India Technology partnership agreed between prime ministers Modi and May in April 2018. 

On a trade deal the EU is working on this since 2007 so a trade deal will take a long time in negotiations.

LyrArc Article Gist
Bernie Sanders points out in this NYT op-ed the idea that Donald Trump could benefit from the same discontent among working class voters that helped the Leave campaign is a wake up call for the Democratic Party. He calls for global trade and a global economy that works for working class, middle class Americans.  Sanders is pushing for a Democratic Party that embraces the concerns of working class Americans, that understands the impact of factory closings and loss of jobs, of economic uncertainty, of declining incomes and shrinking opportunities.

LyrArc Article Gist
Questions raised in this Hindustan Times report about whether India's participation in the Shanghai Cooperation Organization makes sense now after the pandemic and the new arrangement in global affairs. New supply chains and trade alliances formed after the pandemic are likely to be very different after the pandemic and formed with dominant consideration of each nation's economic interests including manufacturing in the home country.  India joined the SCO to forge ties with the central Asian countries. But this no longer makes sense as India's manufacturing ties with individual nations such as Britain, Japan, Taiwan and the U.S., European Union may make more sense and build on "Made in India" initiatives than older thinking and approaches. Britain after Brexit, Japan and Taiwan after a realignment of trade relations, are keen on expanding business and trade, investment ties with India. India has many opportunities to pursue for mutual economic benefit with these countries. Germany, France and other EU countries, the U.S. are also keen on expanding trade and investment with India to boost their economies after the pandemic. This is a crucial juncture for India to plan for the next 10 years for a changing world in which India becomes a dominant story in manufacturing. Australia's participation in the RCEP may also not be long term under the prevailing climate of trade relations with China. Australia India trade can be expanded with new efforts.  ...

LyrArc Article Gist
Greg Ip of the WSJ looks at the result of changes in supply chains away from China, and the new trading relationship with China to 2028. He says the shift to a new global supply chain that diversifies it away from concentration in China is taking place. Would taking the tariffs from 30% to 60% under a new Trump administration be a good idea? Greg Ip thinks it is a bad idea as the change is gradual and is actually taking place. It may have the unintended effect of worsening US China relations essential for global stability when it is coupled with erratic or retaliatory rhetoric. Rhetoric that appears to China that it is being singled out in world trade beyond what are changes that have taken place with Japan in the past in trade. The Biden administration is for good reasons working to restore a balanced yet stable relationship with China. Apple is shifting production of 25% of iPhones to India. Samsung is investing more in Vietnam. The trade deficit with Mexico has reached $151 billion twice as large as in 2017. And $100 billion with Vietnam three times as large as 2017. The US trade deficit with China has dropped from $381 billion to $281 billion in the last 12 months, the Commerce Department reports show. And from $1.1 trillion with the whole world from $1.2 trillion for the last 12 months, 4% of US GDP. Overall the Trump era tariffs of 30% have not reduced the US  trade deficit substantially but has shifted American and European foreign investment to India, Vietnam, Mexico and other countries as well as to the home country. Over time the supply chain would become truly diversified as India makes great strides to become the third largest economy with new infrastructure by 2030. The head emeritus of the European Union Chamber of Commerce in China, Joerg Wuttke, says the pressure to export will be high for China as its economy shifts more to manufacturing from construction. Most Chinese companies are producing more than internal demand in China, and most companies in solar are losing money, in wind turbines and solar all are losing money, Wuttke says. This means China will double down and increase its investments in Mexico, Vietnam, Morocco and other countries so that it can send its products to the US through third countries that do the final export. One expert even says removing a few screws here and some there, find a different supplier, and shipping to a third party for final export that makes it not 100% Chinese content, the pressure for that is high. ...

LyrArc Article Gist
As steel making capacity appears to be increasingly out of control in China in 2012-2015, trade actions to limit steel imports from China in other countries is growing. Huge excess capacity in steel, cement, glass, wind turbines and solar panels, is leading to China becoming the targe of global trade sanctions for 75% of the trade sanctions cases since 2009, according to research group Global Trade Alert.

LyrArc Article Gist
Prices of natural gas in the US have risen 93% since August 2007 and as global demand continues prices are expected to fuel inflation in the US. Producer prices were up 1.1% in March according to Labor Department and natural gas prices contributed to this increase. Natural gas heats half of uS homes, supplies 20% of USA electricity and is used to make products from fertilizer to plastic bags. And demand from the US power sector is growing at 10% a year as natural gas is clean burning to produce electricity at power plants and preferrable to caol burning plants from environmental standpoint. With environmetal regulation and costs natural ga ma be preferred by plants for power generation. A revolution has ocurred in the way natural gas is cooled into liquid LNG and transported in LNG tankers so that places like Nigeria and Quatar can now ship to Japan and Europe. And LNG contracts are now written in less rigid terms so that supplies are not fixed over 10 year periods like before and can be diverted by suppliers to other markets where prices have risen so that when a nuclear power plant shuts down in Japan LNG supply can be diverted to Japan from other countries because of vastly higher prices in Japan. This also happens elsewhere last year a drought in Spain cut hydroelectric power and Spain turned to Algeria and Egypt which had already diverted supplies to Japan which paid prices twice as high as Spain, so Spain secured supplies from Trinidad a US supplier, which reduced supplies to the US by 31% over 2006. So this shifting global supply chain means shortages and prices in one place can reverberate all the way to the USA. Because of these and other reasons US prices are expected to go much higher by estimates from Barclays and Deutsche Bank....

LyrArc Article Gist
Founded in 1880, Carl Welcker's company has seen the changing fortunes of manufacturing for over a century, during depression and after the wars. Still the 50% drop in orders for this company, which makes the machines that make 80% of the spark plugs in the world, is like nothing Carl Welcker has experienced. Its a tragedy he says. Its the speed of the manufacturing decline that is causing concern. In Europe where a fifth of GDP comes from manufacturing industrial production is down 12% from ayear ago. In Brazil it is down 15%, in Taiwan 43%. In China exports are down 25%. In the USA, industrial output went down by 11% in February 2009, according to the Federal Reserve. The pattern of this decline recalls the pattern of 1929, as tightening creedit and consumer fear reduces demand for manufactured goods in one country after another, creating a downward spirtal that reduces global trade. And of concern is that trade is declining even faster than manufacturing.German exports are down 20% from ayear ago, Japan's have plunged 46%, and in the USA exports fell at an annualized rate of 23.6% in the fourth quarter of 2008. A company like Schutte in Cologne, Germany, expanded rapidly as globalization opened new markets in Eastern Europe and Asia. Sales more than doubled in 5 years from 58 million euros to 100 million euros. Which suggests that the extraordinarily rapid expansion of the last few years may have its reverse effect heightened in a slowdown, as those additional sales to China and Eastern Europe disappear. For the USA manufacturing accounts for 14% of GDP, for the world 18%, and for China 33%. But this creates a misperception about the importance of American manufacturing exports. First, manufacturing contributed more to GDP growth than any other sector of the US economy, and accounts for two thirds of American exports, says the chief economist for the National Association for Mnaufacturers in Washington. America's share of global manufacturing output, he says, has remained steady at 20 to 23% for the past decade. This covers jet engines, locomotives, pharmaceuticals, and high tech products. For countries like India where manufacturing accounts for 16% of GDP, the last quarter of 2008 saw the first quarterly production decline in over a decade. And industries like handicrafts exports have fallen by 55% to $1.35 billion, and textile makers have cut half a million jobs. ...

LyrArc Article Gist
In the 2 hour call Xi and Biden discussed issues that are creating serious differences between the 2 countries, the war in Ukraine, Taiwan, trade and tariffs, South China sea and Indo-Pacific issues, global supply chains, food and energy issues. Chinese statement says "those who play with fire will be perished by it. It is hope the US will be clear eyed about this." Xi Jinping takes on a third term in 2022. Biden has spoken with Xi five times since 2021 and the last call in March was to dissuade China from supporting Russia in the Ukraine war. China is opposed to Nancy Pelosi's visit to Taiwan. Biden has said it was a bad idea at this time.

LyrArc Article Gist
The U.S. trade dispute with China takes a new turn after tit for tat tariffs, with the U.S. president Trump claiming that China was interfering in the U.S. midterm elections. This plays into the narrative in China that the U.S. does not want to see China's ascent as a global power. President Trump and Trade Representative Lighthizer have singled out "Made In China 2025," China's plans for tech leadership as a serious issue for the U.S. President Trump made his claim in a speech at the United Nations, saying that he was "the first president ever to challenge China on trade."

Many of China's tariffs on U.S. exports are targeted at agricultural products such as soyabeans and corn in heavily pro-Trump states, and in rural areas where the Republican party has a significant base. 

 

LyrArc Article Gist
South Korea's LG Energy Solution is pushing forward with its aggressive investments in electric vehicle batteries by going public, raising $11 billion through South Korea's largest listing on January 27. LG Energy has made large investments in the US and is dominant in Europe. CEO Kwon Young-soo told a recent news conference that its strength is that "we have global buyers and global production facilities in the US and Europe, which CATL doesn't have." Saying that LG Energy is not Chinese is a big pitch, and LG Energy is taking advantage of the current trade war between the US and China.  China's CATL or Amperex is the largest maker of electric vehicle batteries with 30% of all batteries sold, compared to LG Energy's 20%. Yet CATL is concentrated in the China home market. The next three companies are in order Japan's Panasonic, China's BYD, South Korea's SK Innovation, and Samsung SDI. The South Koreans plan $15 billion in investment in the US. They see the fact that they are not Chinese a big advantage in meeting European and US automaker needs. ...