Welcome to the latest instalment of our weekend roundup, TradeFred’s look back at the most important news stories that took place while the markets were closed. Today’s edition focuses on escalating trade tensions, more Brexit wrangling and the latest on Australian politics – plus much more besides.
Global investors are bracing themselves for a continuation of President Donald Trump’s protectionist agenda, as top US officials claim a new round of tariffs could hit Chinese imports on Monday. Although the levy is said to be 10%, less than the 25% quoted by the administration, it will still affect around $200 billion worth of goods.
These new tariffs will be placed on products such as internet technology products, furniture, tyres and chemicals, plus a host of other items. America and China have already engaged in tit-for-tat levies earlier in the year, with no end in sight of the troubles.
White House spokeswoman, Lindsay Walters, said the President “has been clear that he and his administration will continue to take action to address China’s unfair trade practices. We encourage China to address the long-standing concerns raised by the Unites States.”
Investors had been hoping that the stepping up of trade talks between the two countries was going to thaw relations, however this latest announcement seems to have poured cold water on this. Although progress was thought to have been made, the imposition of new tariffs could seriously derail proceedings.
These fears appear to have been confirmed by Chinese officials, who told the Wall Street Journal (WSJ) that they may decline to participate in future negotiations if the tariffs come into effect. The WSJ quoted one senior figure saying that China would not continue with the talks “with a gun pointed to its head”.
Meanwhile, the looming tariffs appear to have instilled a sense of urgency into the World Trade Organisation (WTO). The body is said to be stepping up talks to reform the process for settling international trade disputes, though did not provide any more details.
At a meeting in Argentina, the WTO said there was an “urgent need” to improve, especially in the face of increasing tensions between the US and China. Germany’s Deputy Economy Minister, Oliver Wittke, said strengthening the organisation was vital “especially in times of ‘America first’ and increasing global protectionism.”
The UK and European Union are getting closer to that illusive withdrawal agreement, Britain’s Brexit minister has revealed. Dominic Raab made the claim after a telephone call with his EU counterpart Michel Barnier.
For his part, Mr Barnier appears to have confirmed this, although he was clear there were still “substantive differences” that still had to be resolved. Both sides of the divide are hoping to each a deal by mid-November.
With the UK set to leave the bloc on March 29th 2019, British Prime Minister Theresa May has faced a series of roadblocks in her attempts to steer the country out of the EU. Her much-maligned “Chequers” proposal has been battered by Brexiteers and Remainers alike, yet she seems dead-set on pursuing it to the end.
Indeed, she has recently issued an ultimatum to critics, saying there is a single binary choice for UK lawmakers to decide upon: her deal, or no deal at all. This came in response to counter-proposals from the Eurosceptic European Research Group (ERG) on how to solve the continuing Irish border issue.
Mrs May has also been dogged by continued speculation that her critics are planning to topple her, with former British Foreign Secretary Boris Johnson the bookmakers’ favourite to assume control. He appeared to try and ease speculation over the weekend, stating his desire was to “chuck Chequers” and not replace the Prime Minister.
Away from Brexit, France’s far-right leader has urged her European counterparts to join together to fight the liberal elite. Marine Le Pen, in her comeback speech after her election defeat, said her party would campaign “in liaison” with its allies.
She said the upcoming European Parliament elections in May would be an opportunity to “beat [French President] Macron“, and “build with our allies…. a majority that makes a break from the decaying European Union.”
Meanwhile, Greece is planning on loosening capital controls very soon – a month after the country emerged from its bailout programme. Its Finance Minister, Euclid Tsakalotos, said: “We will complete the second pillar (of regulations) concerning cash withdrawals and the opening of bank accounts, and we will enter the final phase for the full lifting of capital controls, the third and final pillar... concerning restrictions on moving capital abroad.”
Rest of the world roundup
Australian voters are reportedly happy with their new Prime Minister, yet his party is still on course for a humiliating election defeat. A new poll revealed that although current leader Scott Morrison is preferred to his Labor Party rival Bill Shorten, the opposition party leads the incumbent government by 53% to 47% when it comes to voting intentions.
The electorate is said to be angry about the latest in a series of backroom coups that have usurped sitting Prime Ministers. Three weeks ago, Mr Morrison replaced former leader Malcolm Turnbull after his party turned against him.
Indeed, Mr Morrison’s first test will come next month, when there will be a by-election for Mr Turnbull’s Sydney constituency. What was once viewed to be a safe seat, is now seriously under threat following Mr Turnbull’s decision to resign from politics after he was ousted from power.
Meanwhile, Iran has called on the European Union to offset the effect of America withdrawing from the country’s nuclear agreement. Tehran’s Foreign Minister, Mohammed Javad Zarif, warned that Iran had drawn up several options if the EU failed to intervene in the dispute.
Speaking to German news magazine Der Spiegel, he said his country could “reduce its implementation” of the agreement and perhaps increase uranium enrichment activities. He warned the country would have no choice but to act if the current agreement was jeopardised by “the actions of the Americans and the passivity of the Europeans.”
Finally, India’s Finance Minister said the government was confident it would meet its fiscal deficit target. Arun Jaitley claimed the administration would achieve its objective of 3.3% of GDP, a day after unveiling a series of measures to counter the falling Rupee.
He said: “We will have a growth rate higher than what we’d projected earlier this year in the budget. The government is confident and will strictly maintain the 3.3% fiscal deficit target.”
India’s Rupee is currently Asia’s worst-performing currency. It has weakened by around 11% so far, amid turmoil in emerging Forex markets and higher oil prices.