Dhaka, Bangladesh
Markets hope for positive signs from Trump speech

Markets hope for positive signs from Trump speech

Business Desk US President Donald Trump is scheduled to discuss the country’s trade policy at the Economic Club of New York on Tuesday, and the markets are likely to hang on every word. Trump’s lunchtime address at the club, which has hosted US presidents including Woodrow Wilson and John F. Kennedy, as well as foreign leaders like former Soviet President Mikhail Gorbachev here and Chinese Premier Li Keqiang here will be closely watched by investors anxious for any positive news about his administration’s long-running trade war with China. “You can expect the president to highlight how his policies of lower taxes, deregulation, and fair and reciprocal trade have supported the longest economic recovery in US history with record low unemployment, rising wages, and soaring consumer confidence,” White House spokesman Judd Deere said. He declined to give further details. US stock markets have hit record highs in recent weeks on hopes the White House and Beijing are close to a trade deal that could go a long way toward dispelling the uncertainty dogging the global economy. Last week, officials from both sides said they had a deal to roll back tariffs, only to have Trump deny any deal was agreed on. A positive speech on US-China trade would likely satisfy market participants even without specific details of the “Phase 1” agreement under negotiation, said Jim Paulsen, chief investment officer at The Leuthold Group in Minneapolis. “It still feels like we’re pretty close to having something done,” Paulsen said on Monday. “Even if it’s meaningless, it will be meaningful.” More than 1,350 people are expected to attend the speech, according to the club’s spokeswoman, Erin Klem. Not everyone thought Trump’s speech to the 112-year-old club, which has served as a venue for major economic policy addresses, would be seen as constructive by investors. Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas, had little hope Trump’s speech would mark an end to uncertainty. It remains notoriously hard to predict whether Trump will take a positive or negative tone on trade. “Whatever uncertainty exists today will exist tomorrow also,” he said, adding that if Trump were to say he is not rolling back any tariffs, the market would react negatively. Gregory Daco, chief US economist at Oxford Economics, estimated the trade war had chopped about eight-tenths of a percentage point off US growth. After starting the year with growth running at 3.1 per cent, output throttled back to 1.9 per cent in the third quarter, with weak business investment factoring heavily in the slowdown. Daco questioned whether a limited trade deal with China would be enough to draw businesses back off the sidelines. “Do you as a business make a decision that now the environment is clearer, there are less tariffs, so now you’re more likely to invest? Or, if after the last three years, you’re still more cautious and say ‘let’s wait this one out,’” Daco said. “I’d favor the latter.” The latest bargaining chip in US-China negotiations to cool a 16-month-old trade war is whether President Donald Trump would roll back tariffs on hundreds of billions of dollars’ worth of Chinese imports, and how soon. The Trump administration began imposing the tariffs in July 2018 on industrial components and technology goods from China. After Beijing retaliated with higher duties on US farm goods, Trump struck back with more tariffs - many already enacted, some still threatened - under which the vast majority of Chinese imports could be affected by the end of 2019. As US and Chinese negotiators close in on a “phase one” trade deal, expectations are rising that at least some of these tariffs will be removed. China’s Commerce Ministry and a US official said on Nov. 7 that a deal would include tariff rollbacks, but Trump undercut the idea after pushback from China hawks in his administration, saying he has not decided to do so. Following is a look at current and planned US tariffs on Chinese goods, listed in reverse chronological order. Trade experts say the most recent tariffs would be the likeliest to be removed. The United States is scheduled to levy 15 per cent tariffs on about $156 billion of Chinese products on Dec. 15, including cellphones, laptop computers, toys and clothing - known as “List 4B.” People briefed on the trade talks say the United States has effectively agreed not to proceed with this round of tariffs as part of the phase one trade deal. A US official has said the fate of these tariffs would be considered as part of the final negotiation over the deal’s text. After an early October round of talks led to a White House handshake on the interim deal with Chinese Vice Premier Liu He, Trump decided not to proceed with an Oct. 15 increase on tariffs on about $250 billion worth of Chinese goods to 30 per cent from the 25 per cent rate already imposed. If talks to complete the text for the phase one trade deal collapse, Trump could move to reimpose this increase. Affected goods range widely from industrial components and semiconductors to furniture and building materials. The United States imposed a 15 per cent tariff on about $125 billion of goods on Sept. 1, 2019, including flat-panel television sets, flash memory devices, smart speakers, Bluetooth headphones, bed linens, multifunction printers and many types of footwear. Trump imposed these tariffs, and set the Dec. 15 duties in motion, after a late-July round of negotiations failed to result in a major increase of Chinese purchases of US farm goods. The phase one trade deal now being discussed would roughly double such purchases from pre-trade-war levels over a period of time, according to US Treasury Secretary Steven Mnuchin. People familiar with the discussions say that China has asked for these Sept. 1 tariffs to be removed as part of the deal and the request is being considered. On May 10, 2019, Trump increased tariffs on $200 billion worth of Chinese goods to 25 per cent from 10 per cent after China pulled back from a proposed deal that US officials said was nearly completed. The higher tariffs applied to nearly 6,000 products that were originally taxed in September 2018, from computer modems and routers to vacuum cleaners, lighting fixtures and furniture. The US trade representative’s office issued exclusions on hundreds of these products in September 2019, including some computer circuit boards, laminated wood flooring and dog collars. Trump imposed tariffs on a $200 billion list of Chinese imports on Sept. 24, 2018, after Beijing retaliated against an initial US volley of tariffs with its own duties on American farm products and manufactured goods. This list of product tariffs, and the two previous lists below, may be the least likely to be rolled back, trade experts and people familiar with the talks say, adding that keeping some tariffs in place would maintain leverage over China for future negotiations. Trump has said he will not do a complete rollback of tariffs on Chinese goods. The first US tariffs on Chinese imports imposed in the summer of 2018 covered $50 billion of Chinese goods considered core to US “Section 301” allegations that China systematically steals and forces the transfer of American intellectual property to Chinese firms. These initial lists were composed primarily of Chinese-made industrial components, machinery, semiconductors and other non-consumer goods aimed at inflicting pain on Chinese exporters while minimizing the impact on US manufacturers. The “List 1” tariffs on an initial $34 billion in Chinese goods were imposed on July 6, 2018, while a second list of $16 billion “List 2” tariffs went into effect on Aug. 23, 2018.

Share |